I am retired and take educated guesses on all things financial.

April 30, 2007

May 1, 2007: The WEB: ranks and picks

I almost forgot, in addition to being Jesus of Global Warming, Al Gore claimed to invent the internet a few years ago. Brilliant guy, he is.

Credit Suisse First Boston recently released a thorough analysis of web companies working various internet formats, along with stock recommendations. I have studied the report and give you a snippet that may help you if you are interested as an investor - or, just a lurker on the net.

The Top Ten Web US Web Properties, in order:

Fox Interactive Media
Google Sites
Microsoft Sites
Time Warner Network
Comcast Corporation
Viacom Digital

Very important for advertisement and promotional views ($$$)

Top US Work and Home Weekly Traffic:

Active users 145,683,686 per week - this is amazing to me.

Unique users most popular Web sites in order:

Yahoo!....the leader by far three are very close
Time Warner
EarthLink...the following quite a bit less
Electronic Arts
United Online

Some recommended stocks from an extensive list:

aQuantive (AQNT)
Bankrate (RATE)
Earthlink, Inc. (ELNK)
eBay (EBAY)
Google (GOOG)
Liberty Interactive (LINTA)
Microsoft (MSFT)
Monster Worldwide (MNST)
Netflix (NFLX)
Priceline (PCLN)
ValueClick (VCLK)
Yahoo (YHOO)

Enjoy lurking.

April 29, 2007

April 30, 2007: Aero defense highights, a Chinese tip: SWRAY

lnside the Boeing 787 dreamliner. Business class seating area, cockpit and general seating area of the new plane from Boeing.

A few interesting developments in the areo defense sector and commercial aerospace sector the past few days:

> Bush, of course, will veto the "deadline bill". Congress is quietly putting together a new bill which will fully fund Iraq mission, with stips put on the Iraqi government to succeed post haste with forging a successful end to sectairian violence and and end to tacit support of Al-Queda and Iran elements working within Iraq at present. Bush should agree with most of it, and will likely sign it. That will be good news to the new extremely well protected armor vehicle construction industry, such as FRPT and their subcontractors.

> Boeing (BA) announced a number of orders (over $12B at list prices). Aviation capital bought 15 737s and five 787s, Virgin bought 15 787s, Air Canada bought 23 787s, SpiceJet bought 10 737-800s, Oak Hill bought 6 777-Fs, S7 Group bought 101 737-800s, Arik Air bought 3 787-9s and 4 777's. The London Times stated that USAir will probably switch a $3.7B A-350 order to Boeing 787s.

> AirBus announced layoffs of approximately 4500 workers in four countries. Protests were held by many of the thirty-five hour per week-two month vacation- lifetime pensions- can't be fired workers in Toulouse, France and elsewhere this week. Their balloons and Anti-American signs were a nice touch.

My recommendations are the same as they were last week for this industry.

Force Protection (FRPT), mentioned above, received a large contract for its vehicles - too big for them to handle alone. They will be subcontracting work to other builders to meet their production requirements. Trading at approximately 22, I still cannot endorse this pick, although I have been taken to the woodshed by FRPT devotees the past three months. Any slip on Iraq contracts and this company will fall like a heavy stone - make that a boulder, and I am not interested in one concept defense companies.


Several months ago, I recommended looking at a conglomerate based in Hong Kong, Swire Pacific. It has its hands in many things and does each of those many things pretty well. The stock price, even with less than robust earnings from their rental property developments in HK and China, trends up. The ADR is being more actively traded and has a viable market now, IMO. You are encouraged to look at SWRAY closely at this time for possible inclusion in your speculative portfolio. Online, go to and see for yourself. I am likely to add some SWRAY to my speculative portfolio shortly.

April 27, 2007

April 27, 2007: ETF bits and pieces

"ETFs LOVE ME (Siegel)....THEY LOVE ME NOT"(Bogle)...They love me has become the winner.

Now post-op from yesterday's knee surgery, I thought it would be appropriate - given the pain med I am taking - to stick to some new ETF fund remarks that may be of interest to you. Comments are observations based upon ETF fund experts, not direct research on my part.

State Street Global Advisors launched two ETFs this week:

The SPDR S&P International Small Cap ETF (GWX) focuses on companies in developed markets with market caps below two billion dollars. Investors have become increasingly interested in small cap international funds,as they are more closely tied to to the performance of local markets and have a much lower correlation with the US market than do International funds that focus be design on large companies that have a direct or indirect presence in the United States. The expense rate is .60%.

The SPDR World ex-US ETF (GWL) will track an index of over five thousand companies from developed markets outside of the United States. The expense rate is .35%.

A new ETF from Claymore is now traded. The Claymore/Clear Midcap Growth ETF (MCG). Clear Indexes are a proprietary system that "fulfill some simple, yet desirable principles": The stocks selected are differentiated in the marketplace, Positioned to out-perform major indexes, easy to explain to institutions/wholesalers/ brokers/advisers/investors, and scalable with capacity in multiple product structures". Of note, Claer Index-owner money is going into the fund, which is nice to know. He has a stake in his product. The expense rate is .60%.

I-shares recently launched several international ETFs: BRIC Fund (Brazil, Russia, India and China), Chile Index Fund, MSCI Israel Index Fund, MSCI Thailand Index Fund and MSCI Turkey Index Fund. Go to for more information on these.

I expect many more unique international ETF rollouts, as investors seek more strident diversification within their portfolio(s). Most of us are firm believers of choice and assuming risk within reason for rewards. I welcome all new funds. I will invest in a few - hopefully those I understand. Unfortunately, many individual investors will be too smart by half and buy ETFs they really do not understand (knowing Chile is a country in South America is not my idea of understanding a Chilean ETF).

At some point on the future, the equity markets will go into a bearish mode. I will recommend the pain med I am taking at present - you'll laugh in a stupor, not wallow in disappointment.

April 25, 2007

April 26, 2007: Housing VACANCY (Take my house, please - Henny Youngman circa 2007)

"For Sale" pre-owned homes are languishing on the market in greater numbers. Instead of a few paragraphs of "why", the following chart should suffice:

Existing inventory changes, March 23-April 23, 2007:
All major markets report an increase in existing homes for sale.

San Jose +19%
D.C. +11%
San Fran. +10%
Sacramento +9%
L.A. +8%
Seattle +8%
Balt. +8%
Newark +7%
Minn. +11%
Boise +7%
St. Louis +11%
Albuquerque +11%
Orange Ct. +10%
Houston +6%
Portland +4%
S.L.City +10%
Austin +6%
Denver +7%
Columbus +8%
Memphis +6%
Chicago +7%
Boston +8%
Atlanta +9%
Nashville +8%
Milwaukee +7%
Cleve. +8%
Inland Empire +12%
Dallas +6%
Cin. +6%
San Ant. +3%
Vegas +7%
Reno +6%
Phoenix +6%
Phil. +4%
Detroit +6%
Orlando +8%
K.C. +7%
San Diego +7%
New Orleans +7%
Omaha +5%
Raleigh +3%
Louisville +3%
Jacksonville +5%
Indy. +5%
Tucson +3%
Oklahoma City +3%
Miami +7%
Honolulu +1%
Tampa +4%
Ft. Meyers +2%

Year to year, the comparisons are bad for almost all markets (Boise up 111%,Tampa 56%, Albuquerque up 111%, Seattle up 43%, Vegas up 35%, Miami up 54%,Jacksonville up 69%, Portland up 82%, Memphis up 33%, Phoenix up 46%, etc.).

Over the past two months, investors are starting to return to the carnage and are picking up real estate at pennies to the dollar. Carl Icahn is amongst some well-known investors taking the plunge. I have facilitated and also participated in several excellent transactions. As mentioned in an earlier post, I may be a little early, but I am well satisfied with my investments.

Now may well be the time for investors to begin to nibble at distressed real estate. The upside is likely greater than the remainder of the bull market run past 13000.

New home construction was UP this month to date. With all the builder incentives, why buy old when you can buy new at the same price or lower?

Stocks of builders that might be worth taking a look at:

Centex (CTX)
Lennar (LEN)
M/I Homes (MHO)

April 24, 2007

April 25, 2007: Alternative energy tidbits

My objective is very simple with the global warming theory: make money off it. Islamic-fascism is a much greater danger than the theory of global warming. Of course, by investing in companies developing global warming products, even if I think Al Gore is an idiot, I still am doing the right thing. Investing in productive technologies sure beats carbon credit scams. Win-win.

Four things are happening for sure:

1. Renewable energy is a growing field.
2. Emissions trading schemes are likely to be implemented in many countries.
3. There will be increased pressure on public companies to disclose risks their company(s) pose to climate change as well as their "green' credentials.
4. The insurance industry is studying the risks associated with climate change.

Rare Metals:

I am led to believe that investors may want to focus on price trends for rare metals.

Gallium, for instance is trending higher on growing demand from LED and blue-violet laser applications with expanding environmental markets. Gallium was up 43% last year. Best stock picks are in Japan: Sumitomo Electric Industries, Dowa Holdings and Toyo Tanso.

Ceramic Capacitors:

Multilayer ceramic capacitors (MLCCs) can store large amounts of energy in a minimum of space. MLCC makers are enjoying excellent earnings of late- with a long way to go.

Two companies leading the pack are Japan's Murata Manufacturing and Taiyo Yuden.

Johnson Controls (JCI) has green appeal. They have a large and rapidly growing building efficiency business and a leading position in the lithium ion for hybrid vehicles. Cramer has mentioned this stock a few times for these reasons. I believe he is correct. It is appealing for purchase on a pull back.

Kyocera (KYO) has a unique solar cell business, and has gotten many other divisions of the company to function more efficiently. It has yet to be recognized as a solid green player.

Schneider (SCHN.PA) or SBGSF is a German company that thrives on lowering electricity consumption. It is appealing for purchase on a pullback.

April 23, 2007

April 24, 2007: Three somewhat obscure stocks to mull: SRRY,THS and DFR

I received a number of e-mails yesterday applauding me mildly for putting some personal views of myself on a post. Several wanted some additional information of a slightly more personal nature. I attempt to reply to all legitimate e-mails but do not relish being spammed by a few crazies. If you have questions that can be categorized as personal, please drop me a line for a personal response.

T is putting fresh cash from rental cash accounts into a few eclectic stocks and the sale of more Convernium (CHR) shares to bring my holdings to 50% of the original batch I purchased at $4 and pennies/share. I am also selling (25%) some Interline Brands (IBI) at a 1.7% loss-- the company has good management but the share price keeps flat lining. I feel my money is better placed elsewhere.


TreeHouse Foods is an excellent roll out story in a highly fragmented private food label business. TreeHouse is managed by highly talented buyers and it is operating in an industry that is ripe for consolidation. TreeHouse expects to make approximately $500m in acquisitions this year, adding profits from day one of each purchase. Their most recent purchase was San Antonio Farms, a Mexican Sauce company with an enviable lineup of products. This compliments their current products including pickles, powdered non-dairy products,soup and infant feeding products. The private label soup and infant feeding products were purchased in 2005 from Del Monte.
Trading at about $32.00/share, this company is an aggressive marketer and maximizer of earnings in a perfect industry for defensive plays. It could well be a $45.00/share stock if earnings continue to grow into 2008.


Deerfield Triarc is an equity company that just acquired Deerfield and Company (DCM), a fixed income asset manager. Trading about $17.00/share, Deerfield Triarc has its assets as follows:
RMBS 36.3%
CDOs 34.5%
CLOs 18.5%
Alternative Assets 5%
Hedge Funds 4%
Managed Accounts 1.8%

Deerfield offers an outstanding yield (9.9%) and has potential for capital appreciation coming from expected increases in the dividend. If the stock makes it to $22.00/share this year which is likely, the total return is excellent, indeed.


My first penny stock recommendation. The essentials are this. The company is beginning to click in the Chinese recycling business, especially plastics. It also has a presence in Australia. The company has morphed over several years, stumbling and bumbling. Two important events have occurred beneath the radar to make this company potentially viable. 1. It has focused on recycling and has put resources and a team together to appropriately run the show. Profits are up. Way up in relative terms 2006 to 2005. 2. The new management is Chinese with a tough CFO hired to get things right, giving SRRY a leg up on the Chinese "global warming/save the environment" initiative, which is pathetic in terms of global resolve, but essential to China continuing to develop - recycling old things to make new things. Trading at 50 cents/share, the stock will drift lower as one million shares were placed last week in private at 35 cents. At 40 cents, I am strongly considering buying a chunk of Sancon with fun money.Based upon my research, which has been a challenge on this issue, I believe this company could be a $15.00 stock, or be bought out by a larger trash company seeking expansion into China, which is in its infancy in regards to the trash and recycling business. And don't forget Australia.
Yahoo for more details

April 20, 2007

April 20, 2007: Aero defense updates

There have been a few significant developments in the watch list I have regarding aero defense and related fields.

Here is what's new, along with a few recommendations for further research on your part:

The Coast Guard announced that it is taking full control over the sole of LSI for the Deepwater program from Integrated Coast Guard Systems, the Northrup/Lockheed Martin joint venture, which puts all upcoming ICGS contracts in doubt. There is a large outstanding unobligated balance of $1.6B for Deepwater due mainly to problems with the 123-foot patrol boat program as well as the Fast Response Cutter, among others. This means that the Coast Guard, starved for boats that will keep up with their Homeland Security duties, will have to wait longer to receive craft which are replacing boats built as early as the late 1950s. Incredible, isn't it. On the bright side, when the USCG receives new boats, they should be functional. The Deepwater program, I have been told by active USCG personnel, has been a disaster from the beginning.

Losers will be both Northrup and Lockheed, and rightfully so.

GD won a 15 year multi billion IWiN contract over LMT- another big loss for Lockheed.

EDO received a $56M EW award.

LLL received a $95M award from the Navy for joint warfare support.

Army is slowing down purchases due to Congressional budge impasse. Look for body armor and armored vehicles to take a significant cut(AH, FRPT,etc.). See picture above.

Airbus has cut prices of A350 800-900 aircraft to compete with Boeing 787 by 46% and 53% respectively. I strongly believe that the US government should look into the anti-dumping laws on this issue. On the other hand, often you get what you pay for.

BA is the sole bidder for $2.5B South Korean contract for 20 jet fighters.

BA signed SPR to provide component and repair work on the 777 and 737-NG aircraft. Perhaps GR is beginning to loose a competitive edge as I review other awards from other contracts.


Removing LockheedMartin (LMT)from my stock list.

Removing Goodrich (GR) from my stock list (selling half of my portfolio holdings in GR as well)

Removing Northrup (NOC) from my stock list.

Removing Armor Holdings (AH)

Recommended for research on your part:

SPR - looks great
BA - be wary of Airbus dumping its aircraft at a loss to generate business

April 18, 2007

April 19, 2007: A dollar saved is a dollar earned.

No need for a picture today.

Here are a number of really good websites you could save money and time. Just the thing to uplift you psyche after tax season.

I hope these sites are as useful for you as they are for me.

This web site is superb for exploring, pricing and buying items for your home or business structure and grounds of any size. This site is a best kept secret by Home Depot, the owner. It is designed for contractors to get big discounts on everything. Guess what? YOU are a contractor! The free 1900+ multifamily catalog is most useful, IMO. All products also online. Delivered to your front door - or wherever you want them delivered- usually free. The catalog is free, too, with quarterly updates sent to your address - free.

REVIEW YOUR CREDIT REPORT(S) FREE: I recommend using one of the big three credit companies every four months to get timely updates. This site is NOT a shill for a fee-based service.

You can browse without annoying requests for personal data.

How does up to $250,000. being invested tax free sound to you. Made permanent in late 2006 by Congress.If you have children, grandchildren, great grandchildren, or you or your spouse are going to go to college for anything, this program is for you.
If you do not take advantage of it, you deserve a head slap.
I like two, although your state probably has improved theirs over the past several months (contributions may be partially or fully state tax deductible).
I like two:
Utah has a dandy through Vanguard
Alaska is very good as well, administered by T Rowe Price
Alaska will never have a state income tax in our lifetimes and is my personal choice.

These web sites have coupons for lots of stuff.

For overstocks:

Shoes? Yes indeed. My favorite.
Great prices on first quality merchandise. Free shipping/return. I am a completely satisfied Zappo shopper.


I don't know how they do it, but you can get a first class seat for coach prices (Y-up or Q-up class).
Great on long hauls and red eye flights.

Dial 1.888.567.8688 and select option #3.
This stops all financial institutions that use your credit line to market lists to third parties. It works after about two weeks.

April 16, 2007

April 17, 2007: A pipeline of earnings for you: MLP Pipelines

MLPs are Master Limited Partnerships that are designed to distribute acquired revenues on a tax advantaged basis. They present ideal opportunities for pipeline companies to maximize the tax laws to their advantage in an identified "risk" such as energy transport.

Once reserved for the wealthy few, over the past two decades MLPs have become more readily available to investors as one buys stock ("units") of the trust to share in the fruits of IRS K-1 entities. I have owned shares of MLPs off and on for at least ten years. As with stocks, there is a season to buy and a season to sell.Yields on many are very attractive when matched with modest (and sometimes dramatic) upward valuation of units and an expectation of regular dividend ("royalty") hikes.

Finding real value in stocks at this time is getting harder to find. Investors may park money in low interest accounts that stagnate and are fully taxable. Voila,
the unit trust becomes a great investment tool.

MLP pipelines give the investor who follows their portfolio regularly a look at commodity prices and how the changes in price can affect the MLP business model, and thus the distributable cash flows and valuations. Also, trends can be spotted that will require infrastructure build out, and based on current ownership of assets, one should be able to surmise a short list of potential MLPs that could benefit from a new project. Investors will also be able to identify bottlenecks in the distribution channels, such as Canadian oil sands product having to be pipe lined to Texas and Louisiana for refining (much oil sand product is so heavy it is designated for asphalt, which is a seasonal product - thus another angle to play in the bottleneck chain). Why the Texas, Louisiana area? Refineries were built for Venezuelan crude, which is also very heavy for the most part) and will be shipped elsewhere when Chavez gets his price. This is just the tip of the pipeline MLP puzzle that has many pieces.

Trying to follow all this may be considered huge expense of time and trouble. My view is to simplify.

T's criteria:
If an MLP yields less than 5.25%, don't buy it.
If it does not raise its payout at least every two quarters, sell it.
If the PE is between 15-28, it is o.k. to buy. Lower, something is wrong. Higher, too rich.
The pipeline must be centered in North America.
The pipeline MLP must have a web address.
The pipeline MLP must be followed by at least six analysts, preferably with a divergence of opinion (the best time to enter when following the other criteria, IMO).

Following my guidelines, which are mine and mine alone, I think you will be safe and pleased with your investment. You will miss a few big winners, but you will avoid most mediocre players in the game.

I recently purchased Teppco Energy Partners (TPP).I held this MLP in the earlier in the decade and was pleased, both buying and selling it. TPP is now ready to spurt forward again, IMO, by being the "furstest with the mostus" in critical pipeline areas they have built into or acquired a while back through acquisition.

Here is my list to watch. Some may not at present meet my criteria, but they appear to be solid and worth following.

Boardwalk Pipeline Partners (BWP)
Crosstex Energy (XTEX)
Enbridge Energy Partners (EEP)
Enterprise Product Partners (EPD)
Kinder Morgan Energy Partners (KMP)...a well managed MLP.
Nustar Energy (NS)
TEPPCO Partners (TTP)

Welcome aboard, "partner".

April 12, 2007

April 13, 2007: Time to yield? High yield ideas

The introduction of the first High Yield Corporate Bond Fund ETF ( ticker HYG created some initial excitement today. It is the first ETF High Yield roll out in the popular ishares Bond ETF series. However, it has a .50% expense ratio, well above other ETF Bond funds. I contacted the Barclay's press point person and asked this very question. No answer was received.Vanguard's High Yield Bond fund is expensed significantly lower. So are some others.

High Yield securities definitely have a place in the diversified investor's portfolio(s). I think it is a stretch for ishares to expense this fund at .50%. It should be half that cost, or less.

I did a quick check of some higher yielding stocks that could be an appropriate fit into your portfolio. I did not include real estate stocks or any bonds for this limited roster. It is possible that the Fed may cut interest rates this summer to alleviate the bumps and bruises as the markets and our society adjust to new loan stips and the fallout of loans in default. And, of course, to help the home construction market.

Here is a very short list, taken primarily from Standard and Poors:

AmeriGas Partners LP (ALD) 29.29/share/7.00%
Buckeye Partners LP (BPL) 50.81/share/6.30%
Double Hull Tankers (DHT) 14.74/share/11.80%
Enbridge Energy Partners LP (EEP) 58.16/share/6.50%
Enbridge Energy Management LP (EEQ) 56.31/share/6.80%
Ferrelgas Partners LP (FGP) 23.36/share/8.60%
Fairpoint Communications (FRP) 19.12/share/8.30%
General Maritime Corp. (GMR) 29.99/share/11.60%
KKR Financial Group (KFN) 27.30/share/7.20%
TC Pipelines LP (TCLP) 37.60/share/6.50%
Windstream Corp. (WIN) 14.60/share/6.70%

Limited Partnerships may have tax advantaged yields.

As we know, some stocks have high yields temporarily for a good reason: they are about to fall dramatically in price.

April 11, 2007

April 12, 2007: China, where global warming is a nice, hot high sulphur coal plant, burning brightly

I have been researching alternative energy companies, and have bought a few. For those that view global cooperation on this matter unified minus Bush, I submit that these individuals must be smoking and inhaling some alternative energy plant leaf.

Take China.

During a very recent conference call hosted by a major brokerage, the following was stated in clear terms:

The Chinese promise to cut pollutant energy emissions by 20% between 2006-2010 is not going to occur. Pollutant energy was cut be 1% in 2006. GDP is expected to grow at least 10% annually during the 2006-2010 period.

The conclusion was stated that economic growth remains the number one priority for the Chinese government, with energy intensity and other issues such as pollution all at number two or lower.

Beijing officials were surprisingly frank about China's determination to NOT adhere to stated pollutant energy reduction. Talk is cheap, as they say with a smile.

Coal is king in Chinese energy and will remain so for a long, long time (decades).

In 2006, China added approximately 100 GW of new electrical power of which around 75% was coal fired. 80% of existing power generation is coal fired. Over the next twenty years, it was stated that more than 70% of all Chinese electrical power will be coal fired, using high sulphur product. Fortunately, the new power plants are somewhat more efficient than the older ones, though not at a meaningful pollution reduction level countrywide.

China states that it is planning on closing smaller, more pollutant small power plants,small steel mills,small aluminum smelters and small transportation plants. Unfortunately, their history of permanently closing industrial installations of that sort is poor. For example, the Chinese government has been trying to close down tea kettle oil refineries for about ten years with only a modicum of success at best (8%).

A senior Chinese energy policy maker conceded that as long as China uses 60% more energy to generate the same unit of industrial production as Japan, then China will struggle during the next phase of global economic development. Thus, the rationale behind forceful worldwide efforts by China to lock in cheap energy sources in Africa and South America. This will keep their inefficient factories running, with cheap labor being the wild card in price point.

China is the second largest consumer of oil and is growing fast, a well-known fact that is an inconvenient truth ignored by American bashers and global environmental extremists.

China is thought to not have any inkling of replacing oil with natural gas. Chinese oil imports are rising rapidly. One positive sign to note is that Chinese heavy industry may be tailored in the future to run on coal or natural gas (not yet discovered or secured at this time). Coal might help, as coal bed methane may be transformed into natural gas (although high levels of CO2 are emitted during the process of conversion). Not so with Chinese transportation or home heating and cooking, both grossly inefficient and a heavy pollutant.Oil and high sulphur coal are king with hundreds of millions of mini-polluters across the Chinese mainland.

For the past few years, China has been content to sit back and let the US take the flack for CO2 reduction inaction. However, the US, even without signing any protocols, is reducing CO2 more than any other continent and will leave China scrambling to implement - or explain away- a lack of a coherent alternative energy policy. Clearly, renewable non-pollutant energy use is not near the top of any Chinese policy agenda at this time.

Although China states that it wants an aggressive bio fuel industry,it lacks available agricultural land. And what,if enacted by using these agricultural lands for ethanol, will feed China's population?

Chinese officials have a negative attitude towards imported natural gas and imported liquid natural gas. They prefer cheap coal from African and South American resources, and their huge domestic reserves. Again, pollutant fuels are strategically important to China. Certainly more important than treaties, protocols or demonstrations on global warming or alternative energy.

China will likely surpass the US in power generation over the next five years. This means much more pollution unless Chinese attitudes shift 180 degrees on global warming and pollution matters.

All participants agree that Chinese promises of reductions in global warming-identified power sources have not been backed by any meaningful results. Then again, the same could be said about much of Europe. Russia, Indian, Africa and South America are exempt for the most part. If they were signatories to any global warming initiatives, they all would have failed the test of results anyway.

In regards to Chinese growth, some are waiting for China to slow down. Don't look for China to implode any time soon. GDP is to grow 8-10% per year for the foreseeable future, and is likely to overshoot in 2007 in the run up to the 2008 Olympic Games.

Labor costs differentials will remain about the same, 20:1 vs. the United States and 27:1 vs. the European Union.Western technology given to China on the cheap will exacerbate the cost of production even more in the future.

It is my belief that China expects the decline of the western world to continue into this century, with China assuming the role of leading world power- militarily and economically- with willing allies, by around 2040.

By then, we may be about .7 degrees warmer collectively.

April 09, 2007

April 10, 2007: Aero defense updates and passing gas on EnCana

Fortunately, our anti-missile program works, and the Chinese efforts at blinding satellites by lasar have been recognized and neutralized - for now.

Right to the points:

NOC won the $256M contract for the USMC G/ATOR radar, after a protest from a competitor was dismissed.

LLL won the UKs Project Helix contract at $756M/7 years.

ATK acquired privately held Swales Aerospace, a satellite component manufacturer. This is a good deal for ATK. I would follow this stock and see what happens to earnings and cost efficiencies.

Boeing (BA) announced that 787 aircraft orders have reached 514 from 43 customers to date. Over 105 aircraft were produced and delivered by BA during the first quarter of this year. Most popular were the next generation 737s, totalling 83.

Rockwell Collins (ROC) has earned avionics contracts for 85 Boeing 737NG aircraft and all of Singapore Technologies avionics contracts for their C-130 fleet. This could begin to erode Goodrich earnings and should be watched beginning third quarter of this year.

ERJ has 100% production quotas of its 170/190 aircraft for this year and 85% for 2008. ERJ will increase production to 14/month. ERJ has been a recommended stock on this post for months.

Aero defense recommendations:

Boeing (BA)
Goodrich (GR) but watch this one carefully
Precision Castparts (PCP)
Sprint Aero Systems (SPR)
TransDigm Group (TDG) -almost new on the list
BE Aerospace (BEAV)
Esterline Technologies (ESL)
Rockwell Collins (COL)- almost new on this list
DynCorp (DYN)
General Dynamics (GD)
L-3 Communications (LLL)-upgrade for this stock, IMO
Northrup Grumman (NOC) - lots of clout at the DoD
a few prior recommendations appear to be fully priced at this posting date.

ENCANA: This is an exceptional multi-level clean energy play. I am strongly considering adding this to my portfolios to accompany Chesapeake Energy (CHK), a core holding of mine.

ECA is clearly positioned to benefit from tighter North American natural gas supplies. ECA is a low-cost producer with assets in Canada(70%) and the US (30%). Safe, secure and easily developed. Trading around $53.00/share, I think a price by year's end of $70.00+/share is probable.

One reason, Canadian gas inventories are 30% BELOW last year. Exports to the US could fall as much as 1.0Bcf/d as Canada fills needed storage capacity. This will benefit Chesapeake concurrently. Another reason, gas will be produced at a record rate by ECA from their share of the Alberta oil sands, while other producers see mature gas fields in decline. More gas at a higher price for ECA.

The oil sands oil and gas are a long term ace in the hole for ECA. Now that the Canadian government has eliminated the trusts, it is highly unlikely that ECA will break itself into parts instead of keeping the company whole. This is a good thing for investors interested in growth as well as income.

EnCana's recent joint venture with Conoco Phillips to develop EnCana's Foster Creek and Cristina Lake bitumen projects with Conoco Phillips' Wood River and Borger refineries is a key transaction unlocking the vast potential of Encana's bitumen resources (this is a 6.6bbls asset) on the cheap.

I like this somewhat under-reported story. Very much.