TFN eNews 11/06/2009: Top China growth play?
Published via e-mail broadcast on November 6, 2009
In today’s TFN eNews:
* Jumping on the TFN bandwagon
* The fourth horseman
* Top China growth play
Dear TFN eNews reader,
The Wall Street Journal today jumped on TFN’s natural gas bandwagon: “Gas production from shales has boomed with new drilling technology that makes it easier to extract gas from dense rock formations. Shale formations, such as the Barnett Shale in Texas, have been largely credited with fueling a surge in domestic gas production. Producers must drill down to the rock, then horizontally through the formation, to break it apart and release the gas trapped within.
“A surge in supplies from these fields and weak demand for the fuel resulting from the economic downturn have contributed to falling natural gas prices.
“Natural gas prices have fallen by more than 60% from their summer 2008 highs above $13 a million British thermal units. Gas supplies, however, have remained abundant. Total gas in U.S. storage for the week ended Oct. 30 stood at an all-time high of 3.788 trillion cubic feet — about 11% above last year’s level and the 12% above the five-year average.”
Andrew had been hinting at just this thing for months: We talked extensively about this in the late summer… and started belaboring the subject right here in the TFN eNews in September.
Three weeks ago, he moved his TFN Strategic Trader into position.
On one of his put options plays, his readers are up by 88% from the official entry price. But despite that gain, he’s maintaining his buy rating on these puts. The shares underlying his second pick were also down today, thanks to dropping natural gas prices and rather anemic quarterly results. TFN Strategic Traders were up over 30% on the play, with stronger gains certainly on the way.
But Andrew was switching the status of his third put play from a buy to a hold: This ETF slid incredibly fast over the past two weeks — down another 3% just today.
“That action has increased the value of our put options by 242%, with more gains likely on the way today,” he wrote today. “While I’m positive we’ll see significantly higher returns, the threat of a quick rebound is growing. If it happens, you’ll get a shot at buying the contracts at reduced prices. Don’t sell yet. But don’t buy any more.”
*** To make up for this status change, he offered a fourth Gas Basher play today: “This is a perfect day to enter the position as shares of the company are up on news of a positive quarterly earnings announcement. Fortunately for us, the good news will not last. The company specializes in natural gas compressors, which are used at gas wells as well as transportation pipelines.
“Of course the company had a decent quarter thanks to the massive Marcellus Shale growth. That’s no surprise. But the growth spurt will be short lived as the industry shoots itself in the foot. You know my thoughts on how the industry is about to plummet, thanks to a glut of production. Next Tuesday, we’ll get confirmation from the International Energy Agency. When it happens, the action will unfold fast.”
Read up on Andy’s main argument right here: http://www.todaysfinancialnews.com/TST/GAS/ETSTKA04.html
*** Protectionism is a reflex inherent in everybody who doesn’t understand free markets and prosperity building. No surprise here: With over 10% of the U.S. workforce now actively seeking work — not counting those who’ve given up –, the Obama White House just imposed another set of strong tariffs on imported Chinese goods.
It’s proof the situation is getting tense. But in this contest, there’s only one side holding four aces. That’s why we say take advantage of the move and buy Chinese!
TFN’s world-wise strategist Andrew Snyder writes: “Washington is getting serious about ‘leveling’ trade with China. Call it a desperate tool to fix our trade imbalance. Or call it bowing to American manufacturers — whoever those may be. Just don’t call it good news for the economy.
“Obama is going to get some mighty weak handshakes when he heads to Asia in a few days. After imposing the largest-ever tariff on imported Chinese pipe (almost 100%), Beijing is far from happy. As our dependence grows on China to fund the nation’s debt, this is not a good time to tick off our most important trading partners.
“Despite tax-relived American middle-class liberals now complaining about ‘taxpayers’ bailing out financial institutions, it’s worth mentioning that the bail-out money did not originate from U.S. tax revenues… but with our foreign lenders!
“Unfortunately, given the relative strength of the Chinese economy, Obama’s latest trade sanction will hurt American more than China. We’ve got unemployment at 10.2%. Their economy is growing by a percentage almost as high.”
So where to put your money?
One suggestion is China Infrastructure Investment Corp. (NASDAQ:CIIC). The tiny, $100 million company is nearly a pure play on the country’s growth potential.
Find out more about this play right here: http://www.todaysfinancialnews.com/international-investing/life-is-a-highway-a-chinese-highway-10298.html
***The 3 Best Stocks under $3 to buy Now!
We expect these new recommendations to bring in gains of perhaps 145%… 55%… 67%. Better yet, I think we can take some of those gains before Christmas. But you have to act immediately! http://www.todaysfinancialnews.com/HSC/ridic/WHSCK902.html
*** Quote of the Day:
“I’m an American, and I’m for prosperity. What creates prosperity is free and competitive markets. That means limited government. And I will speak about that every chance I get.”
– John Stossel, Creators.com
Recommended Reading:
Life is a highway, a Chinese highway
Best Books to Fight H1N1: 5 Great Reads to Beat the Swine Flu
Natural Gas Prices: “Stealth Buyer” tips his hand
Today’s Top 3 Financial News Stories:
Finance.Yahoo.com – Jobless rate tops 10 pct. for first time since ‘83 “The 10.2 percent jobless rate for October shows how weak the economy remains even though it is growing. The rising jobless rate could threaten the recovery if it saps consumers’ confidence and makes them more cautious about spending as the holiday season approaches.”
MoneyNews.com — Zuckerman: U.S. On Brink of Deflation Crisis “Inflation typically results from too much money chasing too few goods,” writes Zuckerman in U.S. News & World Report. Today, too much supply is chasing too little demand.”
Bloomberg.com — Gold Advances to Record in New York, London After Jobs Data “Bullion is heading for a ninth consecutive annual gain and approaching $1,100 an ounce for the first time as investors seek to protect their wealth from the threat of inflation and the debasement of the U.S. currency. Payrolls fell by 190,000 workers last month, compared with a 175,000 drop anticipated by the median forecast of economists surveyed by Bloomberg News.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: An overvalued market – not always a bad thing
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