Solars: Cowen & Co positive (ENER, ESLR, FSLR, HOKU, SPWR, STP, and TSL.)

The bet being on the subsidies.
From Notable Calls:

Cowen & Co is out with a positive call on Solars saying most of the U.S. solar names look undervalued relative to growth and earnings, in teir view, reflecting four areas of investor concern: uncertainty about the next phase of subsidies in Spain, Germany and the U.S.; and the tension between silicon supply/cost and module ASP/demand. Each of these is likely to be clarified in the next two to six months, underpinning a group rally....

...- Cowen believes a bill to extend tax credits for renewables may be introduced in the Senate on Earth Day, April 22nd. Details must still be worked out. However, they see improved chance of passage.

- Followed By Spain, Then Germany. Zapatero's Socialist Party retained control in the recent election, so support for renewable energy should continue. With new feed-in-tariff rates due to take effect in October, they believe legislation should be settled by July. And, the final bill is likely to be more favorable than the last draft, with a higher FIT (33-35c vs. 31c) and increased cap (perhaps 2GW vs. 1.2GW). While the new German FITs are likely to be in line with expectations...MORE

Buy Japanese Samuri Sword Makers

As Grandma used to say, if the report is "The sky is falling" the course of action is to short sky.
Conversely, if the report is of shortage, go long of what's scarce. I am a fan of low I.Q. investing.

From Bloomberg:

From a windswept corner of Hokkaido, Japan's northernmost island, Japan Steel Works Ltd. controls the fate of the global nuclear-energy renaissance.

There stands the only plant in the world, a survivor of Allied bombing in World War II, capable of producing the central part of a nuclear reactor's containment vessel in a single piece, reducing the risk of a radiation leak.

Utilities that won't need the equipment for years are making $100 million down payments now on components Japan Steel makes from 600-ton ingots. Each year the Tokyo-based company can turn out just four of the steel forgings that contain the radioactivity in a nuclear reactor. Even after it doubles capacity in the next two years, there won't be enough production to meet building plans.

``If there are 50 to 100 reactors or more to be built, there will be a real shortage and real delays in deliveries, so it's a good hedge to get in line now,'' said Ron Pitts, senior vice president for nuclear operations at the construction and engineering company Fluor Corp. in Irving, Texas.

Pitts estimated the cost of heavy forgings, including reactor containment vessels, steam generators and pressurizers, at $300 million to $350 million for each generating unit. Japan Steel wouldn't comment on the size of the down payment, which Pitts estimated at $100 million.

Right Now

UniStar Nuclear Energy LLC in Baltimore, a venture between Constellation Energy Group and Electricite de France SA, reserved slots for Japan Steel gear in 2006, even though it doesn't expect to complete its first reactor until 2015. It plans to build reactors based on technology from Areva SA of France....

...Japan Steel stock more than doubled from the start of last year to 2,080 yen in July, before dropping, partly because of a plan to issue shares in case of a hostile takeover bid. They now trade at 1,602 yen, valuing the company at 595 billion yen ($5.8 billion). Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo, sold his shares in July....MORE

HT: Environmental Capital

Bespoke on Commodities

I had a friend who was a fanatic about technical analysis. He had a drafting table where he would draw charts by hand with protractors and German machined straight-edges. He was convinced that being half a degree off on the slope of a line would lead you to perdition.
Looking at Bespoke's charts is easier:
(link below)

With commodities down sharply once again today, and the news media already asking everyone and their mother's if this is the end of the boom, below we highlight our trading range charts of major commodities. The green shading represents two standard deviations above and below the commodity's 50-day moving average. When the price moves above the green shading, it is considered overbought (oversold when below). We provide trend and support lines where necessary.

Bespoke Investment Group

Post of the Day: The Ritholtz/Esquire Indicator

From Infectious Greed:

Okay, as I just said to my friend Barry Ritholtz in an IM, when the economically adrift Esquire does a lengthy interview with the uber-bearishrealist Mr. Ritholtz that's gotta be a great sign of where we're at in the down market cycle.

I call for a 12% run on the Dow -- and, as Barry knows, I mean that in the most loving way possible. So if anyone posts anything mean about Barry I'll delete it. Be nice.

COMMENTS

">

1. Comment by Barry Ritholtz -- March 20, 2008 @ 3:02 PM

My own indicator! I Love it.

And, I don't disagree with you. As noted on Monday, between the spike in my traffic, and Abby Joseph Cohen getting sacked at GS, it was time to trade from the long side. (but just a trade)

http://bigpicture.typepad.com/comments/2008/03/contrary-indica.html

Regular readers will remember this from Monday:

Salvador Dali and Abby Joseph Cohen

It's a recession! Lakshman Achuthan finally pulls the trigger

Via The Curious Capitalist:

He held off for a while in hopes that maybe Washington could come through with enough monetary and fiscal stimulus to stave it off, but now Mr. Business Cycle himself is saying it: We're in a recession. From CNNMoney:

Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, said the economy has now fallen into what he calls "a recession of choice.">>>MORE

Our other posts today on this topic:

Now With the Recession Behind Us...

And

Markets: I Scream, Triple Dip

Sector Snap: Agricultural Chemicals (MON; MOS; POT)

Via Yahoo Finance:
Shares of agricultural chemical companies declined on Thursday, following commodities prices mostly lower.Banc of America Securities analyst Kevin W. McCarthy said agricultural chemical companies have declined recently on a sell-off in commodities like gold, oil, corn and soy.
"Investors sold on the belief that Fed cuts are nearly done, which could support the dollar, with negative implications for dollar-denominated commodities," McCarthy wrote in a client note....MORE

Deals of the Day: The Bear Stearns Empire Strikes Back

Best sub-headline of the day:

Today in Bear Stearns

over this Deal Journal story:

The empire strikes back, as outrage about the $2 a share price turns to action. [WSJ]
Jimmy Cayne and billionaire investor Joe Lewis are apparently looking for a white knight, the Post’s Zachery Kouwe reports. [New York Post]
Incidentally, Cayne and other Bear executives would get “paltry” exit packages if the J.P. Morgan deal went through. [WSJ]...MORE

Renewable impact on power costs must be clear: S&P

Accurately rating structured products is pretty tough, here they're talking simple common sense, which is what Henry Poor did when he wasn't writing his manual.*
From Reuters:
U.S. utilities and states must do a better job of explaining the potential costs of complying with renewable portfolio standards or risk consumer backlash if those costs show up in power bills, officials at Standard & Poor's said in a conference on Tuesday.

Twenty-nine states and the District of Columbia have some type of RPS. Other states and the federal government, which has not yet been successful, are considering the standards.

Some states with RPS moreover are looking to increase renewable targets even before reaching their initial goals.

RPS requires utilities to acquire a certain percentage of power supply from renewable sources such as wind or solar.

That renewable power is often sold at above-market prices.

Some studies forecast RPS costs will not significantly boost customer rates, and some reports predict RPS will actually reduce costs.

S&P however said the states and utilities have not provided much data that assesses the actual RPS costs incurred to date....MORE

*Henry V. Poor's
"Manual of Railroads of the United States for 1873-74"
Engraved Frontispiece; Description of the Status of the CPRR as of December 31, 1872.

---

Markets: I Scream, Triple Dip

Among other duties (coffee A.M, turn out lights P.M.) I think of likely (and more importantly, unlikely) scenarios of where the markets might be heading.

One possibility I've been toying with is a double recession following the credit crunch. The way this would play out in the stock market is a rotation out of commodities (but keep an eye on wheat) by the hot money back into equities with a run back toward the old highs on the S &P.

Then as we hear a drumbeat of recession reports, Mr. Market gets despondent, the market heads south, takes out the March lows, Mr. Market gets suicidal, recession is officially announced and we go back up.

This second run up would fail just about the time it's announced that we've left recession and six to nine months later the recession of 2009 is announced.
It might be time to switch to the weekly charts, if this picture pans out we would show a series of lower highs and lower lows.

My scenarios are usually wrong, but they give me a framework to hang the minute-to-minute reality on.

I'm going out for some mint chocolate chip.*

From Yahoo Finance.
Want more control over the chart? Try our Interactive Chart.










*Timothy McVeigh asked for two pints of Ben & Jerry's as his last meal, the 168 people he murdered didn't get to choose theirs.

Now With the Recession Behind Us...

…, from Kim Zussman at Daily Speculations:

Time for the trader psychology profile evaluation

1. Before, during, and after trades you are:

A. Anxious, miserable, regretful
B. Strapped, teetering, busted
C. Wined, rummed, beered
C. Aroused, orgasmic, disgusted

2. What do you think of when asked to define empathy?

A. "Everyone but me is wrong"
B. "I'm pithy"
C. Oskar Schindler's feeling towards cheap labor
D. Blue to the color-blind

3. Which of the following dreams do you recall?

A. You were the captain of the Titanic and you sank the iceberg with your six-shooter
B. You won the Scarlett Johannsen date on eBay and she fell in love with you.
C. Your self-doubt resulted in the permanent disappearance of your image in the mirror
D. Scientists discovered that Ptolemy was wrong because the big-bang vector run backward to the beginning of time has the locus of origin in your left frontal lobe

MORE

Commodities Mostly Lower, But Selling Seems To Be Waning

From Dow Jones via Cattle Network:

Commodities prices are mostly lower on continued selling as the dollar rises after a less-than-expected Federal Reserve Rate cut, but the widespread liquidation in hard assets seems to be slowing.

However, economic uncertainties and tighter bank credit lines for margins have funds continuing to reduce risk exposure in commodities, analysts said.

Chicago Board of Trade soy futures are firmly planted in negative territory, with soybeans plunging to their 50 cent lower daily trading limits again as they remain on the defensive from speculative led liquidation, analysts said.

At 12:20 EDT May soybeans are 50 cents lower at $12.07, May soyoil is 200 points lower at 54.40 cents per pound and May soymeal is $4.90 lower at $305.80 per short ton.

Similarly, gold and copper futures are down as funds and speculators extend their selling before a long weekend as the dollar rises and in continued response to a smaller-than-expected Fed interest rate cut.

Comex April gold is down $19.30 at $926 an ounce. Comex May copper is down 9.4 cents at $3.5395 a pound....MORE

Norway Subsidizes Cows at $16 per day

From Reuters:

Farm subsidies in many rich countries are high but the Norwegian $16-a-day cows have to be among the most astronomical examples.

The problem is that Norway wants farmers in the Arctic county of Finnmark to produce milk — but since it’s so cold for much of the year the herds have to live in heated barns and food has to be trucked in.

That’s clearly bad economics and far worse for the environment than cows grazing outside on grass.

The government argues that a Viking-style resolve to keep society going in remote Arctic regions means cows have to live in the barren north and that the alternative of closing down dairy farms and trucking in milk is worse.

According to a study by the Norwegian Agricultural Economics Research Institute, the average subsidies for a dairy farmer in the high north totalled 503,586 Norwegian crowns ($98,720) in 2006. Each farmer looks after an average herd of 17 cows, so that works out at about $16 per cow every day....MORE

Gold, the Dollar, and Chicken/Egg Semantics

From the WSJ's MarketBeat blog:

Gold futures are losing some of their luster, lately trading at $928.30 an ounce, a sharp decline from the last close above $1,000, which was just Tuesday, as the U.S. dollar rallies against the euro, Swiss franc and yen. Asbury Research’s John Kosar asked today in his blog, Logic Over Emotion Investing, whether the “collapse in gold” could help the dollar with an overdue bounce.

Or is it the other way around?>>>MORE

Ag Stocks and The Berlin Airlift (AG; MOS; MON; POT)

Last night in "Commodities Comeuppance" I said my best guess was that the ag stocks would be up today. When POT and MOS opened down I was reminded of a vignette from the Berlin Airlift.

We're coming up on the 60th anniversary of the Soviet blockade that June.
During the summer the two million people that the Brits and Americans were trying to feed could get by with two tons of coal per day (over the course of the airlift 80% of the weight hauled was coal) but as the blockade went on, it was apparent that the Sov's. intended to starve the city and it became imperative that an efficient method of delivering coal be found.

During winter the absolute minimum requirement was 3100 tons of coal per day. The little C-47's could haul around three tons per flight. The first week of the airlift, deliveries averaged 90 tons per day. The second week, 1000 tons/day.

It was decided to experiment with a low-speed, low-level drop of coal onto an empty field, the idea being that if it worked, B-29 Superfortress' with a 105 mph stall speed and 22-25 ton capacity would solve the problem.

On the appointed day the senior commanders went to the field, the plane came over, low and slow, dropped the coal, packed 100 pounds to a bag, the bags landed, exploded open, the coal was pulverized and a great black cloud of coal dust covered everyone watching.

One of the Generals, I forget if it was LeMay, Tunner or Smith, said "Doesn't work" and that was that.

When I saw the ag stocks open this morning I thought
"Doesn't work".

The logistics geniuses figured out what needed to be done, took 300 of the 400 10-ton capacity C-54's in the U.S. fleet, developed flight rules so efficient that the Germans called it "die Luftbrücke" (Air Bridge) and on Easter Sunday 1949 in a move to crush the Soviet's spirit, they decided to show off with the "Easter Parade".

In the 1440 minutes of that day, they flew 1398 flights into Berlin delivering 12,940 tons of coal.
The Soviets gave up the blockade the next month, two million people didn't starve or be forced to live under Moscow masters and thousands of kids remembered the candy bars the pilots would tie to handkerchief parachutes and drop as they came into Tempelhof.

39 British and 31 American airmen were killed in crashes during the airlift:

Berlin Airlift Monument in Berlin-Tempelhof with inscription "They lost their lives for the freedom of Berlin in service for the Berlin Airlift 1948/49"

Yup Sonny

---

Is the Commodity Bubble Bursting?

I've said it before, Mr. Gongloff has as good a feel for markets as any journalist I've come across. I'm not sure if it was he or Mr. Patterson who wrote the instant piece, it's as timely as it gets.*
From the Wall Street Journal:

While trying to clean up the mess of one bubble this week, the Fed might also have unexpectedly hastened the end of another.

Oil, gold and other commodity prices have soared recently, much higher than what would seem to be fundamentally justified. They took a big tumble in the other direction yesterday, with gold posting its biggest dollar decline in 28 years and oil its biggest loss in 17 years.

One cause of the selling seemed to be Tuesday's interest-rate decision by the Fed, which didn't lower rates as much as markets expected. Moreover, in its statement accompanying the cuts, it spent a surprisingly large amount of time harrumphing about inflation risks. That seems to have eased concerns that the Fed was prepared to toss out its inflation-fighting mandate.

Hedge funds and other investors that had pumped cash -- much of it borrowed -- into commodities might now be having second thoughts. If the Fed is serious about fighting inflation and will be more reluctant to cut rates in the future, then the run-up in commodities prices might be running its course. Moreover, if the economy gets weak enough to damp inflation on its own, that's also poison for commodities, as it means slumping demand for oil, steel, wheat and other hard assets.

The deleveraging process gripping Wall Street is another important factor. If the downdraft in commodities prices continues, hedge funds and other traders that made bets on raw materials with borrowed money could be forced to sell their holdings and unwind those bets....CHARTS and more.

*Full disclosure: we've got a soft spot in our heads for Mr. Gongloff.
(okay mom, I used your line, will we have pie this weekend?)

Commodities Comeuppance. And Climateer's "Quote of the Day" (MON; MOS; POT; AG)

Our best guess is up tomorrow, you know, Thursdays child has far to go and all that.
From TheStreet.com:

U.S. stocks sold off steeply in the afternoon Wednesday after hesitant trading close to the baseline. The Dow and the S&P 500 each lost 2.4%, and the Nasdaq dropped 2.6%. On CNBC's "Fast Money" TV show, Tim Seymour said there's a rollover out of commodity names. He noted that the yen moved 80 basis points today. The commodities trade is a crowded trade, he said. He was bullish on some Eastern European gas names, but said he believed there was a lot of "fluff" in plays on Potash...

...Pete Najarian said that the market is prone to overreactions and was irrational lately.

[video] Cramer: The One Momentum Sector to Make Money

Lyrical Genius:

From Deal Journal:
(open video in a new tab)

CDO Remake of Bohemian Rhapsody

Is this the real price?
Is this just fantasy?
Financial landslide
No escape from reality
Open your eyes
And look at your buys and see.
I’m now a poor boy
High-yielding casualty
Because I bought it high, watched it blow
Rating high, value low
Any way the Fed goes
Doesn’t really matter to me, to me...MORE

Hold all Tickets. We had thought "The Day the Nasdaq Died" the pastiche* of the decade:

The Day the NASDAQ Died

Humble Pie (sung to the tune of American Pie)

A long, long week ago
I can still remember how the market used to make me smile
What I'd do when I had the chance
Is get myself a cash advance
And add another tech stock to the pile.

But Alan Greenspan made me shiver
With every speech that he delivered
Bad news on the rate front
Still I'd take one more punt

I can't remember if I cried
When I heard about the CPI
I lost my fortune and my pride
The day the NASDAQ died

So bye-bye to my piece of the pie
I poured my paycheck into Datek
Now my cash account's dry...MORE

*..."Bohemian Rhapsody", by Queen is unusual as it is a pastiche in both senses of the word, as there are many distinct styles imitated in the song, all 'hodge-podged' together to create one piece of music....

(Wikipedia)

GOT THAT? WE HAVE A PASTICHE OF A DOUBLE PASTICHE!!!
Genius.

Bear Stearns: Jim Cramer Defends His Position, Is Still Hated (BSC)

From Gawker:

"Mad Money" host and bug-eyed madman Jim Cramer went on CNBC today to clarify his statements from last week about Bear Stearns, when he urged people not to move their money out of the firm. As we pointed out earlier in his defense, he was not referring to the company's stock, and his advice was actually perfectly sound....

Go to Gawker for the video.
HT: 1440 Wall Street.

Volatility Getting You Down, Bunky?

Maybe it's time you looked into the tallow market.
The tallow/grease/lard complex has been traded for five thousand years:

2992 B.C.
Honey I'm home!
Hi dear, anything new in tallow?
Nope. Same ol', same ol'.

2008 A.D.
Ditto.

Here's a long term forecast for tallow:

Figure 1: Tallow and Crude Oil Prices: New Zealand Dollars per Litre

Source

Disclaimer: They didn't do so well on the oil forecast.
Regardless, my guess is that the chart will end up looking like this:
____________________________________________________________

Did you know chefs have been sculpting tallow for over 300 years?

Tallow Modeling Tool Set

This set of 6 tools is excellent for smoothing, contouring and detailing large sculptures with big surface areas. Sharpened ribbons of stainless steel are secured into hard wood handles with metal grommets.

Tallow is also a town in Ireland.
From the Waterford County Museum:

Tallow : An Outline History
Very little is known about the history of Tallow, probably because of its situation,
and the poverty of its early inhabitants attracted none of the warriors of the past, from whose exploits and daring deeds, history is made....

Here's the ePodunk entry.

Investing Roundup-Down,

DOWN-Dow Jones Industrial Average
DOWN-S&P 500
DOWN-Nasdaq
DOWN-Gold
DOWN-Oil
DOWN-Wheat
DOWN-Corn

Here's Bruce Springsteen's market commentary.