The roughly 70% drop in oil prices in less than two years has claimed many victims. The economies of entire countries such as Nigeria and Venezuela have been devastated. Shale oil boom towns like Fargo, N.D., have gone bust.  Shares of many energy companies have been decimated — some even to the point where it is probably too late to short them. For instance, stocks like Chesapeake Energy (NYSE: CHK) and Whiting Petroleum (NYSE: WLL) have lost more than 90% of their value since oil’s peak and now trade in the low single digits. However, one group has only recently… Read More

The roughly 70% drop in oil prices in less than two years has claimed many victims. The economies of entire countries such as Nigeria and Venezuela have been devastated. Shale oil boom towns like Fargo, N.D., have gone bust.  Shares of many energy companies have been decimated — some even to the point where it is probably too late to short them. For instance, stocks like Chesapeake Energy (NYSE: CHK) and Whiting Petroleum (NYSE: WLL) have lost more than 90% of their value since oil’s peak and now trade in the low single digits. However, one group has only recently begun to feel the heat from the plunge in crude: Canadian banks, which have significant exposure to oil and gas.   Of the six major banks in Canada, the one that looks the most vulnerable is The Bank of Nova Scotia (NYSE: BNS). #-ad_banner-# Commonly known as Scotiabank, it is the third largest bank in Canada, with assets of C$856 billion ($639 billion USD) at the end of fiscal 2015 (Oct. 31). The bank provides financial services to 23 million customers in more… Read More

The major U.S. indices posted their second consecutive positive weekly close last week. They were led by the small-cap Russell 2000 and tech-heavy Nasdaq 100 indices, which gained 2.7% and 1.7%, respectively.  This is a positive near-term sign, as these indices typically lead the broader market higher and lower. Moreover, all sectors of the S&P 500 except for defensive utilities finished in the green last week. The best performers were materials, up 3.2%, and consumer discretionary, up 2.9%. #-ad_banner-# As I… Read More

The major U.S. indices posted their second consecutive positive weekly close last week. They were led by the small-cap Russell 2000 and tech-heavy Nasdaq 100 indices, which gained 2.7% and 1.7%, respectively.  This is a positive near-term sign, as these indices typically lead the broader market higher and lower. Moreover, all sectors of the S&P 500 except for defensive utilities finished in the green last week. The best performers were materials, up 3.2%, and consumer discretionary, up 2.9%. #-ad_banner-# As I said in last week’s Market Outlook, stocks are at a critical decision point from which the market’s next near-term move is likely to begin. Heading into this week, that move appears to be higher. A Near-Term Bottom Emerging? In last week’s report, I said a sustained rise above 1,947 in the S&P 500 would clear the way for a move to the 1,993 to 2,005 area. While the index is still negotiating this overhead resistance, others are starting to signal an emerging breakout.   On Friday, the Dow Jones Industrial Average closed above its 16,511 Feb. 1… Read More

Last December in Paris, almost every country on Earth agreed to substantially reduce carbon emissions over the next decade, and to meet regularly to report on progress. Cynics can argue that the climate conference’s goals will never be met. But scientists are in lockstep about the urgency of action — and for the first time, a practical framework is in place, with everyone on board. #-ad_banner-#One of the major beneficiaries of government policies to reduce carbon emissions will be solar power. Electricity generation accounts for a huge chunk of carbon emissions, due to the prevalence of power plants that burn… Read More

Last December in Paris, almost every country on Earth agreed to substantially reduce carbon emissions over the next decade, and to meet regularly to report on progress. Cynics can argue that the climate conference’s goals will never be met. But scientists are in lockstep about the urgency of action — and for the first time, a practical framework is in place, with everyone on board. #-ad_banner-#One of the major beneficiaries of government policies to reduce carbon emissions will be solar power. Electricity generation accounts for a huge chunk of carbon emissions, due to the prevalence of power plants that burn coal and natural gas. Generating power from solar, wind, nuclear, hydro and geothermal sources produces little or no carbon emissions — so shifting from fossil fuels to alternatives is the easiest way to effect change. And even with natural gas at historically low prices, the relative cost of solar power is — for the first time — affordable for power plants to at least increase their mix of solar. And in large global economies still building out their power grid, such as India, solar will now be the power source of choice.  Solar received more good news in the budget… Read More

I have a confession to make. I love American Presidential politics the same way that many people love sports. It’s my March Madness — but it lasts almost an entire year.  2016 is turning in to one of the strangest elections I’ve ever watched. It’s a bit like a 50 car pileup; you know you shouldn’t look but you just can’t resist. #-ad_banner-#On the GOP side, the biggest ruckus is being kicked up a by billionaire real estate mogul turned reality TV star with zero government experience who is running a populist themed campaign that defies conventional wisdom on a… Read More

I have a confession to make. I love American Presidential politics the same way that many people love sports. It’s my March Madness — but it lasts almost an entire year.  2016 is turning in to one of the strangest elections I’ve ever watched. It’s a bit like a 50 car pileup; you know you shouldn’t look but you just can’t resist. #-ad_banner-#On the GOP side, the biggest ruckus is being kicked up a by billionaire real estate mogul turned reality TV star with zero government experience who is running a populist themed campaign that defies conventional wisdom on a daily basis. The Democratic choices are no less weird with a geriatric, self-avowed, socialist senator who is also running on an angry, populist platform and a former Secretary of State with a politically dynastic name and trust issues. While the media devours this circus, the market jury is still out till at least summer, when the picture should be a bit clearer. In the meantime, smart investors should consider these moves to make sure their portfolios will be ready to weather the politically induced chaos should it arrive. 3 Areas To Avoid In An Election Year By nominating convention… Read More

Warren Buffett strikes again. We learned this past Tuesday the billionaire investor has been buying when there’s “blood running in the streets” in the energy sector.  #-ad_banner-#It was no secret that Buffett and his investment team at Berkshire Hathaway (NYSE: BRK-B) are big fans of Phillips 66 (NYSE: PSX), the nation’s largest refiner. Up until the fourth quarter of 2015, Buffett had steadily increased his stake in the company to the tune of 14.2% of shares outstanding (a position worth more than $5 billion).  But the big surprise in Berkshire’s latest 13F report revealed that instead of building onto their… Read More

Warren Buffett strikes again. We learned this past Tuesday the billionaire investor has been buying when there’s “blood running in the streets” in the energy sector.  #-ad_banner-#It was no secret that Buffett and his investment team at Berkshire Hathaway (NYSE: BRK-B) are big fans of Phillips 66 (NYSE: PSX), the nation’s largest refiner. Up until the fourth quarter of 2015, Buffett had steadily increased his stake in the company to the tune of 14.2% of shares outstanding (a position worth more than $5 billion).  But the big surprise in Berkshire’s latest 13F report revealed that instead of building onto their stake in Phillips 66, Buffett and his investment managers (Ted Weschler and Todd Combs) seem to have found a new darling in the energy space: Kinder Morgan (NYSE: KMI). Kinder Morgan is the largest pipeline operator in the United States. And just as you’d expect, while the price of West Texas Intermediate (WTI) crude has tanked over the past year, so too has the price of Kinder Morgan shares. Now that oil prices have rebounded somewhat in the past week (back to near $30), the talk on the Street is whether we’ve seen… Read More

#-ad_banner-#​Although inflation is low and the U.S. dollar is high, gold seems to be waking up. It’s hard not to notice that the yellow metal has already made quite a few changes for the better on the charts. And it appears gold mining stocks are coming along for the ride. First, let’s take a look at the long-term chart of gold futures. Using a log scale chart, we see they decisively moved above the major trendline drawn from the 2012 high, as well as the top of the trend channel drawn from the 2014 high.  When… Read More

#-ad_banner-#​Although inflation is low and the U.S. dollar is high, gold seems to be waking up. It’s hard not to notice that the yellow metal has already made quite a few changes for the better on the charts. And it appears gold mining stocks are coming along for the ride. First, let’s take a look at the long-term chart of gold futures. Using a log scale chart, we see they decisively moved above the major trendline drawn from the 2012 high, as well as the top of the trend channel drawn from the 2014 high.  When we see breakouts through two different measures of trend, we should pay attention. Not only that, but gold futures are now above major moving averages, including the 50-day and 200-day.  On the chart above, I used the 40-week moving average as a substitute for the 200-day. This month, prices moved to their highest spread above the moving average since 2012, which was arguably before the bear market really began. Gold mining stocks have also broken through long-term trendlines, and I think the smaller companies offer the most bang for your buck. To cut down on single stock risk, though, the… Read More

Phew! The stock market recently has calmed down after a highly volatile first six weeks of 2016. While we may not be out of the woods, the sky-is-falling panic seems to have been overblown. Let’s use this breather to review three recommendations from late last year and assess if they’re still worthy. Boeing (NYSE: BA), which I recommended in December, has fallen sharply since then, for two reasons. First, investors’ rising concerns about economic growth in China and India led them to dump Boeing, which expects strong demand for commercial aircraft from those countries for years to come. Second, the… Read More

Phew! The stock market recently has calmed down after a highly volatile first six weeks of 2016. While we may not be out of the woods, the sky-is-falling panic seems to have been overblown. Let’s use this breather to review three recommendations from late last year and assess if they’re still worthy. Boeing (NYSE: BA), which I recommended in December, has fallen sharply since then, for two reasons. First, investors’ rising concerns about economic growth in China and India led them to dump Boeing, which expects strong demand for commercial aircraft from those countries for years to come. Second, the U.S. Securities & Exchange Commission last week announced that it was looking into Boeing’s use of “program accounting” methods for its 747 and 787 Dreamliner lines. While the SEC may decide there’s no problem, the cloud cast over the company led to another selloff. #-ad_banner-#In my view, both issues are legitimate concerns, but ones to which the market overreacted. China and India are not in or near recessions; they remain in strong growth modes, albeit slower than expected. Their orders for commercial aircraft are booked years in advance and are not expected to slow considerably as a result of their… Read More