|
 “Finally! Dow Finishes Above 14,000,” reads CNNMoney’s headline story last night. “Finally!”? The Dow moved from 13,000 to 14,000 in less than four months… what else do you want
 Despite rapid gains in the stock market, 60% of Americans who agreed to talk to Gallup pollsters think the economy was “better” five years ago and fear that worse economic times are just around the corner. Of those surveyed, only 18% believe they have obtained “the American dream” -- whatever that is.
 Gold continued its recent breakout overnight… the once and future money is up to $677 an ounce -- a 10-week high. The precious metal has gained 7% this year. In June, we published a book on gold’s resurgence in the global monetary system. If you haven’t had a chance, check it out here: Gold: The Once and Future Money
 The dollar managed to stem the bleeding yesterday, briefly. Euro traders took profits and pulled the euro back to $1.37. The pound held its ground at $2.05.
 The hunt for the guilty begins. An investor filed suit against Moody’s CFO Linda Huber yesterday, claiming the company ought to have disclosed its assignment of “excessively” high ratings to bonds backed by subprime mortgages.
Moody's investors paid artificially high prices for the company's stock because of “false and misleading” statements, says Raphael Nach. Mr. Nach is suing on behalf of all investors who bought stock between Oct. 25, 2006-July 10, 2007. Good luck, buddy.
 The pace of home construction rose by over 2% in June -- a good sign for the beleaguered housing market. But at the same time, building permits -- a sign of future construction plans -- sank to their lowest level in 10 years. That’s not so good. 
“Does anyone remember the media saying, ‘The housing bottom is in’ back in February?” asks Mish Shedlock. “We do. And they have been repeating that every month since. It seems no one showed up for the party:
“This chart is a survey of homebuilders. Any number under 50 means that more respondents think things are bad than good. Housing continues to soften, and the chart shows that traffic is sinking, and that expected sales are sinking, as well.”
 Solar big dog SunPower (SPWR: NASDAQ) trounced analysts’ second-quarter expectations yesterday, more than doubling its earnings. According to the mainstream rag Investor’s Business Daily, solar is performing well due to “higher oil prices, subsidies and better technology.”
“No kidding,” writes Greg Guenthner, “that’s why we’re bullish on geothermal power opportunities. It’s clean, affordable and -- unlike sunshine -- hot steam coming from the depths of the earth is always ‘on.’”
 Geothermal energy now accounts for about 9,300 megawatts of the world’s electricity. That adds up to 60 million people in 24 countries who are getting their power from the Earth’s heat.
“In the United States,” Gunner continues, “more than 2,800 megawatts of electricity from geothermal plants supply 4 million people in Alaska, California, Hawaii, Nevada and Utah. Six percent of California’s power comes from geothermal sources, where 15 new projects are under development.”
You may be familiar with Calpine Corp. (CPNLQ: PINK SHEETS). Calpine became the world’s biggest geothermal power company in the late 1990s after completing the largest IPO ever for an independent energy provider in 1996. Later, in 2005, the company declared bankruptcy. Calpine was eventually delisted from the NYSE. But while it’s rebuilding, one tiny competitor is preparing for operations at The Geysers, as well as a second location on the West Coast.
Unfortunately, Gunner can’t -- or won’t -- divulge the name of this bulletin board gem to The 5. “It’s just too small and too illiquid to reveal to a large audience,” he says. But if you’re a newly minted member of his Bulletin Board Elite, you’ll learn all about it… and Gunner’s passion for “Jumper stocks”: Find Out More >>
 Shipping rates have hit an all-time high. “The Baltic Dry Index -- a measure of dry bulk shipping rates for things such as coal, grains and ore -- hit a new record,” reports Chris Mayer. “It’s risen fivefold since 2000 and is up 52% just this year.”
One reason: The world economy is on track to grow nearly 5% this year. Unless something gnarly happens, it will be the first time since the 1970s that the world economy has grown by more than 4% annually for five consecutive years.
“The steep rise in shipping rates will also put more pressure on the prices of base metals, grains and other agricultural products, iron ore, coal and other dry bulk commodities,” says Chris.
 Light sweet crude oil continued its year-high run yesterday, stopping just short of $76 a barrel. Domestic gas kept on keeping us guessing, dropping down below the $3 mark, to $2.97.
 The “average” American claims they would “curb their driving habits” if gas prices rose above $3.50. Forty percent of people responding to a survey conducted by Reuters said $3.50 would be that magic price at which U.S. consumers suddenly change their ways and start riding bicycles.
Nineteen percent said “get real”… no matter how high prices climb, the country will not curtail consumption. Having been stuck in traffic on the Peripherique outside of Paris on numerous occasions, we’d be inclined to agree with the 19%. If you do the math, gas is roughly $6.90 a gallon in Paris… the French love their cars all the same.
 The story we reported here in The 5 about Chinese street vendors selling chopped cardboard-filled dumplings was apparently a hoax. Or so said a Chinese official yesterday. Whatever.
 “Apple growers in China are taking over the U.S. domestic market,” Kevin Kerr tells us. “Apple growers here in the U.S. simply cannot compete with China’s cheap labor and low costs. Many are just giving up.”
Chinese apple growers produce five times as many apples as the U.S. -- nearly half of all apples grown in the world. A Chinese picker makes about 28 cents an hour, or $2 per day, according to the U.S. Apple Association. In 2005, workers in Pennsylvania made about $10 per hour.
 “Your recent report discusses eucalyptus trees in Brazil,” writes a befuddled reader, “and implies their use in the construction of houses if interest rates drop lower from where they are at present.
“From my experience of raising eucs many years ago -- the lumber from them was poor in quality, split VERY easily and twisted badly when used in construction or in the making of lumber -- it had to be bound at its ends to keep from splitting.
“South Africa used it in the shoring of gold mines. It had a very short life in the mines. They used it because it was ‘forgiving’ -- they had then about 15,000 hectares of trees, and their rotation was 11 years.
“I believe there are about 750-plus species of eucs -- some very fast growing and very poor wood -- some very slow growing and as hard as oak. With the growth rate you mention -- seven years -- the wood might be too soft even for fuel.”
We asked Christopher Hancock, who’s been covering the Brazilian beat for us, to respond: “The real driver of the company,” Christopher writes “is the great paper business and Brazilian interest rates. Construction was a possible bonus from what I gathered. Good info, though. Thanks for it.”
Christopher has good reason to be bullish on Brazilian stocks. Brazil’s bonds are on the cusp of an investment-quality upgrade, and it seems almost certain that Brazil will cut interest rates again in the next few months.
“Brazil's monetary authority is expected to cut the country's interest rate by half a percentage point, to 11.5 %, continuing almost two years of rate cuts amid improving economic conditions,” reports Mr. Hancock. “Consumer price inflation has been running at 3.7% for eight months and is expected to remain at that level for 2007.
“This is a real positive sign for Brazil's economy. Lower rates lead to more growth. And if the rating agencies upgrade Brazil to investment-grade, you'll see a nice little economic expansion.”
Christopher’s play in this booming market is already up over 20% since he recommended it to Free Market Investor subscribers only one month ago.
 “‘The enormity of this market’?” responds another reader. “Really, guys. This puts tears in my eyes. Try ‘the huge size of this market’… not ‘enormity.’ Usually, you alligators write rather well.”
We alligators actually got three e-mails “appalled” by our use of the word “enormity” when describing the market for commercial mortgage-backed securities rating assignments. Incredulous, we slithered over to our copy of Webster’s. It defines “enormity” in three ways:
1. Outrageous or heinous character; atrociousness.
2. Something outrageous or heinous, as an offense.
3. Greatness of size, scope, extent, or influence; immensity.
For the mortgage-backed securities debacle? We’ll take all three.
Cheers,
Addison Wiggin,
The 5 Min. Forecast
P.S. In the second quarter, over 70% of the money that active duty troops in Iraq donated to presidential campaigns went to “anti-war” candidates. Here’s a video of the recipient of the highest amount giving Fed Chair Ben Bernanke a hard time during his congressional testimony on Wednesday: http://www.youtube.com/watch?v=xTBrJNipytg |
Addison Wiggin
Recent guerilla attacks in western Mexico have authorities on both sides of the Mexican border scrambling to protect billions worth natural gas pipelines. Companies such as Hershey’s, Honda, and Kellogg’s are losing up to $7 million a day as local rebels bomb energy sites left and right. Meanwhile, several little known organizations are well positioned to profit from a sudden energy grab... or… worse yet, a full blown U.S. / Mexico Border War. 
