InvestMacro FX

Source: ForexYard

Despite starting Thursday off on a promising note, the euro managed to tumble against most of its main currency rivals as the euro-zone debt crisis continues to drive investors away from the currency. With analysts forecasting an increase in today’s US New Home Sales figure over last month, it appears unlikely that the euro will reverse its recent bearish trend.

Economic News

USD – Unemployment Claims Boost USD Ahead of Holiday Weekend

Yesterday’s US Unemployment Claims gave the USD an added boost against its main currency rivals ahead of the holiday weekend. The latest unemployment figure came in significantly below analyst expectations at 364K, the lowest level since April 2008. The positive jobs report gave further incentive to investors looking for a safe haven outlet in the wake of the on-going euro zone debt crisis.

Turning to today, traders can expect further market volatility ahead of the Christmas holiday. Several US indicators, namely the Core Durable Goods Figure and the New Home Sales report may lead to further gains for the buck. In particular, the New Home Sales figure will likely play a prominent role in tomorrow’s trading session. Along with employment, home sales were one of the main contributing factors to the US financial crisis. Should the figure come in at its expected 314K, dollar traders may be able to enjoy their holiday that much more.

EUR – EUR Unable to Recoup Losses in Thursday Trading

Despite starting the day off on a positive note, the euro was unable to maintain its bullish trend yesterday as a number of factors caused investors to abandon the currency. While the ECB decision to institute a three-year refinancing operation boosted hopes that the euro-zone debt crisis may be easing, negative rumours about the actual of state of the European economies brought the currency back down. The news brought the EUR/USD dangerously close to the psychologically significant 1.300 level.

In addition, positive US news caused traders to redirect their money to the more stable greenback ahead of the Christmas Holiday. Analysts are warning that the euro is unlikely to rebound ahead of the New Year, and there is a chance that the currency will maintain its downward slide well into 2012.

GBP traders should also be prepared for continued bearishness, as sterling has been closely mirroring the euro in recent days. As a whole, investors seem less and less interested in betting on riskier assets like the euro and pound. This is particularly significant for Forex traders, as the low liquidity environment in the market right now can cause even small trends to become exaggerated.

JPY – JPY Continues to Drop against USD

The yen continued to fall against the dollar throughout the day yesterday, as investors continue to shift their funds toward safe haven assets. Negative news out of Europe has continued to boost the dollar, often at the expense of the Japanese currency. The USD/JPY hit a three-week high yesterday, although the pair seems to have now stabilized and may even see a downward trend ahead of the Christmas holiday.

Against the euro, the yen has fared significantly better. The EUR/JPY pair has dropped very close to the psychologically significant 101.00 level. Should the pair breach that support line, further downward movement may take place.

Turning to today, the low liquidity environment in the marketplace means that current trends will likely maintain. That being said, traders will want to pay attention to the US news set to be released today. Any surprise results will likely impact yen pairs.

Crude Oil – Oil Prices Jump amid Possible Increase in US Demand

Crude oil experienced a hectic trading day yesterday, as improvements in the US economy led to forecasts that American demand for the commodity may increase in the near future. Analysts were also quick to add that demand for crude oil typically increases during the cold winter months in the United States.

Bullish sentiment was somewhat offset by the negative news coming out of the euro-zone. The on-going debt crisis continues to weigh down on crude prices. Still, with the commodity likely to breach the psychologically significant $100 a barrel line, traders may want to go bullish ahead of the Christmas holiday.

Technical News

EUR/USD

On a weekly basis the EUR/USD broke some important technical barriers, closing below the rising trend line from the January and October lows. The weekly close 1.3045 was also in-line with the 61% Fibonacci retracement from the 2010-2011 bullish trend. While weekly stochastics are currently oversold the monthly stochastics may have room to run lower. The January low of 1.2870 is the near-term support with additional support coming in at 1.2665 from the monthly chart off of the 2008 and 2010 lows. Resistance is back at 1.3140 and the 20-day moving average of 1.3275, followed by the December high of 1.3550.

GBP/USD

Sterling has consistently been sold at previous resistance levels and with falling weekly and monthly stochastics this strategy could remain intact. Initial support is found at Friday’s high of 1.5560 and the pair may have scope back to the range between the 55-day moving average at 1.5740 and the late November high of 1.5775. Any rally could be capped at 1.5890 from the falling trend line off of the August and October highs. The test for sterling shorts will come at the October low of 1.5270. A break here may find support at the trend line stemming from the January 2009 low which is found at 1.5100.

USD/JPY

The USD/JPY is encroaching on its trend line from the 2007 high which comes in at 78.30. Weekly and monthly stocahstics are both moving higher and a break above the trend would expose the post-intervention high of 79.50 and the August high of 80.20. A failure to make a significant close above the trend line could have the USD/JPY testing the December low of 77.50 and the November low of 76.55.

USD/CHF

Last week’s break above the 0.9330 resistance opens the door to this year’s high of 0.9782 as well as the December high of 1.0065. The falling trend line from the 2003 trend line comes in at 1.1165 and makes for a long term resistance level. To the downside 0.9330 will now act as a support followed by the late November low of 0.9065 and the 200-day moving average at 0.8925.

The Wild Card

EUR/JPY

The EUR/JPY is a textbook example of how broken support levels turn into resistance. The November low of 102.50 was breached by a swift move lower though the EUR/JPY slowly retraced back to this level. Yesterday the pair ran into selling pressure at the same price. Forex traders should now look to the supports at 100.75 and the 2010 low of 99.90.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By The Sizemore Letter

Turkcell is Charles Sizemore’s recommendation for InvestorPlace’s “10 Stocks for 2012.”  For more details and to view the other picks for the year, follow this link: 10 Stocks for 2012

Before falling to the Turks in 1453, Constantinople was known as the Queen of Cities across Europe and the Middle East.   No other city in the world could match its culture, sophistication and economic development.  The city sat at the intersection of the Mediterranean and the Black Sea, the West and the East, Europe and Asia.  It was the axis around which the known world spun.

Modern Istanbul lacks the economic clout of a New York, London, or Hong Kong—for now.  But as it did in its former days of grandeur, Turkey finds itself at the center of several very powerful forces.  It is the bridge between a wealthy but economically distressed Europe and a poor but growing Middle East.  It is a European country with a customs agreement with the European Union; but it is also an emerging economic and political leader in the Islamic world.  And while much of the Islamic world—and non-Muslim developing countries like Russia and China—is still struggling through the unstable transition from autocracy to democracy, Turkey is a good 20 years ahead of most of the pack.

The “BRICS” of Brazil, Russia, India and China may get most of the press, but Turkey has one of the brightest futures among emerging market contenders.  Turkey has a younger population than any of the BRICS save India, yet fertility rates have recently fallen to Western levels; this puts the country in a demographic sweet spot for falling inflation and rising real consumer spending growth for decades to come.

Of course, the downside to being at the crossroads of Europe and the Middle East is that Turkey finds itself sandwiched between the two most problematic regions of the world. Europe is struggling to contain its sovereign debt crisis, and the Middle East has been wracked by social revolution and the threat of war against Iran.

Not surprisingly, Turkish stocks have taken a beating.  The MSCI Turkey Index is down nearly 50 percent since October of last year.

If you believe, as I do, that Turkey has one of the brightest futures of any country on the planet, then the crises on Turkey’s borders should be viewed as a phenomenal opportunity to buy shares of some of Turkey’s finest companies.  And my choice for 2012 is mobile phone operator Turkcell Iletisim Hizmetleri AS (NYSE: $TKC).

Figure 1: Turkcell (NYSE: TKC)

It’s been a rough year for Turkcell shareholders.  Actually, it’s been a rough several years.  The share price is barely a third of its pre-crisis level, and earlier this year it came close to falling below its 2008 meltdown lows.  Investors fleeing the volatility of Europe and the Middle East have had little use for a Turkish bluechip like Turkcell.

Their loss is our gain.  There is no object more essential to life in the modern world than the mobile phone, and Turkcell is the dominant wireless carrier in Turkey with a 54 percent market share.  And while mobile phones are ubiquitous in Turkey, the overall market is far from saturated.  Market penetration is at about 2/3 of the European average.  And smart phones—with their lucrative data plans—represent only 10% of Turkish cell phone users.

Turkey, while the biggest, is far from Turkcell’s only market.  The company is also a major player across Eastern Europe and the Middle East, and Turkcell is the market leader in five of the nine countries in which it operates.  The key to take away from this is that telephony is still a growth industry in most emerging markets, and Turkcell is a fine company in a great position to profit from that growth.

In Turkcell, we have:

• A world-class company with a dominant market position in a dynamic emerging economy
• A company that sells service that has become a basic necessity for both consumers and businesses—meaning that it is recession resistant
• Great opportunity for growth
• A direct play on the Turkish consumer

Turkcell is also a conservatively financed company.  The company has no net debt, and a third of its balance sheet is cold, hard cash.  Turkcell has $3.73 per share in cash; not bad considering the stock price is currently less than $12.

Skeptical investors might well be wondering: What’s the catch?

If investing were this simple, it wouldn’t be fun.

Most good value stocks have a few black marks that have caused them to fall out of favor with investors, and Turkcell is no exception.Turkcell’s board of directors has had an on-again, off-again power struggle between two shareholder groups that reached a boiling point earlier in 2011.   The company missed its dividend payment, not because it couldn’t afford it (it most assuredly could) but because the board couldn’t stop bickering long enough to approve it.  Markets hate uncertainty and the uncertainty plaguing this stock explains a fair bit of its underperformance of late.

The board situation will get fixed soon.  In the meantime, life goes on and the company continues to grow and prosper.  When the dividend payment is resumed, I expect it to be in the ballpark of 5 percent.  In the meantime, investors can buy a piece of one of the finest emerging market telecom companies in existence trading for just 9 times expected 2012 earnings.

Action to take: Buy shares of Turkcell and plan to hold for the duration of 2012.

If you liked this article by Sizemore Insights, you’d probably enjoy The Sizemore Investment Letter, our premium members-only newsletter. Click here for more information.

The Central Bank of the Republic of Turkey kept its benchmark 1-week repo rate unchanged at 5.75%.  The Bank said: “The Committee has indicated that tight monetary policy should be maintained for a while in order to keep inflation outlook consistent with the medium term targets. However, given the prevailing uncertainties regarding global economy, it would be appropriate to preserve the flexibility of monetary policy. Therefore, the impact of the measures undertaken on credit, domestic demand, and inflation expectations will be monitored closely and the amount of Turkish lira funding via one-week repo auctions will be timely adjusted on either direction, if needed.”

The Turkish central bank last cut the benchmark rate by 50 basis points when it held an emergency meeting in early August, the bank also cut its benchmark interest rate by 25 basis points to 6.25% in January this year.  The Turkish central bank also adjusted required reserves in late July.  Turkey reported annual consumer price inflation of 7.7% in October, compared to 6.7% in August, 6.3% in July, 6.2% in June, 7.2% in May, 4.26% in April, and 3.99% in March, and above the Bank’s full year inflation target of 5.5%.  

By Elliott Wave International

The following series is excerpted from two classic issues of Robert Prechter’s Elliott Wave Theorist. Although originally published in 2004, the valuable series has been re-released in the Independent Investor eBook, along with over 100 pages of other reports that challenge conventional economic thinking.

Here is Part II of the series. You can read Part I here. Check back in a few days to read Part III, or you can download your free copy of the Independent Investor eBook here.

Action and Reaction
In the world of physics, action is followed by reaction. Most financial analysts, economists, historians, sociologists and futurists believe that society works the same way. They typically say, “Because so-and-so has happened, such-and-such will follow.” The news headlines in Figure 1, for example, reflect what economists tell reporters: Good economic news makes the stock market go up; bad economic news makes it go down. But is it true?

Figure 2 shows the Dow Jones Industrial Average and the quarter-by-quarter performance of the U.S. economy. Much of the time, the trends are allied, but if physics reigned in this realm, they would always be allied. They aren’t. The fourth quarter of 1987 saw the strongest GDP quarter in a 15-year span (from 1984 through 1999). That was also the biggest down quarter in stock prices for the entire period. Action in the economy did not produce reaction in stocks. The four-year period from March 1976 to March 1980 had not a single down quarter of GDP and included the biggest single positive quarter for 20 years on either side. Yet the DJIA lost 25 percent of its value during that period. Had you known the economic figures in advance and believed that financial laws are the same as physical laws, you would have bought stocks in both cases. You would have lost a lot of money.

Figure 3 shows the S&P against quarterly earnings in 1973-1974. Did action in earnings produce reaction in the stock market? Not unless you consider rising earnings bad news. While earning rose persistently in 1973-1974, the stock market had its biggest decline in over 40 years.

Suppose you knew for certain that inflation would triple the money supply over the next 20 years. What would you predict for the price of gold? Most analysts and investors are certain that inflation makes gold go up in price. They view financial pricing as simple action and reaction, as in physics. They reason that a rising money supply reduces the value of each purchasing unit, so the price of gold, which is an alternative to money, will reflect that change, increment for increment.

Figure 4 shows a time when the money supply tripled yet gold lost over half its value. In other words, gold not only failed to reflect the amount of inflation that occurred but also failed even to go in the same direction. It failed the prediction from physics by a whopping factor of six, thereby unequivocally invalidating it. (I was generous in ending the study now rather than in 2001, at which time gold had lost over two-thirds of its value.)

It does no good to say — as we sometimes hear from those attempting to rescue the physics paradigm in finance — that gold will follow the money supply “eventually.” In physics, billiard balls on an endless plane do not eventually return to a straight path after wandering all over the place, including in the reverse direction from the way they are hit. (What physics-minded investor, moreover, can be sure that gold should follow the money supply rather than vice versa? Is he certain which element in the picture should be presumed to be the action and which the reaction? Maybe a higher gold price increases the value of central banks’ gold reserves, letting them support more lending. Cause and effect arguments are highly manipulable when using the physics paradigm.)

We do know one thing: Investors who feared inflation in January 1980 were right, yet they lost dollar value for two decades, lost even more buying power because the dollar itself was losing value against goods and services, and lost even more wealth in the form of missed opportunities in other markets. Gold’s bear market produced more than a 90 percent loss in terms of gold’s average purchasing power of goods, services, homes and corporate shares despite persistent inflation! How is such an outcome possible? Easy: Financial markets are not a matter of action and reaction. The physics model of financial markets is wrong.

Learn to Think Independently — Download Your Free Independent Investor eBook “The Stock Market is Not Physics” is just one report in the more than 100 page, two-volume Independent Investor eBook. You’ll get some of the most groundbreaking and eye-opening reports ever published in Elliott Wave International’s 30-year history; you’ll also get new analysis, forecasts and commentary to help you think independently in today’s tumultuous market. Download Your Free eBook Now.

By MoneyMorning.com.au

There are two questions that have befuddled investors for years.

When is the best time to buy stocks?

And, when is the best time to sell stocks?

Neither question has ever been – and probably never will be – finally answered.

The reason these questions will stay unanswered is that there’s no single “best time” to buy and sell stocks.

When you’re dealing with speculative stocks that’s where the art of stock speculation comes into play.

Because at any point in time, a stock is a buy or a sell. It’s just a question of the size of the return you expect. Let’s explain it this way using a homemade chart we published in the January 2011 issue of Australian Small-Cap Investigator.

We call it the…

Simply put, all stocks, but especially small-cap stocks go through a series of ups and downs. But contrary to what some people think, these price moves aren’t random. They are affected by investor hopes for a stock.

For instance, an investor who buys a speculative stock early while it’s still trading for 3 cents per share (point 1 on the chart), has a different attitude to a new investor who paid 50 cents per share (point 2 on the chart).

If the share price stays at 50 cents the second investor will break even. If it goes to 60 cents, the investor will make a 20% gain. On the other hand, the first investor has made a 1,566% gain at 50 cents, but could turn it into a 1,900% gain if it goes to 60 cents.

The point is, which investor is more likely to sell first if the share price doesn’t go up? The first or second investor? The truth is, we don’t know. Individual investors think for themselves, so there’s no way of knowing exactly who would do what.

But what we do know is that when the investor outlook changes, speculative stocks will fall.

Until they reach a point where investors are prepared to buy (point 3 on the chart). Because now those investors still believe the stock will go to 60 cents. But instead of paying 50 cents for a 20% return they’re now able to pay – say – 10 cents for a 500% return.

The thing is, nothing about the company has changed. All that’s changed is investor sentiment. They won’t now pay 50 cents for a stock worth 60 cents, but they will pay 10 cents.

Early, Late and Next Stage Investors of Speculative Stocks

It was a stock tipped in Australian Small-Cap Investigator as long ago as 2008. You can see how the small-cap effect has worked on Lynas over the past five years:

The numbers on the chart aren’t anything to do with technical analysis. We’re simply using these numbers as reference points to explain the small-cap effect… where at Point 1 you get early investors. At Point 2 in come the late investors. And at Point 3 you get the next stage Investors as speculators figure out if the price is cheap or still too expensive.

During that time, Lynas Corp has traded as low as 10 cents… and as high as $2.70. Today it’s trading for $1.15. Yet over the five years, what’s changed?

It’s still a rare earths company. It still has the same big hole in the ground today as it did three years ago. It’s still trying to get approval for a processing plant in Malaysia. And it’s still trying to make a buck by busting the Chinese stranglehold for rare earths.

OK, it has built the Malaysian processing plant… but it’s now held up due to potential environmental delays. And another thing to change is the rare earths price which has gained 663% in three years… although the price has dropped 42% from this peak in just the past two months.

But aside from that, the main thing that changes is investor attitudes. Punters may have thought the Lynas share price would go higher in 2011, but they didn’t want to pay $2.70 for the privilege of owning it.

So today it’s back to $1.15 and the price is levelling off. This is where punters start figuring out if the stock is cheap or whether it’s still expensive.

However, there’s one other thing to note. Lynas is no more profitable today than it was in 2009. But that didn’t stop the share price gaining 2,600% in two years.

The Art of Stock Speculation

That’s the real art of small-cap stock speculation. You don’t have to wait around until the company makes money. In fact, you could argue that’s the last thing you want to do.

Because by the time it gets to the real money-making stage, most of the risk of investing in the company has gone. That’s when the company becomes a safe blue-chip, perhaps even paying out a dividend.

If you want to make the big returns, the best time to get in is early on (points 1 on the chart). This is when the speculative stock is at its most risky. But it’s also where you get the biggest returns.

Whether the company ever makes a dollar of profit while you own the stock is irrelevant. What you need to do is see the potential and get in early. It’s how we played the silver story in late 2009, getting in to a silver stock while the silver price was still low.

And it’s how we tipped natural gas stocks in 2008… and today we’re taking a similar approach. In the December issue of Australian Small-Cap Investigator we laid down the three sectors we believe are set for gains in 2012… and how subscribers can take part in these gains by using the strategy we’ve just shown you above to buy in at the right points.

It’s a high-risk strategy. But if we get it right the payoff will mean big triple-digit percentage gains.

If you’d like to find out more about it, click here…

Cheers.
Kris

P.S. The latest issue of Australian Small-Cap Investigator lays out my thoughts on where the market will head next year… and the three best sectors set to gain. To find out more, click here…

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The Secret Aussie ‘Bank Run’ is a Sign to Buy Gold

Why Gold Should Become Your ‘Stay Rich’ Asset

From the Archives…

A More Profitable Investment Than Cheap Gold?
2011-12-16 – Aaron Tyrrell

The Best Property Investment in the World
2011-12-15 – Aaron Tyrrell

Is This the Gold Buying Dip You’ve Waited For?
2011-12-14 – Kris Sayce

Is Now a Good Time to Invest in Stocks?
2011-12-13 – Kris Sayce

Why You Shouldn’t Trust Your Gold to a Banker
2011-12-12 – Kris Sayce

For editorial enquiries and feedback, email [email protected]

Speculative Stocks and the Art of Stock Speculation

10 Electric Vehicle Trends to Watch in 2012

by David Fessler, Investment U Senior Analyst
Thursday, December 22, 2011

Yesterday, after nearly a year of waiting, I finally got to order my Nissan LEAF. It’s the first affordable, plug-in electric vehicle (PEV) available to the masses. The Chevy Volt, while touted as an EV, is really a plug-in hybrid electric vehicle (PHEV). It still has a gas tank, an engine and an exhaust system.

I should receive my LEAF next March or April. It’ll be the first one in my area, and one of the first in Pennsylvania.

In about a week or so, my “oil well” should be producing “oil” to fuel my LEAF. Translated, my 10-kilowatt (kW) solar panel array should be live, and connected to the grid.

The system has been finished for over two weeks, but I’m still not connected to the grid. My local power company is in no particular hurry to switch my service over and connect the panels.

I’m not surprised. Solar and wind power, and electric vehicles (EVs), have been less than enthusiastically received by the general public, and even less so by the electric utilities.

They have to manage the additional supply delivered by a solar field or wind generator. They also have the opposite problem when EV owners plug in their cars for charging.

Why all the kicking and screaming? In large part, it’s due to something called the human “normalcy bias.” The idea is that humans will keep doing something the same way, over and over, until they get hit on the side of the head with a two-by-four.

Buying and driving a gasoline-powered car is something most adults have done their entire lives. We know nothing else, nor have we even had a choice… until now.

I’m trying to avoid the two-by-four. You see, I think oil prices are headed up, and much faster than anyone realizes. When the oil price tipping point is reached, EVs will all of a sudden make all the sense in the world.

Many automobile companies are, rightly or wrongly, anticipating this tipping point. They’re in the midst of designing and introducing more and more EV models.

While Nissan beat all others to the punch with an affordable PEV (I’m excluding the $98,000-plus Tesla Roadster here), consumers will shortly have a wide variety of makes and models to choose from.

In 2012, Ford is coming out with the Focus EV all-electric. Toyota’s adding a plug to its popular Prius Hybrid. Tesla is working on a cheaper EV sedan, dubbed the Model S, and Volvo is introducing the all-electric V-70. There are more coming right behind them.

EVs for Dummies… and the Rest of Us

One of the biggest hurdles faced by EV manufacturers is educating the consumer, and it will be their focus in 2012, according to Pike Research, LLC. Few understand the difference between a PEV and a PHEV.

Maintenance costs for PEVs are drastically reduced when compared to an internal combustion engine (ICE)-powered vehicle. There are no oil changes. Brakes and rotors last over 100,000 miles. There’s no emissions testing, because there’s no tailpipe. PHEV owners still have to contend with all these things, since their cars still have ICEs.

In relatively short order, both China and Japan will zoom past the adoption of both EVs and vehicle-to-grid (V2G) technology. V2G gives EV owners the ability to allow utilities to use their battery pack as a source of energy when connected to its charging station.

10 EV Trends to Watch in 2012

Pike Research LLC, the leading clean-tech market intelligence research organization, recently published a white paper entitled Electric Vehicles: Ten Predictions for 2012. It’s forecasting the global EV market to reach 250,000 vehicles worldwide next year.

Here’s a synopsis of their predictions:

#1 The global availability and increasing sales of EVs will put an end to the “Are they for real?” speculation.

Pike believes 2012 will be the transitional year for EVs, as more models become available, and even more are announced.

#2 Car sharing services will expand the market for EVs and hybrids.

Right now, at least 10 car-sharing services are offering EVs to rent. Car sharing appeals to younger, environmentally conscious urban dwellers. Avis and Hertz are the most recognizable names, and more are jumping on this hot trend all the time.

#3 Battery production will get ahead of vehicle production.

Numerous battery companies have factories geared up to produce more batteries than manufacturers can use. Delayed model launches and slow consumer acceptance will likely result in battery prices dropping faster than expected (good news). Some manufacturers are directing excess capacity towards the grid energy storage market, also in its nascent stages.

#4 Road tax legislation in the United States that will require PEV owner contributions will fail.

Right now, PEV owners who bypass the gas station won’t be paying any road use taxes, which are part of every gallon of gas purchased. A number of state bills that would force owners to pay a vehicle miles traveled (VMT) tax have died on the vine.

A yearly fee based on average miles driven will ultimately be the tax that will pass.

#5 The Asia-Pacific region will become the early leader in vehicle-to-grid (V2G).

Since EV penetration will be highest here before anywhere else, V2G will be implemented here first, and quickly dominate the market. The unreliability of the grid in this region will be greatly improved with the use of V2G technology.

#6 PEV prices will continue to disappoint many consumers.

Early adopters will pay more. The battery glut, if it shows up at all, won’t be reflected in EV prices before 2013 or 2014. Early adopters will pay for the huge investment that EV companies made in assembly lines and battery and motor technology.

Ultimately, we could see prices in the low $20,000 range, but that target is a few years out.

#7 Third-party EV charging companies will dominate public charging sales.

Grocery stores, drug stores and other commercial establishments looking to attract EV owners have two choices. They can purchase and maintain the charging equipment themselves, set the fee structure, or give the power away free in order to attract customers.

The alternative is to have a third party install and maintain it. Pike feels this will be the more attractive of the two. Wal-Mart, Icon Parking Group and Simon Property Group (large mall owner) are all opting for the third-party route.

#8 Germany, South Korea and Japan will see the most progress towards the commercialization of fuel cell vehicles (FCVs) in 2012.

According to Pike, 2015 marks the start of the commercial rollout of FCVs. But it won’t be here in the United States. The Department of Energy’s shift away from FCVs towards EVs leaves some uncertainty in their adoption here.

#9 Employers will begin to purchase EV chargers in large numbers.

Companies who want to attract young professionals with EVs will begin to install them in large numbers. Already Google, Adobe, SAP and others have installed dozens at their U.S. facilities. 2012 will see hundreds of other global companies following their lead.

Sales in North America could exceed 5,000 units, while the Asia Pacific region could hit 18,000, according to Pike’s report.

#10 EVs will begin to function as home appliances.

Pike reports that many automakers are adopting the HomePlug Green PHY communications standard. This will allow information about the EV to be passed over the power line to other smart-grid enabled devices, insuring they don’t all turn on at the same time.

In summary, 2012 looks to be a big transitional year for EVs worldwide. We’ll take a look next year and see how many of Pike’s predictions have come to pass.

From an investment standpoint, charging station manufacturers like AeroVironment, Inc. (Nasdaq: AVAV) are still the single best way to play the growing EV market. Their business should really start to accelerate in 2012.

Good Investing,

David Fessler

Article by Investment U

By The Sizemore Letter

With Europe’s politicians continuing to stumble from one summit to another without a realistic plan for resolving the sovereign debt crisis, the one European institution that is keeping the entire system afloat is the European Central Bank.  The ECB gave the capital markets a boost earlier this month when it announced that it would provide virtually unlimited liquidity to Europe’s ailing banks in the form of low-interest loans of up to three years.  Data released this week show that Europe’s banks have accepted the ECB’s offer with enthusiasm; 523 banks borrowed nearly half a trillion euros according to Reuters.

This was an enormous step forward, but a little perspective is necessary here.  The move more or less eliminates the risk of a disorderly default by a major bank—a “Lehman Brothers moment,” if you will.  But it most assuredly does nothing to assist Europe’s indebted countries, nor does it do anything to mitigate the risk that a sovereign default could turn the capital markets upside down.

French President Nicolas Sarkozy effectively showed the rest of the world his cards when he suggested that banks could borrow unlimited funds from the ECB under this arrangement and then use them to purchase the government bonds of their respective home countries.  In theory, this could work.  Spanish and Italian banks could be “lenders of last resort” to their cash-strapped government, stabilizing the bond markets and bringing yields back down to earth.

But if this is what Mr. Sarkozy is proposing as a “solution” to the debt crisis, I fear the French President may be in for a disappointment.

It was excessive purchasing of sovereign debt that got banks into this mess to begin with.  If government bonds were “risk free,” then buying them with cheaply borrowed money makes a lot of sense.  But as recent events have proven, European debt is anything but risk free.  What banker in his or her right mind would continue to throw good money after bad?  And how would this be in the best interests of their shareholders?

Meanwhile, European banks are already under enormous pressure to shrink their balance sheets, reduce their risky assets, and deleverage themselves…and to do this while simultaneously keeping the lifeblood of credit flowing to European companies and consumers.  Bank funds used to buy government bonds are bank funds that cannot be lent in the real economy.  And given that Europe may already technically be in recession, is this what Mr. Sarkozy wants?

And so the crisis rages on.

For banks—or any investors, for that matter—to be buyers of Italian and Spanish debt, they need to be confident that they will get their money back.  And for this to happen we need to see one of two developments, both of which are currently off the table:

1. A massive increase in direct buying of the troubled countries’ sovereign debt by the European Central Bank on a scale big enough to drive down interest rates.
2. Some sort of “Eurobond” scheme that shares liability across the Eurozone.

The proposed EU treaty changes that would enforce budgetary discipline would also do a fair bit to repair shattered confidence in the market, though even this alone is not sufficient without one or both of the options above.

Until Europe’s leaders accept what the markets are currently screaming at them, we can expect more months of on again, off again volatility.  Brace yourself; it’s going to be a wild ride.

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How Will Kim Jong-il’s Death Affect Global Markets?

by Jeannette Di Louie, Investment U Research
Monday, December 19, 2011

Kim Jong-il, North Korea’s “Dear Leader” – or crazed dictator, depending on whom you ask – died on Sunday, December 17. According to the official Korean Central News Agency, he suffered a heart attack due to all of the mental and physical stress he was under.

Of course, considering the state of the highly secretive nation of North Korea, we might never know whether that’s the truth or not. Even the country’s next door neighbor, South Korea, can only speculate that Kim may have had a stroke in 2008 and/or been diagnosed with cancer after that.

Global markets didn’t seem to really care how he died though; only that he did. On Monday, December 19, the first trading day after the news hit, Business Insider reported:

“European stock markets were mixed to lower on Monday, as investor confidence waned after the announcement of North-Korean leader Kim Jong-il’s death and amid ongoing concerns of mass downgrades in the Eurozone.”

More than likely, the health of the combined European economy weighed far more heavily on investor’s minds out of the two. But even so, everybody knows that most markets don’t like uncertainty, and can perform irrationally over the slightest hint of it at times.

And let’s face it: The previous North Korean regime, headed by Kim Jong-il, thrived on keeping the rest of the world as unsure as possible.

Now the world has to wonder whether his son will do the same.

Kim Jong-il Leaves All to Kim Jong-un

Kim Jong-un, the third son of Ki Jong-il, first came to global attention in 2009 when his father officially appointed him his successor. But while the world had practically three years to digest that information, we know nearly as little about him today as we did before his promotion.

And what little we do know about him isn’t very comforting…

The Younger Kim has lived his entire life in North Korea, surrounded by his father’s communist policies, which were enforced by his father’s unquestioned dictatorship. His worldview is therefore likely narrow and unyielding.

Worse yet, he has some seriously scary boots to fill if he wants to live up to his father’s (and there has been no indication that he doesn’t want to fill them). So focused on building up his country’s military might, Kim Jong-il not only bullied the United Nations and the international community repeatedly, but also impoverished his own people who are even now dying of malnutrition and starvation.

And the Markets Go on

As evidenced by the enormous rally global markets experienced on Tuesday, most investors don’t seem to care long term – or even mid term – about who’s leading North Korea.

And really, that’s still up for grabs.

Only 28 years old, Kim Jong-un isn’t the only member of his family with a claim to the throne. Both of his older brothers were once considered likely successors and his uncle by marriage, Chang Song-taek, might very well have been running the government for years now, just behind the scenes.

If Kim remains in power, it will likely be because his uncle can use him as a puppet or because he has cracked down heavily on dissenters. Neither bodes well for the rest of the world.

Yet for better or for worse, the world seems much more focused on the economic health of Europe and the United States. Everything else pales in comparison these days.

More than likely, North Korea and its new “Dear Leader” – or whatever title Kim Jong-un plans to take – will play the same game it has for years: develop its nuclear program, starve its people and make a sometimes painful nuisance out of itself in the international community.

But if it affects the markets in any large way going forward, it will only do so sporadically.

Good Investing,

Jeannette Di Louie

Article by Investment U

Dec. 22 (Bloomberg) — Bloomberg’s Zeb Eckert reports on the outlook for economic relations between North and South Korea after the death of Kim Jong Il. Eighty percent of South Korea’s 20 largest business groups are concerned Kim’s death will pose a risk to their business, the Herald Business reported Dec. 20, citing its survey of executives at the companies. Nine of them responded they will factor in the risk for their business plans for next year, according to the report. (Source: Bloomberg)