David Fessler (Investment U):

As the old saying goes, “You’re either a contrarian, or a victim.”

It just so happens that one of the savviest contrarians I know is my colleague, Louis Basenese.

And nobody takes that to heart more than Lou does. I’ve scratched my head in bewilderment on many occasions after reading one of Lou’s bold predictions – only to see his intuition prove uncanny time after time.

So today I’m stealing a page from the “Basenese Playbook” and taking a look at the severely battered transportation sector, one that pretty much everybody hates. However, I think, it’s not only about to come off life support, but perhaps become one of the hottest investments in 2010.

The Transportation Sector: The Market’s Most Important Domain

Airlines, railways, package carriers, even oil and gas pipelines are all industries that make up the transportation sector.

But why should you care about it?

Because transportation is actually the most important sector – and for good reason: growth or contraction here serves as a proxy for both U.S. and global economic growth.

It stands to reason that if more “stuff” is being shipped, it means companies are producing more goods to satisfy business and consumer demand. In turn, this is a good indication that the U.S. economy – and that of the rest of the globe – is in decent shape.

Right now, however, there’s a big change underway in U.S. freight transportation. Thing is though, it’s hardly received any attention. So let’s take a closer look…

And the World’s Most Efficient Transportation System Is…

Let me toss a few statistics your way…

Click here to read the rest of Mr. Fessler’s article at Investment U and uncover his three transportation sector picks.

Every business is affected by oil. As long as crude oil remains above US$80-$85 per barrel, I’m staying defensive in stocks. The market is slowly beginning to discount another difficult period ahead for corporate earnings.

With oil prices soaring nearly 40% in just three months, companies are going to start revising their expectations for the next 3-6 months just because input costs are squeezing margins. There is just no way earnings are going to boom in the midst of surging energy costs.

If companies are being squeezed by high oil, what about the consumer? Will the American consumer come to the rescue and support a flagging economy?

The government’s US$100 billion fiscal stimulus package is now hitting American households this month. But I’ve got to wonder what an average US$1,000 check will do to boost spending? With gas prices quickly approaching US$4 per gallon and food costs sharply higher over the last 12 months, any boost in discretionary spending will largely be directed towards energy and food, not a new car or a vacation.

The sub-prime crisis is now largely history. That’s the good news. The bad news is that a new wave of write-downs lies ahead in the consumer installment debt sector. We’re also approaching a storm for earnings expectations amid high oil prices, a protracted bear market in housing and a contraction in bank credit.

ERIC ROSEMAN, Investment Director

Source: Why I’m ‘Still’ Bearish on Stocks

This from the AP news wire:

The country’s economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday. The statistic did not meet what economists consider a definition of a recession, which is a contraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if slightly they say they believe that will likely happen during the current April-to-June period.

The question is: What will happen in the April-to-June period? Most analysts see the mighty US economy lurching into reverse during the second quarter.

Bill Bonner sees trouble ahead. “In a real economic downturn,” Bill says in The Daily Reckoning, “the United States (and other developed nations) would stop importing so much oil…and so much merchandise from China, which would have the consequence of reducing energy consumption by China too. Result: lower energy prices and a worldwide recession…maybe even the worst worldwide depression in history.

“What might be the consequences of such a depression? In the United States and Europe, probably nothing catastrophic. People in the developed nations live with a thick cushion under their derrieres. The bench might grow harder and less comfortable; assets would fall in price; earnings would decline (both for businesses and individuals); otherwise, life would go on as before.”

Andrew Gordon, in Investor’s Daily Edge, says optimism about the US economy is only going leave you sucker-punched and out of pocket.

“I’ve been begging analysts to get real and take off those rose-colored glasses for months now,” says Andrew. Their unwarranted optimism has resulted in two incredibly wrong-headed predictions 1. That the recession is short and shallow, and something resembling healthy growth will resume beginning in the second half of this year. 2.That company earnings will once again enter double-digit territory in the second half of this year.”