It’s boring because it can be repetitive and not really offer any excitement (other than making money). It’s profitable because it’s really easy to figure out when you’re wrong and get out at a small loss (the hope is that it doesn’t happen the first time you trade the stock!).

One recent example of a range-trading stock is ExxonMobil (NYSE:XOM).

Over the past three months, Exxon has traded within a roughly ten percent range. Every time it hits $74, it begins to rally back up to around $81, and then it falls back down to $74.

The way to play this pattern is simple. Every time the stock drops to around $74, buy shares in it (or buy a call option on it). When it reaches around $81, sell your shares and short the stock (or buy a put option) and stay in your position until it hits $74 again.

You should always position stop-losses in case you are wrong. If you buy at $74, a stop-loss at $72 would be good. That way you keep any potential losses small.

You see, there’s nothing too exciting about this pattern. In fact, it bores me to tears. But at least you can make money from it hand over fist.

But not Adam Lass, writing for the Taipan Publishing Group. He readily points out that ExxonMobil made $45.2 billion in pure profits last year alone. For a company producing enormous amounts of cash in a “Cash is king” economy, he recommends you stay long ExxonMobil.

This from Adam Lass:

Exxon Mobil has proven that they – and you! – can still make money in a recession.

The numbers are in and it’s official: The tail end of 2008 stank too, making for a complete set of matching god-awful quarters.

Starting at the top, U.S. GDP “officially” shrank 3.8% in Q4, supposedly the worst performance in the past quarter century. For the year (come on, I have to do this, but read it fast, like pulling off a Band-Aid or such), the Commerce Department says we grew a mere 1.3%, down from a blistering 2% in 2007.

But wait (as they like to say on those cheap TV ads for Chinese tomato slicers): There’s more! This is only a “preliminary number,” Commerce warns in the fine print, and subject to downward revision once no one is paying attention.

Feeling bummed yet? Down in the mouth? It gets worse before it gets better. (It does, however, get better by the end, so please, bear with me and read on.)

Bad News and Worse?

Remember when Professor Nouriel Roubini was considered a rogue outsider for his steadfast insistence that we were headed for a fall? Now he is lauded at Davos as prescient by the very folks who used to excoriate him.

Roubini celebrated his ascendancy to the “in-crowd” by musing as to whether we might be in a genuine depression: “I’m not a permanent bear. I’ll be the first to call for a recovery, but I just don’t see it yet, and it just keeps getting uglier.”

Roubini wasn’t the only one moping about Davos last week. Megalithic publisher Rupert Murdoch notes that people worldwide are “depressed and traumatized” as their life savings evaporates: “It really doesn’t matter where you’re talking about in the world. There’s no hiding place…”

Upon hearing such moaning and groaning, analysts promptly downgraded Murdoch’s News Corp (NWSA: NASDAQ) for the fifth time in five months. “While we have long viewed Rupert Murdoch as the most visionary CEO… we are increasingly surprised/frustrated with his lack of strategic direction.”

How to Turn Wall Street’s Pain Into a Quick 347% Gain!

While current market conditions are treacherous for naive “buy and hold” investors, a small group of smart folks are converting the market slide into gains of 251%… 307%… even 387%… week in and week out… no matter how far the Dow falls. Here’s how you can join them — free — for a full six months!

No Reason to Quit

Hey guys: It’s hard to remember that your goal was to drain the swamp when you are up to your behind in alligators. That’s what makes it a depression – everyone gets so damned depressed they can’t see anything good coming down the pike. “It’s bad now, and it’ll always be like this.”

It ain’t true when your gawky 13-year-old drama-queen daughter says it about middle school, and it ain’t true when mawkish down-in-the-mouth analysts and petrified economists say it about the stock market.

Oh, I’m not saying that times are good, or that it’s easy for a company to gin up profits these days. Lord knows the list of folks announcing losses is as long as my arm. And quite frankly some of them deserve it.

Sorting Out the Winners

I mean come on: Kodak (EK: NYSE) could have stayed king of the imaging hill, but they chose to ignore digital as a mere fad. Boeing (BA: NYSE) allowed a labor strike to deprive it of the last good year it will probably enjoy for some time to come. And poor old Ford (F: NYSE) may actually have a tough-minded visionary at the helm, but it is an auto manufacturer in a year when that is simply the wrong business to be in.

But there are companies out there bucking even this horrendous headwind, by making a great deal of money for their stockholders. Exxon Mobil (XOM: NYSE) for example, has just announced that they not only made money, they made $45.2 billion in 2008. That is more profits than anyone else. Anywhere. Ever.

The funny thing about Exxon Mobil is that no matter how many times they put out this statement, no one ever believes that they can do it again. “It’s a fluke! Oil prices are too high… oil prices are too low… yadda, yadda, yadda.”

“They Can’t Possibly Do It Again” (and Again and Again and Again)

This season’s complaint is that Exxon Mobil’s profits for the last quarter are down 33% from the previous quarter one year ago, because they produced 1% less raw product. They do seem to have managed to make $7.82 billion dollars anyway.

Look, I understand as much as the next guy that past performance does not necessarily indicate future gains. And yes, times are hard and threatening to get worse.

But you shouldn’t let depression blind you to the fact that XOM is still producing enormous quantities of cash during the worst quarter in the past quarter century… a quarter that saw most of their friends on the exchange floor losing their shirts (and their lunches).

So yes, I was – and am still – long XOM shares and XOM calls.

Source: All-Bad-Everywhere-Forever? Nonsense…

I have been extensively researching the global energy crisis that’s now underway. My research is uncovering some very interesting investment candidates with lots of profit potential. The interesting thing is…NONE of these firms are traditional big oil & gas firms that investors are so fond of.

Crude oil soared as high as US$135 a barrel last week – more than double the price of a year ago. But big oil firms like ExxonMobil WILL NOT be cashing in on the next phase of the energy boom.

Instead, the richest investment opportunities can be found in the fast-emerging alternative energy sector.

That’s where oilman T. Boone Pickens is putting his money – his company Mesa Power just placed an order for US$2 billion in wind turbines. And there’s much more profit potential in other parts of the alternative energy sector too – especially alternative fuel.

• The market for ALL alternative energy sources grew 40% last year alone to US$77.3 billion and will explode into a US$250 billion industry within 10 years.
• Bio-fuel grew to a US$25.4 billion market last with more than 15 billion gallons of ethanol and biodiesel produced globally – more than double the output of just four years ago.
• The worldwide Bio-fuel industry will continue to enjoy explosive growth for years to come – expanding into a US$81 billion business within the next 10-years!

But you don’t have to wait two decades or even two years to start making serious money from this energy-sector market shock…

Fossil fuels are dead – the future belongs to alternative energy. Vast fortunes will be made in the “great fuel revolution!”

MIKE BURNICK, Senior Editor & Global Markets Analyst

P.S. I’m pulling the trigger on my first market-shock recommendations to take advantage of the great fuel revolution. My first pick is a renegade oil firm that develops “HemiCell-190″, which already powers 2.6 million cars. My second selection is a “giant killer” that just scooped-up gold-mine in alternative energy assets that ExxonMobil threw away. Subscribers to my signature research investment service Market Shock Trader will be hearing from me about even more ways to profit. Very soon, I’ll be sending them specific rifle-shot plays to cash in on alternative energy!

Source: Legendary Oil Man Turns Back on Oil

To answer those questions we turn to a report published in late March by UBS energy analyst Jon Rigby and his team in London. Their incredibly useful report is called, “Will there be enough production capacity?” UBS has been battered by its huge sub-prime related losses. But their work on where future oil production will actually come from nearly redeems them. They have asked just the right question at the right time, and answered it in detail.

The report reaches a number of surprising conclusions about the global oil market. It also includes a useful database of oil projects scheduled to enter production in the next five years. These are projects which could add meaningful capacity (100kbpd or more) to global oil production. We’ll look at who stands to benefit in a moment. But first, some of the report’s findings [emphasis added is ours]:

• “Declining existing basins, rising costs, increased technical challenges, stretched supply chains, geopolitical blocks and tightening fiscal terms all seem impediments to growing global production capacity for oil and gas, despite the clear pricing signals.
• “There is no obvious wall of new production coming to the market in response to high prices.”
• New projects scheduled to come on-line from National Oil Companies (NOCs) belong mostly to three major firms: Aramco, Petrobras, and Gazprom.
• New project cost is rising and becoming more technologically challenging, especially deep-water.
• “Nominal growth rates tied to global GDP now look more unrealistic as potential upstream growth slows. This appears reasonably consistent with a growing view that oil production may actually not exceed 100Mbbl/d.”

The idea that global oil production may never exceed 100mbbl/d is worth a much closer look. I’ll get to that later. But before we look at the end, let us look at the beginning of the end and where new production might come from as the world’s oil producers try to bridge the gap between 87mbpd and 117mbpd.

The good news is that there IS new production capacity in the pipeline this year and next. Keep in mind that the final investment decision on the projects entering into production this year was made anywhere from 3-6 years ago. That shows you how far in advance you have to plan for new production (assuming you’ve even found oil in the first place).

There is no such thing as just-in-time oil production. But let’s take a look at projects that will come on line between now and 2010. We’ve selected only those projects that will produce more than 200kbp or more:

If you include LNG and the barrels of oil equivalent produced from it, your list expands a little more to include the following projects:

Beyond 2010, the future is murkier. But the UBS team has identified projects for which the final investment decision has been made. Assuming cost blowouts can be avoided and the projects aren’t cancelled, here are some of the bigger projects that could come on-stream between 2011 and 2015:

There are some massive LNG and natural gas projects coming on-stream between 2011 and 2015. Gazprom, Shell, BP, and ExxonMobil all look like big winners, should oil prices stay high and pass through to higher LNG prices.

The new oil finds off-shore in Brazil’s Santos Basin are not included in the UBS report because they are not likely to enter into production during the next five years. They will be difficult to produce in any event. Petrobras says the Tupi find may contain as many as 8 million barrels, while the Carioca field may have 33 billion barrels of reserves, of which about 10 billion could be recoverable, according to Citigroup.

Current Production Trumps Reserves

One UBS claim which may surprise older oil hands is that, “the capacity to produce—not reserves—is critical to energy markets.” UBS does not conclude that current producers should be valued differently that companies with large reserves but current production challenges. But it’s worth thinking about.

When oil sells for $125 a barrel, it creates a two-pronged situation in the oil industry: 1) It encourages producers to turn on the pumps at full blast. This depletes fields faster… 2) It creates unbelievably large cash flows for the “biggies” like Chevron, Gazprom, and ExxonMobil. And they can direct those cash flows toward finding more oil… It adds up to huge demand for pumps, drill steel, offshore platforms, pipelines, and valves.

Those fundamentals sound great… but what is the market saying about it?

The market says, “I like it… Let’s send Tenaris, the world’s top maker of drilling pipe, to a new all-time high. Don’t forget new highs for Flowserve, the big maker of pipe valves, and Gulf Island Fabrication, the rig builder. New highs for everyone who operates land drills as well. And heck, let’s include the infamous Halliburton. After all, it’s a bull market in oil services!”

Source: The Market Likes the Bull Case for Oil Services

Q: I’ve made a lot of money in Petrobras. Now it looks like it’s expensive. What say you, Matt? – D.B.

A: By traditional measures like price to earnings, Petrobras is among the most expensive oil companies. That’s due in part to its incredible run. S&A Oil Report subscribers bought in February 2007 and are now up more than 160%.

But oil investors have more useful tools than the P/E ratio to evaluate the likes of Petrobras: lifting costs, discovery costs, netback, and the recycle ratio. These figures tell me nearly everything I need to know about the health and prosperity of an oil company…

Lifting costs tell us how much the company must spend to get a barrel of oil out of the ground. We want to see low lifting costs, which mean higher profits.

Discovery costs tell us how much money the company spends to find a new barrel of oil reserves… It reveals the success of the company’s exploration arm. The lower the number, the better.

Netback is the bottom line… the amount of money the company makes on each barrel it sells. In other words, the profit margin. I like this number because it tells us about both the quality of the oil and the efficiency of the company.

All these numbers are simplified in the recycle ratio…

The recycle ratio tells us how efficiently a company turns a barrel of reserves into a barrel of production. The higher the number, the better the company.

OK, now let’s get back to the question… Is Petrobras cheap or expensive? Here’s a quick comparison:

As you can see, according to the recycle ratio, Petrobras isn’t the best company out there. That’s because it’s primarily an offshore oil company. Offshore exploration and development is incredibly expensive. That same problem is hitting Chevron and Statoil.

I still like Petrobras, but I think most of the easy money’s been made.

Q: With the continued rise in the price of oil and gas, what form of alternative energy (biodiesel, ethanol, solar, wind, nuclear, hydrogen, etc.) do you think has the most potential to help meet future energy needs? – R.M.

A: First things first… we need to split these ideas into two parts – fuels for transport and fuels for electricity.

Oil is not electricity. Oil is transport – cars, boats, planes, trains. About 70% of all the oil we use in this country gets combusted to move us and our stuff from point A to point B.

Alternative transport fuels are tough. I’ll save my thoughts on biofuels for another essay… but I will say, I think natural gas and hydrogen are the right way to go.

As for electricity fuels… right now we use coal and natural gas. Like oil, those prices are on the rise.

I don’t believe nuclear energy is the solution to this problem, at least not in its current form. The dirty secret of the nuclear industry is that we still don’t have an adequate waste disposal system. While carbon dioxide pollution may let New Yorkers grow palm trees, radioactive waste will kill you.

Technical advances in hydroelectric generation eliminated the need to dam rivers. Now, all you need is a steep section of river. That’s great – right up until you have a drought.

Wind and solar face similar problems… You only get power when the wind happens to blow or the sun happens to shine. I think they’re too inconsistent to be large-scale solutions.

On the other hand, geothermal energy – heat from the Earth – is plentiful and cheap. I wrote a report about it last year, and I am conducting research for a new one on the subject right now. Keep an eye on your inbox.

Good investing,

Matt

P.S. If you have any questions on alternative energy investments… or any other commodities… e-mail me here.

Now, we may not be dealing with a bunch of Einsteins at the head of these oil majors, but they’re not dopes either. They understand what’s going on. So, why is it that when ExxonMobil, Royal Dutch Shell, BP, and ConocoPhillips all reported in the last two weeks, each and every one of them said the same thing.

Profits are up on price increases. And volume is flat. Let me repeat that. VOLUME IS FLAT. What the heck is going on?

Take these companies with market cap’s of several hundred billion dollars … the latest drilling technologies … thousands of acres … billions of barrels of proven reserves … tens of billions more of unproven reserves – add it all up and they can’t produce more oil this quarter than they did last quarter or the quarter before?

Have these companies gone OPEC on us?

I mean, we know that OPEC keeps production just low enough to keep prices high. But they only provide about 40% of the world’s oil.

What’s the excuse for these private oil majors? Have they also found it in their interests to keep a lid on production? (This wouldn’t be the first time we’ve seen a manufactured shortage to hike prices.)

I almost wish there were an unholy conspiracy between OPEC and the other oil producers. If there were such a thing, it might mean with a little arm-twisting, we could get non-OPEC producers to push up production.

But, alas, there is no conspiracy.

There is something else … something much more ominous…If we were talking about food, I’d say there’s a worldwide famine brewing. But it’s oil, which isn’t quite as brutal as a famine. People have to eat. But do they have to drive?

No. But a worldwide shortage of oil is knocking on the door. Right now, supplies are tight. But they are more or less in balance … with admittedly no excess capacity to spare. It’s not going to last. Global oil demand is about to leave oil supply in the dust.

Shell’s production fell six percent year-on-year. BP’s fell two percent. ExxonMobil’s fell 10 percent. According to Credit Suisse, overall production will fall two percent this year from last. I believe that underestimates the slide.

And while OPEC – being OPEC – has no quarrel with the soaring price of oil, the fact is, even OPEC countries (except for Saudi Arabia) can’t produce more than what they are now.

Saudi Arabia is producing 12.5 million bpd (barrels per day). It has plans to increase that amount to 15 million. Or should I say “had” plans. The Saudi government has put those expansion plans on hold. It doesn’t want to take the risk of expanding into the teeth of a global recession.

OPEC as a whole plans to increase oil production by five million bpd. That won’t be enough. Global demand should increase by 11.5 million bpd by 2030.

Russia came to our rescue in 1999 when it finally opened up its fields to Western participation. Russian production rose by four million bpd from 1996 to last year. During the same period, Saudi Arabia’s production increased by 600,000 bpd.

Can any of the non-OPEC countries come to our rescue once again? Russia won’t. It’s too busy renationalizing its oil and gas industry.

Mexico? Nope. Their Cantarell field is getting long in the tooth.

England? Norway? No, their North Sea production is winding down.

Venezuela? Don’t make me laugh. Mr. Hugo Chavez is more intent on using his petro-profits as a tool of foreign policy, not plowing them back into oil production to help lower oil prices for the U.S. and its friends.

And the oil majors can’t help us because they can’t help themselves. Every time they think they’re getting access to a big field bursting with oil, something happens. Expropriation … terrorist acts … renationalization…

London ’s leading index headed straight up at the open adding 69 points at the open to 6,156 following a good day on Wall St. yesterday.

The Dow put on 189 points to close above 13,000 for the first time since the start of the year – no doubt a significant closing level for technical analysts. The gain came as financial stocks made the running and in spite of ExxonMobil shedding 3.6%. Exxon is struggling to up production reports the FT as it falls victim to resource nationalism. African production fell 20% after it was forced to hand over more to host governments and its Venezuelan interests were nationalised.

Continues below …

FLEET STREET LETTER ALERT

3 “Gloom-Loving Stocks” for the Coming Recession

Dark clouds are gathering over the UK economy.

But for contrarian-minded investors, this spells opportunity.

The Fleet Street Letter has just been given permission to share three such money moves with you today.

You can read the full briefing here

Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek independent financial advice if necessary. Fleet Street Publications Ltd. Customer Services: 0207 633 3600.

The bounce in US stocks reverberated around the time zones. The Nikkei was up over 2% to close above 14,000 and China’s leading index, the Shanghai Composite added almost 5% as it breaks out from a six month downtrend. European bourses are up across the board this morning.

So is it over? Or is this premature as the IHT suggests? Stock markets are forward looking by six months or so, so are presumable focused somewhere on the end of this year and the bulls see something better out there. But lest we get too carried away the world can look very different at street level. It was only on Monday that Warren Buffett was warning “ my general feeling is that the recession will be longer and deeper than most people think. This will not be short and shallow. I think consumers are feeling gas and food prices and not feeling they’ve got a lot of money for other things.”

Except perhaps for the one off “tax rebate” cheque sent to US taxpayers in the post this week. But some relief is coming too from a sector that of late has been a chronic thorn in the side of central bank inflation targets – the commodities market. Commodity prices have been falling of late across the board – energy, industrial and precious metals and agricultural commodities. The price of crude is down for a fourth day running with Brent Crude at $110 and West Texas light sweet crude a shade under $112. Lehman Bros said recently there was $20-30 of “hot money” in the crude price.

Why the pull back? It’s all about the dollar says commodity strategist, David Moore of Commonwealth Bank in Australia:

“The demand for investing in commodities as a hedge for U.S. dollar weakness has faded.”

Which gives us a clue as to the nature of the demand. There’s actual physical demand for commodities according to their use and then there’s more speculative investment demand. With the revival of interest in the sector, how much of the price is attributed to each? We don’t know but given the rapid rise in popularity of the commodity exchange-traded fund, we suspect the balance has tilted significantly in recent years towards the speculator.

That fading interest in hedging has helped the dollar claw itself back from a low point at 1.60 to the euro, to 1.54 now. When even central bankers are telling the market it’s not so bad, investors worries are starting to subside. Says Japanese fund manager Tetsu Emori:

“Worries about the financial market turmoil and even an economic slowdown seem to be softening, so that’s why people are selling gold.”

As such gold continues its slide south, at one point unwinding all the way to its $850 price at the start of the year. Just as the dollar stages something of a rally, the Gulf States may finally be coming to the conclusion that pegging to it is not after all such a good idea as dollar weakness adds to their domestic inflation problems. Something even Alan Greenspan actually advised them to do on a visit to the region. Kuwait has been the only one to drop its peg to date and has seen its currency appreciate almost 8% against the dollar since. Its Finance Minister Mustafa al-Shimali seems confident other Gulf Cooperation Council states will follow its lead – “some countries will do what we are doing.”

Here at home, the winds of political change look to have blown pretty hard yesterday. UK government worries about taking a pasting from the electorate in the local elections proved well founded. They did – their worst result for 40 years. With the Mayoral vote still pending, it could prove a very black day for New Labour. Still after 11 years in government you take some wear and tear, mistakes are made, support disintegrates, people get disillusioned or just fed up with the same old faces.

And it doesn’t help when the much touted UK economic miracle that has notched up 60 consecutive quarters of growth is looking a good deal less miraculous. The progressive puncturing of inflated house prices, aided and abetted by a mortgage famine is exposing gradually testing the debt-laden underbelly of once enthusiastic consumers. British bank HBOS announced house prices fell by 3.7% annualised over the year to April. It is the worst housing market performance since 1993 and comes on top of a controversial scrapping of the 10% starter tax rate. Who’s to blame? The government, of course. Much to the delight of the Tories for whom the ERM debacle is now but a fading memory.

Regards,

Rob Mackrill
The Daily Reckoning

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The Gulf of Guinea off the west coast of Africa is one of the most dangerous waterways in the world. Its sea lanes are infested with growing numbers of drug smugglers and human traffickers. Illegal immigrants use this waterway to make for the promised land of Europe amidst the traffic of rogue trawler men and the various militant groups that operate in the region.

But it is also where one of the biggest profit opportunities in the world is right now, because the still under-developed region is expected to provide a quarter of all U.S. oil imports by 2015 as America tries to reduce its dependence on the volatile Middle East.

Of course, we’re well ahead of the average investor. We have already positioned ourselves to profit from America’s charge into the region through our investment in a certain pan-African conglomerate. This particular company controls one of the most important ports in Equatorial Guinea, through which a lot of that oil is going to pass… it could soon be set for boom times.

You see, the Americans are deadly serious about securing West Africa’s oil for themselves – they don’t have the luxury of standing by because everywhere you go across Africa, you bump into the Chinese. The Asian giant has been scrambling across the continent in order to secure the supplies of raw materials that feed its massive manufacturing machine – and more than anything, they’ve been after oil.

The Chinese are paying big money for Africa’s oil.

Just last month, the Chinese agreed to provide up to $50 billion in infrastructure development financing to Nigeria. The loans weren’t explicitly tied to access to Nigeria’s oil reserves, but you don’t need to be the chairman of an oil company to see what the Chinese are up to – Nigeria is Africa’s biggest oil producer.

The Chinese don’t really have a choice though; their demand for oil is continuing to grow at a phenomenal rate despite all the talk of an economic slowdown – just last month it rose by 25 per cent compared with the same period last year.

With the Chinese willing to spend that kind of money in the hope of securing access to Nigeria’s reserves, you can bet that America is going to have to pay through its nose to get its share of the region’s reserves. In fact, they are so determined to secure the region’s oil supply that they have now sent in the troops. The U.S. Navy has now started deploying ships in the region in order to help west Africa’s mostly ill-equipped Navies take effective control of the region’s waterways. That’s the U.S. Navy’s first serious engagement with the region since it operated an anti-slavery squadron in Cape Verde in the 1840s.

The U.S. admirals are trying to put a cheerful face on it – they’ve branded it “good boat diplomacy” rather than “gunboat diplomacy”. No doubt about it though – the guns are there; and they’re meant to make it easier for the U.S. oil giants like ExxonMobil and Chevron to get the oil out of countries like Nigeria, Angola and Equatorial Guinea.

Critics of US foreign policy see the increasing military engagement with Africa as part of an aggressive agenda to secure energy supplies and counter China’s growing influence on the continent – and they’re probably right. In fact, the U.S. has recently created a new combatant command called AFRICOM, which underscores the region’s growing strategic importance to Washington.

We look set to see a major contest for influence on the continent between the United States and a fast-rising China – but it’s going to be fought with the promise of economic incentives more than with bullets. So, unlike the U.S.-Soviet power games in Africa that left that wreaked havoc on the continent during the Cold War, this time the big winners are going to be the African countries themselves.

This share is a screaming BUY and I’ll tell you exactly what it is in a moment…

When you look at it that way, I think that the skittish investors who have sold out of this stock recently are stark raving bonkers. This is a company that is set to ride one of the biggest economic trends of our lifetimes and you can get in right at the start of it. Remember, this is a company that has investments in the sort of industries that Africa is going to need to develop – infrastructure, bottled water, transport and even landmine clearance.

The company’s shares have fallen recently, not just because of the market weakness we have been seeing, but because of a $15 million loss that the company declared for the year ending September 30th 2007. We aren’t fazed by that though – most of that loss was the result of the company’s heavy investment in developing its new and existing businesses. Most of those losses were also incurred in the period before we invested in the company last August and we expect the company to begin seeing returns on those investments going forward.

There’s oil in Merry Old England too.
China has been looking for oil in other places as well. One of its sovereign wealth funds, the State Administration of Foreign Exchange (SAFE) has just bought a £1 billion stake in BP. That follows its £1 billion investment in French oil giant Total. What are the Chinese up to? They’re obviously not trying to gain control of these companies – they’re smart enough to know that Western governments are not going to let that happen. They learned the hard way in 2005 when the U.S. government blocked a bid by China National Offshore Oil Company (Cnooc) to buy American oil company Unocal.

What the Chinese want is a seat at the international oil table and they will probably use their stakes in European oil giants to encourage joint development projects between its state firms and the western oil companies that have received some of its “friendly investment.” Over the medium term, that is probably going to be good news for China’s oil companies as it will give them access to the expertise and oil blocks of the oil majors.

NYSE may list on Shanghai exchange

It isn’t all fire and ice between the U.S. and China though. Today, the South China Morning Post reported that the New York Stock Exchange (NYSE) may become the first foreign company to sell shares on China’s A-share market, citing China Securities Regulatory Commission officials.

China has been trying to persuade major multinationals to list on its domestic markets in order to establish itself as a major financial player and to help meet the demand for high-quality investments among its local investors. Apart from the NYSE, the Shanghai stock exchange is also considering listing multinationals such as HSBC, Coca-Cola and Siemens. Here at Profit Hunter, we’d like to see that happen because it speeds-up the process of opening-up China’s markets to foreigners. We have stayed out of China so far, because the “B-share” section of the Chinese markets, which is accessible to foreign investors has really been little better than a back-alley casino with a lot of very suspect companies listed. The entry of major multinationals onto China’s markets will probably mark a move towards higher levels of transparency.

And in the markets.

And in today’s market action, Asia managed a small rebound after yesterday’s sharp sell-off. In Japan, the Nikkei rose by 0.6 per cent, while Hong Kong rebounded by 0.4 per cent. China’s benchmark Shanghai A-share Index was up a more impressive 1.6 per cent, while India’s Bombay Sensex gained 1.2 per cent. Our favourite market, Vietnam, declined by 1.23 per cent. The rebound in Asia’s markets was led by energy companies as the price of oil hit a new record high of $113.66 a barrel yesterday. The current spike in oil prices is – at least in part – a result of deliberate policies being pursued by the Opec oil cartel to maximise profits.

Oil might be at a record, but the Gulf markets turned in a mixed performance today. Saudi Arabia’s Tadawul Index was down by 0.5 per cent and Kuwait was down 0.3 per cent. Bahrain – on which our Gulf merchant bank Investcorp is listed – rose by 0.3 per cent; the UAE was up by 0.9 per cent and Qatar jumped by 3.2 per cent. The mixed performance of the Gulf markets as oil hits a record simply underscores that there is much more going on in the region’s economies than just oil.

Now… back to that screaming BUY…

Regular readers of Profit Hunter will know that I don’t use the term: “Screaming BUY” often – hardly ever in fact – which, will perhaps give you all an insight as to the strength of my feelings for this share.

In fact the only other time I use the term: “Screaming BUY” is in reference to another of my hottest tips, involving a certain emerging market.

For some time now, I’ve been telling investors about the over-whelming benefits of both these investments, and why I believe there are no better economies to be in.

Click here and let me take you through the overwhelming benefits of these emerging markets and show you exactly what these investments are right now… you’ll soon be screaming BUY too.

Regards,

Manraaj Singh
Editor
Profit Hunter

A recent entry to the game is the UltraShort Oil & Gas ProShares (DUG).

ProShares introduced this “inverse fund” in February 2007. It makes big money when oil stocks fall and loses big money when oil stocks rise. Since inception, this bet against ExxonMobil, Transocean, and Schlumberger has plummeted. The current rally in all things related to  has sent the fund to an all-time low.

All assets boom and bust, so we’re sure this fund will be a winner someday. For now though, DUG is getting battered the old fashioned way: going against the trend… in this case, the trend of record cash flows moving toward the companies that dig, drill, refine, and transport fossil fuels. Take that, tree huggers.