This from David:

A few weeks ago, during a particularly bad cold snap, we had a pipe freeze underneath our 200-year-old farmhouse, causing us to go without water for a few days. I eventually managed to unfreeze the pipe, but there was no question it was disruptive for a busy household of four.

Here in the United States, we don’t realize how much we take our fresh water supply for granted, until it’s suddenly cut off. We’re used to turning on the faucet and there it is.

But for the folks in California, 2009 is shaping up to be a big fresh water disaster in the making. Last Thursday, state water officials reported that the snow pack in the Sierra Nevada Mountains is only 61% of what is considered normal for this time of year.

An with only eight weeks left in the rainy season, significant rain and snow is needed for the next two months in order to divert a disaster.

That’s on top of back-to-back dry years in 2007 and 2008. The situation is so bleak, officials may be forced to ration water on a statewide basis for the first time since the 1990s.

Lester Snow, the Director of California’s Department of Water Resources, put the situation in perspective: “We may be at the start of the worst California drought in modern history. It’s imperative for Californians to conserve water immediately – at home and in their businesses.”

The fallout has already hurt the wild salmon population, and if the drought continues, it will get even worse. Farmers, who use 80% of California’s water for irrigation, will have to cutback on the number of acres they plant. That will have a devastating impact, as agriculture is one of the most important sectors of California’s economy.

Fresh Water: The New Oil

Fresh water has been talked about as the “new oil,” but it’s far more important. The human race can survive without crude oil, but not without water. We can’t live more than a week without it.

And for that reason – unlike oil – it is completely immune to demand destruction. We need a pint a day, on average, to maintain a healthy existence. If you include the amount used to produce our food, the number jumps to nearly 1,000 gallons per day per person, and even more in countries whose citizens eat a lot of meat.

The main problem with oil is finding more of it. With water, it’s the distribution system that’s the issue, as it primarily flows through pipes. Many were installed when Edison was fooling around with electricity.

While California has its own set of special problems when it comes to water and its distribution, the problem is monumental nationwide:

• 650,000 miles of antique water pipes are in need of repair or replacement.
• Nearly 30% of the water infrastructure in New York City – and most other big metropolitan areas in the east – dates back to when Lincoln was president.
• Many of the nation’s water purification facilities are more than 50 years old, and completely outdated.

But don’t think the United States is alone in this dilemma. China has lots of water, but much of it is polluted or untreated. Roughly 300 million of its 1.3 billion people don’t have access to clean drinking water out of the tap.

China is spending tens of billions of dollars annually to try to fix the problem.

2 Ways to Play the Coming Water Boom

While the recession has consumers hunkering down – and cutting back their purchases of computers, cell phones, toys and other discretionary items – it hasn’t decreased their demand for clean, fresh water.

And one of the biggest companies in the world that’s able to provide the infrastructure to deliver it is Veolia Environment (NYSE: VE). It provides bumper-to-bumper environmental management services for both water and wastewater.

Whether it’s supplying clean water, recycling wastewater, or developing waste conservation systems, Veolia has a solution.

In China, it’s operating freshwater plants, wastewater decontamination and recycling plants and sewerage treatment facilities.

And now you can add some shares to your portfolio at more than a 75% discount to what they were trading a year ago. Veolia currently trades with a P/E of 8.8 and sports an 8.1% dividend yield.

A different, but no less lucrative, way to invest in water stocks is the Calgon Carbon Corporation (NYSE: CCC). Calgon is a manufacturer of activated carbon granules, a material that’s essential in many of the world’s water purification systems and over 700 other liquid purification and odor control applications.

Carbon granules remove impurities from water, air and many industrial processes.

And business is booming for Calgon:

• The company’s shares are up over 200% since September 2006, and worldwide demand is continually increasing for its products.
• Sales in 2008 were $351 million, with roughly 62% of that coming from the Americas, and only 7% coming from Asia.

Clearly the opportunities for the company are enormous. This past year, the company signed a contract with the Jiaxing Jiayuan Water Company to provide 1.1 million pounds of carbon granules for water purification.

James Fishburn, Calgon Senior Vice President, commented on the significance of the order: “Over the last 40 years, Calgon Carbon has supplied millions of pounds of activated carbon to municipalities all over the world, and we are committed to serving the rapidly growing markets in China.”

In summary, both companies mentioned above are addressing a market that will be rapidly expanding for the foreseeable future. Fresh water is clearly the new oil. And now’s a great time to make it part of your infrastructure and energy portfolio.

Source: Fresh Water: California Drought Reveals the “New Oil”

The stock market has already factored in the challenges facing the travel and retail sectors into Priceline’s stock price, Reuters and Barron’s both reported.

According to Barron’s, as the current financial crisis deepens, consumers are going to devote an increasing amount of time to their personal and household spending budgets – a point that Money Morning has repeatedly made as part of its ongoing “Credit Crisis Safety Plays” series. As those consumer concerns about spending and household budgets increase, Priceline’s name-your-own-price business will become a bigger draw, Barron’s, the popular investing weekly, said in its most recent edition.

Barron’s also said Priceline has little debt and plenty of cash on its balance sheet, including $282 million in free cash flow this year. At Friday’s closing price of $54.57, Priceline was trading at 8.8 times projected profits for 2009. That’s well below the average Price/Earnings (P/E) ratio of 21 for Internet retailers, and 9.0-plus for the travel and leisure sectors, Barron’s reported.

Priceline also has a tendency to report upside earnings surprises. In each of the past four quarters, the Norwalk, Conn.-based Priceline has beaten analyst estimates by amounts that range from 9.9% to as much as 27% (Please see accompanying chart).

Strategy Shift a Major Plus

According to noted travel writer Arthur Frommer, Priceline.com was largely once just “a rather exotic service meant only for the gamblers among us – the folks willing to accept the risk of a 6 a.m. flight or an out-of-the-center hotel. By featuring its bidding process (‘name your own price’), Priceline.com came up with absurdly low air or hotel rates, but with the drawback of sometimes producing a dawn departure, a multi-stop flight or a badly located hotel.”

But that’s changed. In a story he penned for TheLedger.com, Frommer said that while Priceline “still maintains its ‘name your own price’ option – the way to get the very lowest prices imaginable - it now also offers the same full-disclosure airfares and hotel rates that Web sites like Hotels.com, Expedia.com (EXPE), Travelocity.com, Orbitz.com (OWW) and others offer.”

The bottom line: Priceline.com often beats the prices offered by these other “full-disclosure” Web sites – and without charging the extra fees that these other sites hit users with, Frommer wrote.

The economic slowdown may also benefit Priceline. The financial crisis has hit the travel sector and the airlines hard. So the major airlines are now using Priceline.com as a way of disposing of their unsold seats – “of which there are a great many,” Frommer wrote. But that’s good news for the more-adventurous traveler, since the “last-minute” airfare deals feature has returned to the Priceline.com Web site, Frommer said.

Priceline is now going global. With its recent acquisition of European hotel search engine called Booking.com, Priceline.com is also has become a standard full-range search engine for hotel rates both in the United States and abroad. Booking.com is the largest of the hotel booking sites in Europe, meaning users will find offers from some of the “more interesting, nonchain, boutique-like hotels that are often absent from American hotel search engines.”

Master Marketer

When it launched its somewhat campy television ad campaign, Priceline.com was smart enough to go after the king of camp himself – Shatner, whose entire TV life has been spent playing such campy characters as Capt. James T. Kirk (Star Trek), police Sgt. T.J. Hooker (T.J. Hooker) and legal legend (in his own mind) Denny Crain (Boston Legal). Shatner’s performances as the “Priceline Negotiator,” have spawned kudos both for Shatner and for Priceline.

Curiously for Shatner, however, it’s original “Star Trek” series veteran Leonard Nimoy (Mr. Spock), and not the irrepressible Shatner – described by one writer recently as the “master of the strained staccato delivery” who landed a role in the new Star Trek (2009) movie due out next year.

But Shatner does have a new talk show starting: Shatner’s Raw Nerve debuts Dec. 2 on the Bio Channel, media reports state.

Source: Hot Stocks: Priceline.com Shares Poised to Beam Up, Barron’s Says

“Hot Stocks” is a new Money Morning feature that analyzes the investment outlook of global companies that are in the news. This is the fifth installment of this ongoing investment series

The data supports “growing anectodal evidence” that Japan is moving out of deflation and that the trend isn’t just to do with commodities, says Christopher Wood of CLSA. Consumers’ inflation expectations have been trending higher; they now expect inflation of 3.1% in a year’s time. The emergence from deflation is “potentially hugely bullish” for stocks, given the positive implications for companies’ pricing power and hence their margins.

Underlying inflationary pressures look set to grow further as the economy is on track for a sixth successive year of growth at or above its sustainable rate, as Capital Economics points out. It expects a rebound in housing construction to bolster growth this year, helping to offset slowing exports, while wage growth has accelerated of late, boding well for consumption.

Household spending rose by 0.7% in the first quarter as a whole. Sustained inflation depends “on a cycle of rising wages and higher consumer spending”, as the FT notes. Meanwhile, stocks remain extremely cheap, with no less than 60% of firms trading below book value and PEs historically low, according to Tad Fujimura of Sparx Asset management. The market is worth a look.

http://www.moneyweek.com/file/46469/japan-inflation-finally-returns.html