• A federal judge gave no leniency to convicted Ponzi schemer Bernie Madoff yesterday (Monday), sentencing him to 150 years in prison. U.S. District Judge Denny Chin described Madoff’s crime as “extraordinarily evil” and said that it was “not merely a bloodless crime that takes place on paper but one that takes a staggering human toll.” As a part of his sentence, the 71-year-old Madoff was ordered to forfeit a total of $170.8 billion which represents the total proceeds of and property involved in certain of his crimes.

• Pipeline operator Enterprise Products Partners L.P. (NYSE: EPD) will buy Teppco Partners L.P. (NYSE: TPP) for $3.3 billion, forming the biggest U.S. energy partnership, Bloomberg News reported. Teppco shareholders will get 1.24 units of Enterprise for each one they own, making the deal worth 15% more than when the initial offer was made in March. Enterprise will see the benefits of the takeover starting next year and will net a minimum of $20 million in cost savings, according to Enterprise Chief Executive Officer Michael Creel.

• Apple Inc. (Nasdaq: AAPL) Chief Executive Officer Steve Jobs returned to work as promised following a near six-month leave of absence in which he received a liver transplant. Initially, Jobs will spend a few days a week at Apple’s Cupertino, Calif. Headquarters and work the other days from home. Investors will be reassured that Jobs is back, Collins Steward Ashok Kumar told Reuters. “In many ways he’s irreplaceable,” Kumar said. “Having him back brings the halo back to the company.” Apple shares closed at $141.97 yesterday (Monday), down 0.33%.

• General Motors Corp. (OTC: GMGMQ) cut its ties to a northern California auto plant it operated with Toyota Motor Corp. (NYSE ADR: TM) since 1983, Reuters reported. The move puts into question the fate of more than 4,000 jobs at the plant that was once seen as a ground-breaking experiment in bringing production efficiencies pioneered in Japan to a U.S. workforce. “While we respect this decision by GM, the economic and business environment surrounding Toyota is also extremely severe, and so this decision by GM makes the situation even more difficult for Toyota,” Toyota said in a statement. The soon-to-be defunct Pontiac Vibe, Toyota Corolla and Matrix are manufactured at the facility.

• The U.S. Interior Department yesterday (Monday) designated roughly 670,000 acres of land as potential areas for solar energy production with the hope it will speed up the development of renewable energy resources on federal lands. “This environmentally sensitive plan will identify appropriate Interior-managed lands that have excellent solar energy potential and limited conflicts with wildlife, other natural resources or land users,” Interior Secretary Ken Salazar said in a statement. The 24 areas on the land could generate nearly 100,000 megawatts of solar electricity, the DOI said. President Barack Obama has allocated $150 billion to renewable energy investment over the next 10 years.

• Oil for August delivery rose to $2.33 to settle at $71.49 a barrel after China said it would increase oil reserves and Nigerian militants partly shut down an offshore oil platform that belongs toRoyal Dutch Shell plc (ADR NYSE: RDS.A, RDS.B), The Associated Press reports. China plans on increasing its strategic crude oil reserves by 60%, providing the market with some long-term support according to Alaron Trading Corp. analyst Phil Flynn.

• The Chinese government has stopped its metal stockpiling program, a top official told state-run Caijing Magazine. China has so far amassed 590,000 metric tons of aluminum, 159,000 tons of zinc and 235,000 tons of copper. The news could push down prices of metal in the near-term, though a stimulus-driven revival in demand could limit the fall, the report said.

Source: Investment News Briefs Tuesday, June 30, 2009

But until that happens, the ride could be bumpy. Thankfully, we have a tree-hugging President that will do anything in his power to make sure that alternative energies – like solar – remain in the forefront of US energy production.

I’m not making this stuff up. This is common knowledge– you can already see the stock of one solar producer Suntech Power Holdings (NYSE:STP) behaving exactly how you would expect…

The first thing you’ll notice is exactly how far STP has fallen since August of last year. This isn’t unique to this company – virtually every stock in the market shows this fall. More interesting, is the potential bottom forming.

You can tell something good is brewing because…

1.    The RSI is showing a strengthening trend over the past three months. The bottoms are higher.

2.    A bullish cross of the 20 and 50-day moving averages. Even though the stock’s price is lower, the bullish cross remains.

3.    The Slow Stochastic is Oversold. This signals that conditions are ripe for buyers to flood the market and take STP much higher. At this point, a 50% spike isn’t out of the question. And the possibility for a double is very real.

It appears that the chart of this solar company is showing really great signs of a potential bottom. Considering the billions Obama will flow into this sector over the upcoming ten years, we might be seeing the cheapest price we’ll ever see for this company.

Positioning yourself today for the long-term could enrich you immensely in the years ahead.

The Times’ story cited the Solar Energy Industries Association as reporting that 3,400 companies in the solar energy sector employ only 25,000 to 35,000 workers, including installers, manufacturers, distributors and project developers and materials suppliers. Those numbers are expected to hit more 110,000 employees by 2016, according to the association.

Wait a minute: So seven years from now, this highly touted, save-the-world market will employ only 110,000 people?

From an investor’s perspective, I thought that number was absolutely puny. Let’s put that into perspective…

– Toyota employs 110,000 part-time workers.
– That’s the number of foreclosure notices sent to homeowners in California during the first quarter of this year.
– And in terms of size, Exxon, Rio Tinto and Wachovia each employ about 110,000 people.

So we’re supposed to be impressed, as investors, that the entire solar-energy industry will support 110,000 workers seven years from now?

Of course, those numbers from Solar Energy Industries Association could be wildly optimistic given a sea change in the politics of solar energy.

You see, that articles in the New York Times quotes Bob Cowen of Morris County, N.J., who opted for solar panels for both ecological and economic reasons. The tab for 49 solar panels for Mr. Cowen’s home came to $64,700. The state of New Jersey gave him a rebate of $42,500. That left Mr. Cowen with an out-of-pocket cost of $22,200.

Now the article didn’t say when Mr. Cowen installed his system, but recently the state of New Jersey moved to abolish its solar-energy rebates.

The state found itself with backlog of more than 700 applications for the rebates. This meant that people to wait months, even years, to get solar panels installed. Faced with an abundance of success, New Jersey regulators concluded it is time to wean solar providers from tax-paid subsidies and replace it with a complicated energy credits program.

New Jersey is not alone in reconsidering the benefits of subsidized solar energy. Maryland, Colorado, New York and several other states have either withdrawn their subsidy programs or are weighing their viability. Even San Francisco can’t seem to draw support for a solar subsidy.

The question that remains is: Would Mr. Cowan have paid the full $64,700 for his solar system? Probably not, since he probably would not have lived long enough to see the full ROI on it.

Likewise, I doubt that any of you would cough up $64,700 for a solar system that has a Rip Van Winkle ROI.

If that’s the case, then as an investor you shouldn’t put a penny into solar energy either.

This from Today’s Financial News:

He is either going to be a hero or an absolute zero. For nearly three years now, Tom Djokovich, the CEO of XsunX (OTC:XSNX), has been promising investors that his fledgling solar panel manufacturer was on the cusp of a major sale.

When I talked with the executive early in the winter of 2005, he kept the company’s official word that it would have its first sale by that spring. Investors flocked to the company, speculating big gains were on the way.

The alternative energy boom was just starting to gain traction and investors believed XsunX was going to be a huge winner. Shares soared from less than $0.25 to almost $3.00 from June of 2005 to April of the following year.

The orders never came.

Share price has been dropping ever since. In fact, investors recently had to endure the pain of 52-week lows below $0.18. The action has not been pretty.

Solar manufacturer or P.R firm?

The decline in valuation is certainly not for a lack of trying on behalf of the company’s public relations team. For the past two years, every new hire, new supplier contract, new investment and even the company’s attendance at industry conferences has been pumped through the media engine.

The shoddy releases were from a desperate company making desperate moves. Investors eventually grew tired of the failed promises and lack of any real information. The more press releases XsunX issued, the further its price dropped.

It is no wonder investors are desperate for answers after yesterday’s announcement. XsunX actually announced a major order. It has entered a two-year contract with a solar power company working on projects in California and Hawaii.

According to XsunX, in exchange for $37 million, the company will supply 15 megawatts worth of its solar modules. A third of the order will be filled in 2009, with the remaining 10 megawatts supplied in 2010.

That is about all the company has said on what should be a monumental subject. It has not mentioned how it will produce the modules or where it will find the cash flow to being operations. After all, its newly leased 90,000-square foot production facility, which is undergoing major renovations, appears nowhere close to being complete. The last I heard, production was not supposed to begin until April of 2009.

Not buyin’ it

It was no surprise to see shares of XsunX jump on yesterday’s news, from $0.19 to $0.25. After all, this company has a long history of getting positive attention just when investors believe the end is near. But if investors truly believed in the company, its management and its products, shares would have climbed even higher.

With almost nothing left in cash, an array of expenses and no hope of finding ample credit in this market, I remain leery of this company’s future success.

Yesterday’s news, if it turns out to be the real deal, could be the company’s saving grace, but we have been here before.

If you are looking for an ultra-speculative play, this is it. As for me, however, I am waiting to see what comes next. If the company can make it through next spring, I will be investigating the situation again. For now, it looks like yet another costly trap.

Source: Solar industry investing: Is XsunX (XSNX) the real deal?

This from Money Morning:

With his landslide election victory Tuesday – coupled with Democratic gains in the House of Representatives and in the Senate – U.S. President-elect Barack H. Obama II will have the ability to pursue more or less any policy he wants.

For investors who have been trying to analyze the economic outlook for the New Year, the election of U.S. Sen. Obama (D-Ill.) provides a major piece of the forward-looking jigsaw puzzle that these analysts hope to assemble. That’s because the likely trends of the United States and other economies around the world – and the relative success of different sectors within those economies – depends crucially on who’s in the White House, what policies they have, and how effectively they can pursue those policies.

Only one thing keeps the triumph of the incoming Democratic president from being totally complete: The Republicans appear to have held onto 41 Senate seats, enough to prevent the Democrat majority from overriding a united filibuster. In practice, however, there are few issues on which the Republicans will be completely united. Thus, on only a few “litmus test” issues – such as the “Employee Free Choice Act,” which removes the secret ballot from union elections – is this filibuster threat likely to be effective.

Obamanomics: From the Environment to Health Care

A review of President-elect Obama’s economic policies – characterized by the term, Obamanomics – clearly offer profit opportunities. Let’s take a closer look at some key areas to consider in 2009.

In the economics area, Obama’s two signature policies are a promise to institute a “cap-and-trade” system of carbon emissions permits to combat global warming, and a substantial expansion in state healthcare provision, notably to include universal healthcare provision for minors.

On the energy front, the support of U.S. Sen. John McCain (R-Ariz.), for the “cap-and-trade” system will make it much easier for Obama to pass legislation quickly, probably in the first half of 2009. Under Obama’s proposed legislation, emission permits will be auctioned to utilities and other businesses with substantial carbon emissions. This has the advantage of being more of a free-market approach than McCain’s plan to give away the permits for free, which would have required the creation of a huge government bureaucracy to decide who would get those permits.

Even so, Obama’s approach has the disadvantage of imposing gigantic new costs on utilities and other carbon emitters. Indeed, Obama himself has said that new coal-fired power plants would become hopelessly uneconomic under his plan – chiefly because of the costs of the emissions permits they would need. That suggests that nuclear power plants (which he does not oppose) would account for the majority of new power-station construction during the Obama presidency – although solar, wind and other power-generating technologies that look pretty and can be made to work also will fare well.

The corollary of Obama’s emissions permit program, therefore, is that an investor should sell coal-producing companies and coal-fired electric utilities, and invest in nuclear power stations and uranium-mining companies. In principle, there should also be opportunities in the solar- and wind-power sectors, but the “new energy” fad of the last couple of years has already driven their valuations to uneconomic levels.

On the healthcare side, investment recommendations are more difficult to isolate. Generally, Democrats are skeptical of the patent protections enjoyed by pharmaceutical companies – as well as the high prices those protections create – so the major manufacturers of patented drugs should be avoided.

Conversely, the producers of generic drugs appear poised to benefit from the increased spending on healthcare – especially the manufacturers of pediatric healthcare products, including pharmaceuticals – should benefit from the Obama program’s emphasis on children’s healthcare.

Financial Crisis Redux

Of all the questions investors will have about the New Year – following Obama’s victory – is what the new administration will do about the current financial crisis.

A federal bailout package – consisting chiefly of spending increases – seems almost certain in the short term; that will cause the federal deficit to balloon even more than it has already, will make U.S. Treasury bond financing increasingly difficult, and will further stoke inflation. In those circumstances, avoid Treasury bonds, except the inflation-protected buying Treasury Inflation Protected Securities (TIPS), the principal and interest of which are linked to the Consumer Price Index (CPI). TIPS currently have an attractive yield around 3.0%.

It seems likely that an Obama administration will tend to impose costs on the financial-services sector in return for the bailouts it receives – perhaps, for example, banks will be required to funnel lending into low-income areas, or toward other chosen beneficiaries. Limits on financial-sector remuneration also may make it difficult for the major banks to do business, particularly in the trading area. The Democrats have a more aggressive attitude toward “predatory lending” than the Republicans, and will undoubtedly find innumerable examples of such lending in the mortgage and credit card area over the next few years, which they will wish to punish. Hence, financial sector investments should be generally avoided.

Potential Profit Plays

On the other hand, both Obama and the Democrats seem more likely to propose bailouts for states and municipalities that find themselves in budgetary hot water because of the recession that’s sure to come (if it’s not here, already). Thus, municipal bonds, which carry a considerable credit risk under a tight-fisted Republican administration, may be thought of as less vulnerable to default under an open-handed Democrat administration with sympathy for the issuer’s problems, particularly if that municipality represents a core urban Democratic constituency.

When New York City got in trouble, U.S. President Gerald Ford – the Republican who succeeded the disgraced Richard M. Nixon – took an unsympathetic attitude and The New York Daily News captured his perceived attitude with the headline: “Ford to City: Drop Dead!” No such episode will occur under the urban-oriented, free-spending Obama!

And that makes munis a “Buy.”

Also in the “Buy” category are automobile and auto-parts companies. No matter which candidate ended up winning Tuesday, the victor would almost certainly decide to bail out U.S. carmakers, as well as the suppliers that rely on them. After General Motors Corp. (GM) was rebuffed in its bid for aid by the Bush Administration, the bailout of U.S. carmakers is now being billed as a top priority for the incoming President Obama.

Automakers such as GM and Ford Motor Co. (F) benefit from being the headliners in an iconic U.S. industry – especially because it’s one that employs lots of potential Democrat voters in industrial states and suffer from international competition that increasingly riles the more protectionist Democrats. A bailout is thus inevitable, probably without involving the automobile companies in a Chapter 11 bankruptcy. And that makes their shares worth a “flutter.”

President-elect Obama’s supporters celebrated ecstatically Tuesday night. Investors should be more skeptical. But looked at carefully, an Obama administration – and Obamanomics – would still seem to offer opportunities for profit in the New Year.

Source: Money Morning Outlook 2009: Obamanomics Offers Investors Plenty of Profit Plays in the New Year

If John McCain manages to pull off a surprise victory next week, Martin says biotech stocks will get a boost from fewer restrictions on drug prices.

This from Smart Profits Report:

One week from today, America will elect its next president.

What was a hotly contested race a few weeks ago now appears to be swinging in favor of Democratic candidate Barack Obama, but that doesn’t necessarily mean Election Night will be much less dramatic.

The question is: How will this major event and changing of the White House guard affects the economy, the stock market – and more importantly, individual investors? Many investors are already sick to death of the drama that the stock market has tossed at them this year, so aren’t likely to welcome much more.

Let’s take a look…

The Four-Year Presidential Cycle And Its Impact On The Stock Market

Despite the current rhetoric and hype surrounding the candidates’ respective policies, measures enacted typically don’t make any serious dent on the economy for a year or two after they’re passed into law.

Yale Hirsch, one of the co-authors behind the respected Stock Trader’s Almanac has studied the effect that presidential election cycles have on the stock market. And his research indicates that the market generally follows a pattern, regardless of whether a Republican or Democrat administration wins the White House.

According to the theory, here are the stock market returns between 1948 and 2007…

• The first post-election year is typically the worst performer in the presidential cycle, with the S&P 500 posting a 7.3% return
• The second year sees the highest record of bear market bottoms, with the S&P recording a 10.1% advance.
• In the third year of the presidency, the market picks up dramatically, notching up a 22.9% gain.
• The final year of a presidency sees more uncertainty creep into the market, with a 12.1% gain. That’s still above average, though.

While the past four years haven’t followed the above trend, this is an entirely different time, with the U.S. experiencing an epic financial crisis right on top of the presidential election.

And the market could easily fall back into this pattern… because right on schedule, economists foresee recession conditions over the next two years.

The Post-Election Healthcare Environment

As an investor, if you’re looking for a map of how the next cycle will play out – and who could be affected the most – a lot depends on whether the winning candidate can live up to his promises. But that can depend largely on who controls Congress and the importance of the sector.

For example, areas like healthcare, energy, education, and defense are always going to be pretty heavily funded, no matter who is running the show.

With regard to healthcare, this election is once again filled with candidates’ promises of how they’re going to create affordable healthcare for all Americans – a task that always seems to be easier said than done.

According to the International Strategy and Investment (ISI) research firm, a McCain administration would probably represent good news for firms like Pfizer (NYSE:PFE), Genzyme Corp. (NASDAQ: GENZ) and Genentech (NYSE:DNA), since they’d be less likely to face restrictions on drug prices.

In addition, McCain may not opt for as much of an overhaul of healthcare as Obama, so managed care firms could see an advantage. Obama would seek changes to Medicare and crack down on medical malpractice areas, so look for managed care and insurance companies respectively to undergo Obama’s favorite word… change.

Since both men have espoused unique alternatives to our current system, the healthcare sector will see changes regardless though.

Look To Renewable Energy Firms… No Matter Who Wins

As for energy – one of the hottest spots on the market – both Obama and McCain support crucial efforts to explore alternative energy in order to relieve some of America’s dependence on getting energy from volatile nations.

Earlier this year, McCain even went so far as to offer a $300 million reward for anybody who could design a “battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.” And both men attended former president Bill Clinton’s National Clean Energy Summit in Las Vegas, Nevada, back in August.

McCain has also thrown his weight behind greater offshore drilling and “clean coal” production, right alongside ethanol production from corn. Obama has expressed more interest in other forms of alternative energy, such as wind and solar power – two areas that could receive more subsidies and mandates under his administration.

In this respect, ISI says solar leader like First Solar (NASDAQ:FSLR), wind turbine manufacturer Vestas Wind Systems (CPH:VWS) and waste-into-energy firms like Covanta Holding (NYSE:CVA) could see benefits.

The Battle For Headlines: Economy And Market vs. Obama And McCain

The bottom line here is that while both candidates are busy championing their ideas and policy proposals to the country and certain sectors and stocks will benefit more than others from a regime change, the overall stock market isn’t going to be as affected as some people might think.

According to John Merrill, chief investment officer of Tanglewood Wealth Management, the market isn’t really paying that much attention to the candidates, no matter how much both like to speak out. “Today, the market and the economy are shaping events much more than the presidential election.”

Source: The Presidential Election Cycle… What The Obama-McCain Battle Means For Stocks

Google, Chevron and Goldman are all betting that this prediction is correct. This from Bloomberg:

Unlike photovoltaic solar panels that convert sunlight to electricity, solar thermal focuses sunrays with mirrors to heat oil in glass pipes to about 700 degrees Fahrenheit (370 degrees Celsius). The oil turns water to steam, which spins an electric turbine. A solar thermal unit that begins operation in 2010 will produce power at 14.2 cents a kilowatt hour, almost triple the 4.8 cents for a plant using pulverized coal, the Energy Information Administration estimates.

Costs for solar thermal may fall as low as 3.5 cents a kilowatt hour by 2020, according to a report commissioned by the U.S. Energy Department. Meanwhile, coal expenses may rise. Congress is considering limits on carbon dioxide and other greenhouse gas emissions. The purchase of pollution permits may be required under a measure the Senate will begin debating next month.

Chevron, Goldman Sachs, FPL, PG&E and other companies have filed more than 50 applications with the Bureau of Land Management to lease government-owned desert property for solar power systems … Google’s philanthropic division put $10 million into eSolar, a start-up in Pasadena, California. Dan Reicher, a former Energy Department official who manages the unit’s climate and energy initiatives, said there will be more such investments.

The PowerShares Clean Energy ETF (PBW) has more than $1.5bn in assets and is one of the most popular ways to invest in solar, biomass, wind, and geothermal energy, says Brian Hunt in Daily Wealth.

“Common sense tells us when the holy trinity of fossil fuels – crude oil, coal, and natural gas – rise in price, companies that provide cleaner substitutes should also rise in price.

“PBW’s only been around for three years […] But with oil approaching $130 a barrel and clean energy stocks out of favor, expect a rally from the ‘treehugger-approved’ companies of the world.”

“Solar panels won’t be accepted en masse unless the economics of it makes sense,” says Charles Delvalle in Investor’s Daily Edge. “Sure, adoption is growing. But it won’t be mainstream until everyone can afford it. The same goes for wind power.

“With so many solutions not making any economic sense, why is adoption skyrocketing? You can thank the government and their incentives. States are ramping up incentives for clean energy production (like California’s $3.3 billion solar initiative). If it weren’t for government incentives adoption would drastically drop.

“When you combine these government incentives with the whole culture change that’s going on, you have a recipe for amazing growth.”