He also shares a British health care conglomerate that provides aid for troubled times and “sells even better when folks are broke.”

This from Adam:

Buy into Eastern Europe’s depression or just make 114% on ours: It’s your shot to call.

In case you hadn’t noticed, retail is in a bit of a pickle these days. The Conference Board’s latest consumer poll puts their Confidence Index down another 12.4 points, to yet another all-time low at 25.

Keeping in mind that anything below 50 is considered bad, I’d have to say that a score of half that ought to be considered really bad.

No shock there, I suppose, since we are looking at massive unemployment right about now. As of late last week, the official figure had us at 8.1%, a 25-year high water mark for folks who are slowly sinking under water.

And that’s only looking at it percentage-wise. Our population has grown roughly 45% since 1985, and 140% since 1930, so it’s safe to say that there are probably more folks hanging around the corner wasting time then ever before in the history of the country, including the dark days of the Great Depression.

Depressing indeed, but before you start thinking this is another one of Lass’ loads of unalloyed dreck, I actually have found another one of those oddball companies looking to expand during this dismal episode.

But First… More Dreck!

There is an odd thing about the current wreckage. Back in 2000, the majority of American households were involved in the stock market in one way or another. This was the dawn of online investing, when most any shmoe who could type their name with two fingers could get a trading account. Inside the biz, many still refer to the tech boom and ensuing crash as the “March of the Morons.”

Not very nice, but there it is. But don’t fret too much, because this most recent crash was in many ways the exact opposite. This time around, it was the wise guys themselves who sank trillions into unfathomable, unvaluable, and in the end, valueless debt arbitrage. The very folks who should have known better fell deepest into the briar patch.

As a result, mega-discounters like Wal-Mart (WMT:NYSE) are actually reporting modest but significant increases in sales, while high-end outfits Saks (SKS:NYSE), Nordstrom (JWN:NYSE), and Ann Taylor (ANN:NYSE) are reporting withering sales declines.

The folks in the Ann Taylor corner suite at 7 Times Square (one wonders how long they will be able to afford THAT address eh?) are specifically blaming the 20% plunge in Q4 on the fact that a remarkable number of women no longer require the “business attire” that is ANN’s stock in trade. The future is so “volatile” right now (that’s biz slang for “god-awful”) the team at ANN won’t even put out a forecast for next quarter.

If you didn’t turn every $1000 you invested last year into 113 GRAND, you really need to give me the next five minutes of your time…

As the Dow lost 40% of its value in 2008, one unorthodox analyst steered his readers to optimized one-year gains of 6,635%, 10,838%, and 11,359%.

Here’s how to get eight months worth of his biggest gainers for 2009 FREE…

The Two Fashion Items That Sell Even Better When Folks Are Broke

But there is one “wearable” shop that is not pulling in its horns. In fact, it is looking to expand its offerings into Eastern Europe. And yes, they know that the once-and-future Eastern Bloc is melting down as fast as (if not faster than) we are here in the States. In fact, they are counting on it.

I am referring to SSL International PLC (SSL:LN). This Brit healthcare conglomerate has the rights to distribute Dr. Scholl’s foot aids overseas. Just imagine all those sore, tired guys pounding the pavement looking for jobs! But SSL’s real winner in these troubled times is their Durex condoms line.

As per Chief Executive Officer Garry Watts, SSL intends on using the downturn to bump its stake 50% in a unit that distributes contraceptives to Russia and nine other eastern European countries. And that’s just the first kiss, as it were: By 2010 they hope to buy up the entire operation.

Blunt and to the Point

In a recent interview with Bloomberg’s Kari Lundgren and Howard Mustoe, Watts put it rather succinctly: “Russian people aren’t going to stop having sex any more than British people are. We’re not immune from the downturn, but it’s a bit like Pizza Hut: If you’re not going out, then you might be willing to drop a five-pound vibrator ring into your trolley.”

Hey, he said it, not me, folks. Okay, stinky feet and Russian condoms are slightly unsettling thoughts (especially around lunchtime). But Watt’s got a point and he’s grinning when he makes it, which makes him different than 95% of the CEOs I speak with these days, who can barely manage a forced rictus smile.

If this is just too much for you to wrap your mind around, and you still want to grab a piece of the action in the “Retail Space,” you can always pick up some of the puts we are recommending in my own WaveStrength Options Weekly column.

Like I mentioned earlier, no one is buying luxury goods. Thus, our Best Buy (BBY:NYSE) play is up some 40% as I sit to write, while our Disney (DIS:NYSE) play is up 114%.

Source: Pick Me Up a Three-Pack When You Go Out, Dear

POLITICS & ECONOMICS

The exciting news this week was that the U.S. economy is not actually in crisis. That’s right, it turns out the economy grew a healthy 3.3% y-o-y in the second quarter (not 1.9%, as previously estimated). Strong export growth and private inventories were behind the acceleration, said the Commerce Department.

But before we get ahead of ourselves, Dan Amoss warns us that GDP data isn’t always a good indicator of economic progress.

Besides, Chuck Butler says this outturn is just a ‘blip on the recession chart’. Firstly, the desperate government resorted to handing out checks to stimulate consumption for a month or two.

Then there was the weak dollar making America’s exports cheaper for most of the world. Between April and June, the US dollar index hovered in a range of 71 to 74, barely above its record low of 70.7 set in March. Since then, the index has spiked around 6.5% to reach 77.1 at the close of this week.

Without these twin influences going forward, Charles says growth will be ‘sluggish to nonexistent’. Sure enough, consumer spending stagnated in July, as inflation reached the highest rate for 17 years. Ouch.

Still, U.S. stocks had a day in the sun, as the market decided to take the GDP data at face value. Too bad both the S&P 500 and Dow Jones are down over 12% since the year began.

Of course, it won’t be long until the U.S. economy has a new captain to steer it through these murky waters.

The Republican Party will have its turn next week, but it was the Democrats that threw their party first. The convention was staged in Denver, and Senator Barack Obama officially became the first black presidential candidate. His acceptance speech was a stadium spectacle, and gave him an eight-point lead over rival John McCain in Gallup’s daily poll.

But what will really matter in this year’s election are the candidates’ economic policies. In an effort to shed the “tax and spend” tag, the Obama campaign is focusing on proposed tax relief for America’s middle class. But Martin Hutchinson says tax hikes are a much better alternative to a budget deficit that spirals out of control. Dan Amoss says spending huge sums of money to rescue the economy will just make matters worse going forward.

No matter what the captain does, some icebergs just can’t be avoided.

OIL & ENERGY

Our insatiable thirst for oil and dependence on other countries to supply us with black gold has presented us with great investment opportunities during the energy crisis.

Democratic Presidential Candidate Barack Obama tells us how he plans to invest in the green collar job movement and focus on wind and alternative energy. Yes, this will create more jobs here in the USA but does he realize that the parts needed for these monsters are made in BRIC nations? Perhaps not, but a well-informed investor could see the opportunity in this while OPEC and Russia tremble at the thought of the USA not depending on them in the near future! See what Byron King has to say here.

And speaking of alternative energy, have you ever stood next to just the base of one of the new model windmills that are going up right now in the Northeastern US? The bases and parts alone occupy so much space you need a lot the size of two football fields just to store the parts.

Andrew Gordon of Investors Daily Edge has his eye on emerging market countries like China and Russia for nuclear energy alternatives. He is bearish on oil majors and is sticking with smaller plays like this oil company from South Africa, called Sasol (NYSE:SSL).

EMERGING MARKETS

At times like these, we wonder what the US government would do for a budget like the Chinese. The spectacular opening ceremony to the Beijing Olympics is said to cost somewhere in the region of $300million. Global media quotes $40 billion as the total cost of the games.

Of course, math isn’t an exact science in China. But the Shanghai Stock Exchange has lost exactly 54.7% of its value in 2008 so far. It seems even the world’s fastest growing large economy is not immune to the global correction, prompting the government to draft a $58 billion economic stimulus package.

Is China a bargain yet? Ian Davis says Chinese stocks are not a screaming buy yet, but will be if the price-to-earnings ratio sinks to 12 (it’s currently as 16). Cris Sholto Heaton says investors should stay clear of exporting firms, which will suffer from a fall in demand from the US and EU. But, he thinks infrastructure companies are well protected from an external slump, and will continue to grow rapidly.

Jim Rogers has no doubts over China’s profit potential. “I have never sold any of my Chinese companies,” he told Money Morning in an exclusive interview. “You know, selling China in 2008 is like selling America in 1908. Sure, let’s say the market goes down another 40% – so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908.”

Following on from this, William Patalon III gives us six convincing reasons to invest in the Dragon economy here.

US STOCKS

The mob lined up to hurl a few more stones at Fannie Mae (FNM) and Freddie Mac (FRE) this week.

Warren Buffett declared “the game was over” for the troubled mortgage financiers. Former IMF-chief Kenneth Rogoff said they should have been closed down 10 years ago. Ratings agency Moody’s slashed its credit scores for both, citing the difficulties they would have in raising new capital.

It is the shareholders that are feeling the sting of these blows. As the trading week closed, Fannie’s stock was down 37%. Freddie had slumped 52%. “Mr. Market has called Henry Paulson’s bluff” says Dan Denning, “…it knows that without direct nationalisation, these government sponsored enterprises won’t last the month“.

So the government is preparing the life support machine. It certainly can’t allow these two giants to die. To do so would be “catastrophic” for the global financial system, according to Yu Yongding, former advisor to China’s Central Bank. Eric Roseman thinks US Treasury bond yields could collapse if the Fed doesn’t intervene soon.

But if something is “too big to fail”, how much does it cost to keep alive? Byron King says this new era of government bailouts will divert hundreds of billions of dollars away from vital infrastructure projects to covering Wall Street’s bad investments.

And who will foot the bill? Why, the humble taxpayer of course…

We hope you have a great Labor Day Weekend!

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Until next weekend,
Contrarian Profits Staff

Marc and Julie

Every month, TFN’s Financial Roundtable gathers the market’s top financial editors to provide perspective on the dominant trends in the world markets. After July’s meeting of the minds with Money Morning’s Bill Patalon and Martin Hutchinson (Financial Roundtable: Top financial analyst predicts $225 oil and $9 gasoline in 2009), August’s event combines the insights of Investors’ Daily Edge’s gurus Rick Pendergraft and Andrew Gordon.

J. Christoph Amberger: Andrew, we have seen oil prices fall from $147 per barrel in July down to $110-111 in early August. We have seen gold plummet from $1,030 in March by as much as $230 per ounce. What do you make of this decline in commodities prices? Have we seen the end of the speculative bubble or is this just a retrenchment in a bull market?

Andrew Gordon: Things sure have changed quickly. It was just July 11 when oil made its high of over $147 per barrel and commodities across the board were hitting highs and Western countries were asking OPEC to increase oil production. As a matter of fact, they did. They increased it by 150,000 barrels a day in July.

But by the time that happened, the market really reversed and oil demand went down. Gas demand went down. A little bump up in oil supplies really pushed down the price of crude. It’s gone down over 20 percent.

I don’t think we’re seeing the end of the secular bull, the commodity bull market and the oil bull market. But certainly the price of oil became so expensive in the U.S. and other countries that it really dampened demand. Demand in the U.S. was about two to three percent less than last summer at this time.

But even in China, crude imports were down by about six or seven percent. It didn’t help that Asian countries have been removing some of the subsidies. So, yes, we’re seeing the reversal of just what was going on about a month ago. But prices are now so low that investors are starting to ask themselves, are we risking demand going up and never having a chance to really establish consumption patterns that save on oil and gas and that begin to use alternative fuel?

In the short term I think these prices are going to go down a little more. But long-term, global growth is still not dead. In many countries it’s still a big factor and the basic fact about global growth and about oil supply is oil supply has not been able to keep pace with global growth. That basic fact is not going to change going into the future and it’s going to put upward pressure on the price of crude.

J. Christoph Amberger: Rick, how do you look at this situation?

Rick Pendergraft: Almost the exact opposite of Andy. On a short term basis, I see oil bouncing right now. You’ve got a lot of support in the $110 range. The 200-day moving average is there. That was a high in March; a low in May. Former support becomes resistance and former resistance becomes support. So I see the 110 level being very hard to get through for oil right now on the short term basis.

Ironically, back in about March I wrote a special report on oil that I thought that long-term, we would see a drop in the price of oil because this global demand is shifting to the left. So the demand is going to pull back a little bit and we’re seeing it more so in this country than any others.

But ironically we had China go offline with some factories. They limited the number of cars on the road for the Olympics to try and cut down on the pollution. The Olympics ended this weekend. It’s going to be interesting to see whether or not when that comes back online when the demand starts rising again over the short term, I do think you’ll see oil bounce back up.

I don’t think we hit $147 again — that is probably the high for the next few years. I just think that the demand globally will shift to the left a bit and we’ll see a little bit of decline in the demand there. That would keep that 147 as a price high for quite some time.

J. Christoph Amberger: OPEC’s president was saying that $70 per barrel would in his opinion be a fair price for oil. Of course, OPEC seems to be as variable with their oil price projections as anyone. What do you make of the down side for oil?

Andrew Gordon: Well, it’s funny. OPEC bases that price a lot on the dollar going down. They said to take away the exchange rate and the price of oil would cost around $70 these days and that’s a fair price. There’s nothing wrong with that so we don’t need to increase production.

People are already talking about the price of crude in the double digits. It hasn’t gone through $110 yet – never mind $100 – and people are already assuming that it’s going to go below $100.

I think it’s going to have difficulty going under $110 even. It may. One hundred – I’m not sure if OPEC will allow it. They don’t have veto power over the price of oil, but they have that bully pulpit and they can certainly jawbone the price of oil up from the $100 level by threatening to reduce oil production or at least slow down development of fields.

I think actually at $90, at $80, you still have the price of alternative fuels, the oil sands, solar power, nuclear power. You will still see the development of alternative energy, but I think $70 is really the threshold. Below $70 it’s really going to impact on the development of alternative fuels. I wouldn’t want to see it fall below that.

Mining: the latest “wisdom” from Wall Street is that commodities have or are in the process of peaking. Don’t believe it. The 95 percent increase in iron ore prices negotiated between China and Rio Tinto a couple of weeks ago shows how ridiculous that line of thinking is. (My favorite mining-related company: Bucyrus (BUCY)).                 

Energy: with energy prices this high, there has to be some good investments out there and there are, but it’s not in Big Oil. I like a medium sized oil company from South Africa called Sasol (SSL).

Fertilizers: This sector is a little more volatile than I would ideally like. And fertilizer companies have gone up a great deal already. Potash Corp. (POT) seems to be the favorite among analysts, but I like Terra Industries (TRA) better.

Oil support/transport: Some analysts like the pipelines. I like the rig companies better. Helmerich & Payne (HP) is an outstanding one.

Health care: Following the Boomer into their old age can’t be a bad strategy. Medical Properties (MPW) is a real interesting health care REIT with loads of upside.

Alt Energy: Solar rocks. Now that China has had their 50 percent correction, I’m liking Suntech Power (STP) all over again.

Precious metals. Gold and silver are going up, baby. The ETF GLD rises with the price of gold. That’s sounds good to me.

Everyone should have a recessionary handbook in their back pocket. This is mine.

Source:  The “Seven Up” Recessionary Handbook 

It now applies to a wide variety of similar processes for converting coal, biomass and other carbon intensive feed-stocks into usable products such as diesel and jet fuel.

These two scientists at the Kaiser Wilhelm Institute invented the process because of a petroleum shortage, increased demand and skyrocketing prices – similar to what the United States faces today. During World War II, Germany used the technology to keep Hitler’s war-machine running.

By 1944, Germany’s annual synthetic fuel production reached more than 124,000 barrels per day from 25 plants. After the war, captured German scientists continued to improve the process in the United States.

But the technology faded after the 1980s. That’s when Congress passed the Energy Security Act, which birthed the Synthetic Fuels Corp (SFC). SFC spent over $88 billion in government loans and incentives, with the goal of creating two million barrels a day of synthetic oil within seven years.

SFC was launched in 1980 and it folded in 1986 after spending billions without providing any fuel. In the grinding recession of the early 1980s, oil prices sunk from more than $39 a barrel to less than $8 a barrel. Synthetic oil became a financial bust.

Now the economics have changed…

With Oil Trading at $130 per barrel, Synthetic Fuel is a “No-Brainer”

The process works like this: Coal is broken into its components by subjecting it to high temperature and pressure, using steam and measured amounts of oxygen. This leads to the production of synthetic gas.

Because the United States has benefited from years of low price petroleum, the leader in synthetic gas grew up in South Africa. The global leader is Sasol (NYSE: SSL). Sasol uses coal and natural gas as a feedstock to produce a variety of synthetic petroleum products. Sasol produces most of South Africa’s diesel fuel using a modified Fischer-Tropsch process.

This process helped South Africa to meet energy needs during its economic isolation under Apartheid. Sasol’s process has received recent investor attention because they produce a low-sulfur diesel fuel, which minimizes the environmental impacts. As a result its stock has soared.

In the United States, a small firm named Rentech, Inc. (AMEX: RTK) provides technology to produce ultra-clean synthetic fuels and chemicals. It licenses its proprietary derivative process from the Fischer-Tropsch method.

It converts synthesis gas derived from coal, petroleum coke, biomass, natural gas, or municipal solid waste into liquid hydrocarbon products. This includes ultra clean diesel fuel, jet fuel, naphtha, specialty chemicals and other fuel products. Rentech also manufactures anhydrous ammonia, UAN, nitric acid, carbon dioxide and granular and liquid urea.

The US Air Force has been a leader in the utilization of these fuels. Most of the fleet is being certified to fly on a blend of synthetic and jet fuels. Recently, a B-1 Bomber became the first plane to break the sound barrier flying with a mixture that included synthetic jet fuel.

In addition, Rentech has a joint development agreement with Peabody Energy Corporation for the co-development of CTL projects that convert coal into ultra-clean transportation fuels using Rentech’s Process.

As with many companies focused on research and development of new technology, Rentech has yet to post a profit and its shares have traded in a small range for over a decade. RTK is still a highly speculative investment in one of the many potential solutions to our rising fuel costs.

So while the media hype is focused on solar, wind and even tidal power to solve our energy needs, the likely successor to petroleum will be refined from a black, sooty fuel that has been used since ancient times – coal.

I am happy to report that the United States has lots of coal, and companies operating in our free enterprise profit-incentive world are perfecting the technology to cleanly burn it in our planes, trains and automobiles.

Happy investing,

Floyd

Source: How These Two German Scientists Are Solving Our Energy Crisis