Ian Cooper - Angel Publishing

Jim Rogers on Oil and the US Dollar

Note: Parts of today's Wealth Daily originally appeared in Saturday's Energy and Capital. We're updating you on new developments and showing how you can profit as oil surges to $143.

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As we told weekend Energy and Capital readers, the Energy Department believes oil prices will fall to $70 a barrel in the next seven years, as production begins in Azerbaijan, Canada, Brazil and Kazakhstan.

But a $70 scenario assumes that OPEC producers will maintain their 40% market share of global oil supply, with plans to invest in additional production. From $70, it's expected to rise to $113 a barrel by 2030, a sharp revision from last year's $59 by 2030 report.

Even $113 may be off, as the issue of supply vs. demand force prices higher. It's not speculation sending oil higher.

Warren Buffett even agrees that it's a supply and demand issue, and not speculation.

"In my lifetime, up until the last year or two, there's been a huge amount of excess supply available," he said. "We don't have excess capacity in the world anymore, and that's why you're seeing these oil prices."

Couple that with news that world energy consumption will rise 50% between 2005 and 2030, as demand in developing countries rises 85% and oil "worst case" scenarios become plausible.

Oil and the US Dollar: What Jim Rogers Is Advising Now

Jim Rogers, who in 2006 predicted $100 oil and $1,000 gold, now says investors should avoid the dollar and instead favor commodities.

According to Bloomberg, Rogers said to avoid the dollar "at all costs" in a speech in Shanghai Monday. "The best investments in 2008 are commodities and natural resources. Agricultural prices have much higher to go over the next decade. We have a shortage of everything, including seeds."

Rogers also anticipates further gains in oil prices, which reached a new all-time high of $143 on Monday. "Crude oil prices are not high enough to stop people from consuming more energy,'' he said. "The bull market will not go to an end until supply and demand come to a balance."

Also not helping our oil woes, OPEC President Chakib Khelil is out predicting $170 a barrel before the end of 2008. According to Bloomberg, Khelil said, "Oil prices are expected to reach $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro.''

Israeli-Iranian tensions over nuclear projects aren't doing much to help. There's a growing fear that in the event of war with Iran, the Strait of Hormuz (passageway for 90% of oil exported from Gulf producers) would be jeopardized. If that happens, we'd see an immediate oil super-spike.

Iran's Revolutionary Guards has already said it would impose controls on shipping in the Persian Gulf and Strait of Hormuz, which accounts for about 40% of the world's oil, if it were attacked.

And then there's Libya, which is threatening to reduce oil production. According to Bloomberg, Shokri Ghanem, chairman of Libya's National Oil Corporation said reductions may be made because of an over-supplied oil market, and in response to Iranian sanctions.

How Investors Can Profit From the Falling U.S. Dollar...

By buying domestic crude oil and alternative energy companies. Oil is going higher. Nothing is stopping the rise. The dollar is weakening. And inflationary pressures remain tight.

Making these companies even more attractive are the oil and gas discoveries and the fact that domestic explorations are more appealing given geopolitical tension.

Even the President agrees.

"Our problem in America gets solved when we aggressively go for domestic exploration," Bush said.

To protect your portfolio from higher oil cost, diversify with domestic and alternative energy companies, like Royale Energy (ROYL), Marathon Oil (MRO), SandRidge (SD) and the many stocks recommended in Pure Energy Trader, The $20 Trillion Report, and GreenChipStocks.com.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

Dear President Obama

We came across this and thought you'd be interested. Enjoy.

The original can be found on the PIMCO site here from Bill Gross.

"Dear President Obama:

You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans. He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love. Over eight years, he failed to put forth a coherent energy policy. He needlessly invaded Iraq and lowered worldwide esteem for this nation as a symbol of freedom and benevolence.

But enough about W's spilt milk. I've already ticked off so many readers that they're questioning my Republican Party voter registration. What do I think you should do as the new President to rectify this mess? All I know is that any solution will come with a high price tag. Although your campaign slogan says "Yes we can," I have my doubts. Granted, you're going to raise tax rates on the rich, give a break to the lower/middle class and rebalance the scales of economic justice somewhat. I myself won't enjoy paying that near 50 percent marginal tax rate after you remove the current cap on the payroll tax, but my wealthy neighbors and I in Newport Beach should just look at it this way: we've had an eight-year lease extension on the "high life." Now it's time to give something back and I suspect we won't be working any less hard. That ol' Laffer Curve has a certain logic to it, but it only makes sense at the upper margin. People did work less at confiscatory tax rates imposed pre-Thatcher/Reagan but once they got down to 50 percent or lower, it was all gravy - promoting conspicuous consumption as opposed to higher productivity and overtime at the office. Gosh, now we don't even want those oversized trophy houses! The New York Times reports that the high-profile crowd now favors small ecologically certified "LEED" houses - "Leadership in Energy and Environmental Design." My, what green eyes we have, Grandma!

Anyway, so you're gonna do the tax thing, Mr. President, and throw in some form of universal healthcare to boot that your buddy Hillary will help spearhead. You hope you can get a lot of this passed despite a potentially long string of filibusters from a Senate that won't quite have sixty Democrats. In addition, you'll need to provide some immediate relief to homeowners in the form of FHA (Federal Housing Administration) subsidies and low mortgage rate loans that somehow have been studied and studied in Congress for the past six months yet still haven't been passed into law. By January, home prices will be down another 10 percent or so and our Japanese-style property deflation will be in full stride. Congress will have had its summer recess though and spent September and October on the campaign trail. They had to get re-elected you know, so those homeowners just had to wait."

The rest can be read here. It's lengthy.

205% For Reading a Free Blog?

In preparation for our eventual all-options letter, we're warming up in The Options Pit blog.

While we don't often provide free trades in our blogs, we did make mention of these five.

On June 3, 2008, Lehman had just broken multi-year support. We mentioned that the "best way to trade the possible drop was to buy the October 25 put options (LYHVE)." At the time, the option traded at $3. Today, as LEH breaks $21 to the downside, the put option trades at $7 - a 133% gain.

On June 10, 2008, Wall Street was bracing itself for further UBS writedowns. Considering the held $15 billion in subprime securities and $17 billion in Alt-A, further downside was a no-brainer. It's why we made mention of the September 22.50 UBS put (UJWUX). At the time, the put traded at $1.30. It now trades at $2.70 - a 108% gain.

While the next three positions didn't come with a mention of a buy, we did receive mentions of what some of you bought.

On May 28, 2008, we recommended that you keep an eye on Expedia (EXPE) following rumors that Barry Diller was looking to take the company private. But as with all rumors we urged caution, saying, "While call activity may indicate bullishness, be cautious of following the rumor." Had you bought the Expedia October 22.50 put (UEDVX), for example, around $1.80, you'd be up 133% as the put now trades at $4.20.

We also made mention of Coca Cola Enterprises (CCE) that day, as "another one for the radar screen," saying "You know things have gone economically awry when people aren't buying Coke any one. The company just reported that trends have ‘continued to limit volume performance in North America, particularly in higher margin 20-oince packages of sparkling beverages and water, negatively affecting operating income.'"

Had you bought the November 20 put (CCEWD), for example, around $1.05, you'd be up about 205% as it now trades at $3.20.

And on June 2, 2008, we mentioned that "Lumber and wood producer Masco Corporation (MAS) is seeing its third day of call option buying activity. But don't be so quick to buy." Understandably, investors wanted to load up behind the Chairman because they believe the U.S. real estate market will bottom this year. It's won't happen, though.

Had you bought the MAS October 20 put, for example, around $3 that day, you'd be up about 67%.

Not a bad start considering we're just getting warmed up.

Airlines See Call Option Activity

Airline stocks, such as Delta Air Lines are seeing significant call option activity in the out of the money September 2008 7.50 call. Something may be happening here. Volume of 32,653 vs. OI of 62,669 isn't an every day event. While we aren't sure of what to make of the move, perhaps merger speculation, keep the call option on radar.

Even JetBlue is seeing some call buying interest in the January 2010 out of the money 5, 7.50 and 10 call option LEAPS. It's one for the radar screen, and a buy when and if oil pulls back.

Oil Speculators Are Not to Blame

For weeks, oil speculators have been blamed for skyrocketing oil prices... but it's not their fault. It's a supply and demand issue.

Even Warren Buffett agrees. "In my lifetime, up until the last year or two, there's been a huge amount of excess supply available," he said. "We don't have excess capacity in the world anymore, and that's why you're seeing these oil prices."

Couple that with news that world energy consumption will rise 50% between 2005 and 2030, as demand in developing countries rises 85% and oil "worst case" scenarios become plausible.

And if you need further reason for an eventual rise to $150... $170... even $200, look no further than the Middle East.

Iran's Revolutionary Guards has already said it would impose controls on shipping in the Persian Gulf and Strait of Hormuz, which accounts for about 40% of the world's oil, if it were attacked.

But it's just not us and Buffett pounding the pavement over supply-demand issues, big oil companies are agreeing.

Here's more from Reuters...

"The heads of some of the world's biggest oil companies countered on Monday OPEC claims that speculators were driving high oil prices, blaming instead a dearth of new supplies.

The chief executives of Royal Dutch Shell Plc (RDSa.L), BP Plc (BP.L) and Spain's Repsol YPF (REP.MC) told the oil industry's biggest gathering in three years that restrictions on where they can invest and high taxes meant they could not help boost supplies as much as they might.

BP's CEO Tony Hayward said the argument that financial investors buying oil futures were behind a four-year rally that pushed oil prices to new records above $143/barrel on Monday was a "myth."

He said the problem was a failure of supply growth to match demand growth. "Supply is not responding adequately to rising demand," he told thousands of delegates at the World Petroleum Congress.

Repsol CEO Antonio Brufau agreed. "The fundamentals in the industry are the significant reasons for having these prices," he said.

Shell Chief Executive Jeroen van der Veer said there was enough supply to meet current demand but that the market was tight and that many users were justifiably worried that future supplies will not meet demand.

Insofar as financial investors were involved in the market, they were only following such supply fears.

"We don't think that the financial markets are leading the speculation, probably they follow what other people fear as long term fundamentals," Van der Veer said. "I do not think that you can blame speculation for the oil price."

Van der Veer said while the world's third-largest oil company by market value did use energy derivatives it did not speculate on the oil price and that its net trading position was balanced.

Oil companies often hedge production but do not usually bet on the direction of the oil market, with the possible exception of BP which is considered the most aggressive trader among the majors.

Analysts at Goldman Sachs have dismissed the speculative bubble argument. "We find the concerns that commodity markets are in the midst of a speculative bubble unwarranted," the investment bank said in a research note published on Sunday.

U.S. light crude was up $1.64 at $141.85 a barrel by 10:59 a.m. EDT, after a record high of $143.67 a barrel, supported by concerns over tensions between Israel and Iran over Tehran's nuclear program.

ACCESS TO RESERVES

Hayward said politics rather than geology was the reason behind anemic supply growth. "The problems are above ground not below it," he said.

Brufau noted that 90 percent of the world's oil reserves were in countries, such as Saudi Arabia and Kuwait, which restricted investment by international oil companies.

Despite falling spare global oil production capacity, OPEC argues that supplies are ample and that they are investing enough to ensure consumers will have the oil they need in future.

However, analysts say while the oil majors tend to boost their investments when oil prices rise, in the hope of lifting output and profits, state-run or national oil companies (NOCs) often do not respond to market signals.

NOC investments are driven by other priorities such as their governments' short-term cash needs, maximizing long term returns and possibly management of the oil price.

High taxes have also limited investment, the executives said. As oil prices rose in recent years, producing countries from Russia to Venezuela have boosted oil taxes sharply.

Hayward said taxes were now ‘dangerously high.'"

Crude Oil Forecast

Crude oil forecasts for $150 to $200 oil aside, the Energy Department believes oil prices will fall to $70 a barrel in the next seven years, as production begins in Azerbaijan, Canada, Brazil and Kazakhstan.

But a $70 scenario assumes that OPEC producers will maintain their 40% market share of global oil supply, with plans to invest in additional production.

And from $70, oil is expected to jump to $113 a barrel by 2030, as the market remains "relatively tight," they said. That's a 92% revision from last year's "$59 by 2030" forecast.

But even $113 may be off, as the issue of supply vs. demand force prices higher. It's not speculation sending oil higher.

Even Buffett agrees that it's a supply and demand issue, and not speculation.

Couple that with news that world energy consumption will rise 50% between 2005 and 2030, as demand in developing countries rises 85% and oil "worst case" scenarios become plausible.

Other Oil Issues...

The weak dollar isn't helping, and neither are OPEC comments that oil could reach $170 this year on currency and geopolitical risks. A falling U.S. dollar makes goods priced in dollars cheaper for foreign buyers, resulting in higher demand.

Threats against Iran over nuclear projects aren't doing much to help. There's a growing fear that in the event of war with Iran, the Strait of Hormuz (passageway for 90% of oil exported from Gulf producers) would be jeopardized. If that happens, we'd see an immediate oil super-spike.

And then there's Libya, which is threatening to reduce production. According to Bloomberg, Shokri Ghanem, chairman of Libya's National Oil Corporation said reductions may be made because of an over-supplied oil market, and in response to Iranian sanctions.

So how do you profit from it?

You buy domestic crude oil and alternative energy companies. Oil is going higher. Nothing is stopping the rise. The dollar is weakening. And inflationary pressures remain tight.

Making these companies even more attractive are the oil and gas discoveries and the fact that domestic explorations are more appealing given geopolitical tension.

Even the President agrees.

"Our problem in America gets solved when we aggressively go for domestic exploration," Bush said.

Good Investing,

Ian L. Cooper

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of June 23, 2008.

Platinum Mining Companies: Zimbabwe Set For a New $400 Million Platinum Mine
Platinum is extremely rare, occurring at only 0.003 parts per billion in the Earth's crust. This makes the most precious of all precious metals about 30 times rarer than gold. In fact, it's so rare that if all the platinum in the world was poured into one Olympic-size swimming pool it would scarcely be deep enough to cover your ankles.

The Big Picture on Q2 2008, Part 2: Commodities and Renewables Charge While Market Tanks
In part 1 of this series, we reviewed the trends in financials, fossil fuels and electricity. This week, we take a look at renewables, food and fertilizer.

Brazilian Ethanol: The Break-Out Brazilian Energy Play
Brazilian sugar refiners are ready to satisfy America's energy sweet tooth. Here's what I mean, and why the Brazilian ethanol recommendation noted below is about to explode.

Investing In Safaricom: The Coming African Stock Boom
Nigeria is mired in oil turmoil, and Zimbabwe's elections just turned bloody again. But regional growth is at 30-year highs and has room to run. That's why today I'm telling you to buy Africa. Across Africa, outbursts and opportunities pose huge potential for risk and reward to the international investors swarming in. Here's how you can make money in African investments.

Investing in Wind Energy: How to Own 52 Wind Stocks for $30
As oil prices stay high, the wind power and alternative energy themes are becoming increasingly popular, making the latest ETF issue even more enticing at $30.

Investing in Electric Vehicles: The DIY Strategy for Energy Price Hedging
If you think $4 at the pump is bad, just wait. It's not getting better anytime soon. By now, we've heard all the reasons for escalating prices: rising demand in India and China, a falling dollar, speculative trading and many others.

Microsoft-Yahoo Deal Back On?: Don't get too excited, though.
TechCrunch is reporting that Yahoo and Microsoft talks are back on. "The information we have is thin, but what one source is saying that Microsoft is talking a price lower than the $33 they were offering when the talks disintegrated in May," the report said.

When Will the Credit Crisis End?: Peak by Q1 2009, says Goldman Sachs
The credit crisis will not peak until the first quarter of 2009, said Goldman Sachs. And, according to the latest Goldman forecast, global financials will need to raise another $65 billion by this time next year to deal with losses.

Dow Does it Again...Tack on Another 25%: Chemical Giant Hikes Prices for a Second Time
The last time I wrote about Liveris was less than a month ago, when he decided that his company had no other choice but to raise prices 20% across the board. His input costs (read the price of oil), he complained had simply become too high crushing his margins.

El Paso Calls Heating Up: Why it's still a buy...
You may want to keep El Paso (EP) on radar. The El Paso August 2008 23 calls are seeing interest with 7,986 call contracts trading hands versus open interest of 69. The spike is being attributed to news that the company has expanded land holdings in the Haynesville shale area. While the stock has since retreated on the comments made at the Wachovia Nantucket Equity Conference, it and the call options are a buy.

How to Protect for Downside
This rally won't last, we said June 12. Bank earnings are next week. The world is on the edge of severe crises. Israel and Iran are ready to fight. Oil is heading up. Gas is skyrocketing. Thousands of homes are in foreclosures. Global banks are struggling. Home equity loans are the new subprime fiasco. Unemployment is rising. Food riots are daily. Bond insurers are losing ratings. Oh, and then there are the hundreds of trillions in derivatives.

Anavex Life Sciences

It was June 2008 when we last reiterated a buy on Anavex Life Sciences (AVXL.OB) and for good reason. This is the company that could help treat Alzheimer's disease.

And if you haven't bought yet, consider doing so ahead of July 26.

You see, between July 26 and July 31, 2008, the company will present its Anavex 1-41 findings at the International Conference on Alzheimer's Disease 2008. And if findings are favorable, there's no telling how much attention this stock and treatment could receive.

What we do know is that Anavex will present that:

"(1) The very low doses of ANAVEX 1-41 (30-100μg/kg, ip) at which we attain neuroprotective results, indicating significantly greater potency than other pharmacological agents."

"The neuroprotection was specifically assessed in the hippocampus, an area highly implicated in Alzheimer's disease. This very significant neuroprotective activity of ANAVEX 1-41 was found to be related to its combined sigma-1 and muscarinic effects."

"(2) The novel anti-apoptotic mechanism of ANAVEX 1-41 that was attained at extremely low doses of ANAVEX 1-41 (100-fold below the threshold for unwanted muscarinic effects). Apoptosis is the predominant pathophysiological aspect of the brain degeneration in AD, and protection against this process could be an important therapeutic strategy."

"In particular, the inositol triphosphate receptors calcium channels (IP3R) upregulation and endoplasmic reticulum (ER) stress sensors modulation maintained the ER and the mitochondrion in the unfolded protein response (UPR) adaptative status and protected against the triggering of apoptotic processes."

News like that only bolsters our bullish opinion.

If you're new to the stock, here's what we originally said on June 14.

Alzheimer's Drug Stocks: How to Get a Piece of a $9 Billion Market

More than 5.2 million Americans have Alzheimer's disease. Another 7.7 million Americans will suffer with it by 2030, and another 16 million will suffer by 2050. And there's a yearly price tag of $148 billion to treat these patients.

No one is quite sure what causes the disease that gradually robs sufferers of memory and the ability to care for one self. There's no known cure, and current drugs are only temporary pain relievers.

So wouldn't it be nice if the drug companies got it right?

Hopes are already mounting that an experimental drug from Elan and Wyeth can do the trick. If they can clear out deposits called amyloid plaque, or simply halt the production, they could help millions of patients, and potentially see annual sales of $13 billion.

But such theories of anti-amyloid could be based largely on "theory and hope," says University of Southern California psychiatrist Lon Schneider (as quoted by Forbes). "None of the drugs have shown evidence of efficacy yet. Geneticist John Hardy, one of the first to finger amyloid as a suspect, puts the odds at 50-50 that one of the antiamyloid drugs will work."

Plus, says the Forbes report, people that can function normally also have large amounts of amyloid-beta plaque, which casts doubt on whether the plaque is a cause, a consequence, or simply an indication of an aging brain.

While there's some hope that Elan and Wyeth can help millions of sufferers, and in the end reap millions for shareholders, some drug developers are turning to the theory of oxidative stress, which damages and destroys cells and is believed to be a primary cause of Alzheimer's disease.

According to PharmaLive.com, ‘Involvement of Oxidative Stress in Alzheimer's Disease' study leader Dr. Nunomura "pointed to extensive evidence of mechanistic and chronological links between oxidative stress and a number of key characteristics of the disease."

The research also suggested that amyloid beta could be produced by the body as it tries to fight the disease, later turning into an accumulating toxic substance. In other words, there's a belief that if amyloid was removed during early stages of the disease, it could do more harm.

Alzheimer's Drug Stock: Anavex Life Sciences (AVXL.OB)

One of the companies basing its Alzheimer's drug on oxidative stress theories is AVXL.OB. Brian Hicks introduced you to this company in November 2007.

The company's drug candidate, ANAVEX 1-41, uses sigma receptors to stand guard against oxidative stress and repair cells. And when AV-1-41 goes into Phase I trials, we fully expect the market to re-rate the company upwards to $10 to $12 a share.

The drug is already showing promise in early stages. And in some trials, the drug reportedly provided neurons with protection from oxidative stress, prevented amyloid beta from becoming toxic, and reduced memory deficit in animal tests.

We continue to rate Anavex stock as one of our favorite small cap investments for 2008-2009. And the fact that the stock hasn't sold off - especially during the recent market turmoil - speaks volumes.

Better, we wouldn't be shocked if Anavex was a buyout candidate.

One, the company is betting that compounds for Alzheimer's disease based on its Sigmaceptor platforms will provide it with competitive advantages. Its Anavex 1-41 treatment has demonstrated that the compound "significantly" protects neurons by preventing oxidative stress, which can damage and destroy cells and is strongly believed to be a main cause of many neurodegenerative diseases.

In short, if drugs like Anavex's can slow or prevent diseases like Alzheimer's there's no telling how many buyout offers would flood Anavex offices.

Plus, they've got another 11 sigma receptor compounds in pre-clinical development, three of which could soon file for investigational new drug applications this year alone. This includes treatments for epilepsy, colorectal cancer and other solid tumors.

Anavex 7-1037 (for colorectal cancers) preclinical trial treatments, for example, shows a 69% reduction (with minimal adverse effects) in tumor growth.

Two, big pharmaceutical companies may not continue overlooking companies with oxidative stress exposure. And three, the Alzheimer's drug market could triple to $9 billion by 2017. Why wouldn't big pharma want a piece of that?

Good Investing,

Ian L. Cooper

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of June 23, 2008.

Crystallex International Corp.

Mid-May 2008, all looked grim for shares of Crystallex (KRY), as Venezuela pulled the plug on the company's Las Cristinas property. Production was expected to begin there by 2009.

At the time, Venezuela refused to grant a permit to KRY for the Las Cristinas mine after deciding not to grant licenses for open-pit mining for gold, diamonds and coal. Instead, they opted to step up oversight on the mining industry. Citing ecological damage for the move, Venezuela dashed KRY's hopes to mine in the nine million acre reserve.

But that was in May.

Today, shares of Crystallex may be a buy after the Venezuelan government said it was willing to reconsider the cancellation of the permit for the Las Cristinas project. In this release, the company said it was invited to a meeting by representatives of the Ministry of the Environment, and was told that possible modifications of the Las Cristinas project could result in an issued permit.

Modifications included further optimizing the social project in the area, mitigating the impact of open vein deposit in the affected areas of the Imataca, improving the remediation plans at the end of the mine life as well as remediation of the existing environmental damage caused by illegal miners.

Even better, from the minutes from a National Assembly committee meeting, Crystallex learned that representatives from the Ministry of Mines "confirmed support" for the company.

While nothing is set in stone just yet, so far the news is good for the company and shareholders of the beaten down stock. Keep it on radar.

Good Investing,

Ian L. Cooper

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of June 23, 2008.

The Big Picture on Q2 2008, Part 2: Commodities and Renewables Charge While Market Tanks0
In part 1 of this series, we reviewed the trends in financials, fossil fuels and electricity. This week, we take a look at renewables, food and fertilizer.

Microsoft-Yahoo Deal Back On?

TechCrunch is reporting that Yahoo and Microsoft talks are back on. "The information we have is thin, but what one source is saying that Microsoft is talking a price lower than the $33 they were offering when the talks disintegrated in May," the report said.

The news comes a day after CNET speculated that Yahoo could be in talks with Microsoft again about the Yahoo search business. But, as we've heard in previous Yahoo statements, the search engine has no interest in selling that business.

Just don't get too excited, and race out to buy Yahoo yet. According to CNBC, there is no deal for Microsoft to buy all of Yahoo, and that nothing has changed. The commentator noted that discussions regarding Yahoo's search business have always been on the table.

All we know right now is that it's a circulating bullish rumor that ignited call buying interest in July, August and October 2008.

Stay tuned for more...

El Paso Calls Heating Up

You may want to keep El Paso (EP) on radar. The El Paso August 2008 23 calls are seeing interest with 7,986 call contracts trading hands versus open interest of 69. The spike is being attributed to news that the company has expanded land holdings in the Haynesville shale area. While the stock has since retreated on the comments made at the Wachovia Nantucket Equity Conference, it and the call options are a buy.

"The Haynesville natural gas shale is found in a vein approximately 11,000 feet underground," says Energy and Capital editor Keith Kohl "Although the Haynesville shale is being touted as the largest onshore natural gas field, it's a little too tell exactly how much natural gas is down there, that's not stopping companies rushing to grab acreage in the play."

Just how big is the potential?

According to the Wall Street Journal, "Chesapeake Energy has snapped up more than 300,000 acres of potential mineral reserves and is bargaining for 200,000 more in the Haynesville area. The company, which has vast resources to unearth gas deposits, accelerated a real-estate bidding war in April, when it declared that Haynesville "could potentially have a larger impact" than any of its previous energy investments..."

"The race to acquire Haynesville acreage started fewer than two years ago. Petrohawk was already drilling a gas deposit known as Cotton Valley, a separate deposit that runs roughly 3,000 feet above parts of Haynesville's deposits, when it became aware of Haynesville in 2006. Chesapeake later raised expectations with claims that Haynesville holds large quantities of natural gas."

"The real-estate frenzy, largely inspired by Chesapeake's initial claims of vast resources, has created a short-term windfall for Goodrich, which has acquired most of its Haynesville land at an average price of $350 per acre. New territory in Haynesville is selling for more than $4,000 an acre, according to a senior official at Goodrich. The rush to develop Haynesville is also being fueled by natural-gas-futures prices that recently reached $11.17. All three energy producers are in a hurry to begin drilling while natural-gas prices are high."

Investing in Wind Energy

As oil prices stay high, the wind power and alternative energy themes are becoming increasingly popular, making the latest ETF issue even more enticing at $30.

Last week the much-anticipated First Trust ISE Global Wind Energy ETF (FAN) launched. And not only will investors will have an opportunity to profit from companies in the wind energy business, they can profit from companies that will soon enter the space.

Sixteen percent of the fund is allocated to the U.S. with some weighting in Denmark, Germany, the U.K. and Spain, including:

· REpowersystems AG - 10.51%

· Vestas Wind Systems - 10.28%

· Gamesa - 8.81%

· Hansen Transmissions - 6.80%

· Japan Wind Dev. Co. - 5.13%

· Babcock & Brown Wind Partners - 4.40%

· Nordex AG - 4.34%

· Theolia SA - 4.28%

· Clipper Windpower - 2.94%

· Gurit Holding AG - 2.81%

Why Are We So Bullish on Wind Energy Investing ?

For one, the U.S. isn't the only country interested in wind power.

UK ministers want a six-fold increase in the amount of energy generated by wind farms by 2020. That would mean that another 4,000 wind turbines would be build across the UK, adding to the 2,000 onshore turbines already in place.

Just last month, the government announced plans for another 7,000 turbines off the coast.

And as for the U.S., twenty years from now wind energy could produce 20% of America's electricity.

An Energy Department study found that wind energy could generate 20% of U.S. electricity by 2030, as compared to today's one percent.

The good news - The Energy Department report finds that achieving a 20% wind contribution to U.S. electricity supply would:

Reduce carbon dioxide emissions from electricity generation by 25 percent in 2030.
Reduce natural gas use by 11%;
Reduce water consumption associated with electricity generation by 4 trillion gallons by 2030;
Increase annual revenues to local communities to more than $1.5 billion by 2030; and
Support roughly 500,000 jobs in the U.S., with an average of more than 150,000 workers directly employed by the wind industry.

To achieve 20%, wind turbines would have to produce 300,000 megawatts of power, compared to today's generated 16,000 megawatts.

It's doable.

And it should come as no surprise that billionaire investors are lining up for a piece of the coming wind energy boom, including T. Boone Pickens, who believes that by reducing oil imports by 38% would save us nearly $300 billion a year.

"It's time we got serious about using [wind power]," he said.

Follow the Smart Money

Pickens' Mesa Power just ordered 667 turbines from General Electric to begin a $10 billion wind far project in Texas. When completed by 2014, the wind farm will be capable of producing 4,000 megawatts, or enough energy to power 1.2 million U.S. homes.

"Oil fields have a declining curve - you find one, it peaks and starts downhill, you've got to find another one to replace it. It drives you crazy! With wind, there's no decline. "You need a giant plan for America," he says. "Not the pissant 83 megawatt [windfarm] deals being stamped all over the country. There needs to be a huge plan from someone with leadership. It's going to take years to do, but it has to start now."

Fortunately, we're familiar with the potential as well.

Says Brian Hicks:

"What we simply cannot ignore about the wind energy market is its growth during 2007. Last year, a record-breaking 20,000 megawatts (MW) of wind power were installed around the world. That means that wind energy supplied approximately 94,000 MW of energy. In other words, that's a growth of around $36 billion."

Let's put this into perspective...

Between 2005 and 2007, both Germany and Spain's wind power capacity experienced impressive growth (about 21% and 51%, respectively). Now look back at the U.S. growth.
Our capacity catapulted nearly 84%!

Don't think for a second that wind energy is about slow down...

Since 2000, wind power production has increased fivefold. Remember that during that period, oil prices have grown nearly the amount. Now that a peak oil is starting to get under the global spotlight, we can expect to see a massive interest in renewables like wind energy.

We're talking about a source of energy that is a renewable, clean, has a low operating cost and has technology that's been around for over century (the first power producing windmill was created back in 1887).

But it isn't just the past growth that we're impressed with. Over the next two years, the Global Wind Energy Council (GWEC) predicts that the world's installed wind power capacity will practically double to 149.5 GW. If you notice, the installed capacity in 2007 was 94,000 MW-which was higher than originally forecasted!"

Not only are we bullish on the latest ETF issue, we remain bullish on pure wind play Western Wind Enertgy (WND.V).

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

When Will the Credit Crisis End?

The credit crisis will not peak until the first quarter of 2009, said Goldman Sachs.

And, according to the latest Goldman forecast, global financials will need to raise another $65 billion by this time next year to deal with losses.

But they're wrong. They're failing to account for the losses when Option ARMs reset.

Alt-A loans were given to borrowers with credit scores of between 620 and 700, and included the option of interest-only loans, option ARMs, and no documentation loans that required little if any documentation for loan approval. Ninety percent of those that got an Option ARM in 2006 provided little or no documentation.

Ninety percent!

And it's estimated that only 60% of Option ARM borrowers make only minimum monthly payments. Others estimate that up to 80%. Say a borrower makes minimum payments on a $600,000 loan. That loan could easily be a $750,000 loan within two years.

Option ARM resets won't peak until 2011.

Even Meredith Whitney believes, "the real harrowing days of the credit crisis are still in front of us," predicting that banks could write off another $170 billion by the end of 2009.

But not every one is as pessimistic...

Richard Fuld, for example, tells us the worse of the crisis is "behind us."

JP Morgan Chase's Jamie Dimond believes the market debacle is "maybe 75 percent to 80 percent over."

And, while it may sound great, remember that last summer we heard similar forecasts from the banking community. Remember when the Merrill Lynch CEO said the subprime crisis was "reasonably well contained"?

FDIC Chairman Sheila Barr said we're in the 7^th inning.

Morgan Stanley said we're in the 3^rd inning.

Morgan Stanley CEO John Mack says the 8^th inning... maybe even top of the 9^th.

But if you ask me, we're in the top of the 6^th inning of a double-header.

Option ARM resets will be tougher for the economy to handle than subprime. And we will see greater numbers of bank failures, job losses, foreclosures, delinquencies, and economic hardship.

Listen, I'm not economically pessimistic. But I prefer to be a realist. Prepare your portfolios for downside risk and a weaker dollar knowing the reality of what's ahead.

Banks will not bottom until housing bottoms.

P.S. We came across an interesting Jim Cramer "flip-flopping" piece on YouTube. Enjoy.

A 22% S&P Fall by September?

If you think today's broad market sell-off was a disaster, just wait until September 2008. That's when, according to the Royal Bank of Scotland is saying the S&P 500 could fall more than 300 points to about 1,050.

"A very nasty period is soon to be upon us - be prepared," wrote the bank who also said the inflationary threat will "paralyze major central banks."

"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets."

And it could get worse, says Morgan Stanley.

"It will be worse yet - for Europe - if the Fed backs away from expected tightening. ‘This could trigger another 'catastrophic' event.'"

"We see striking similarities between the transatlantic tensions that built up in the early 1990s and those that are accumulating again today. The outcome of the 1992 deadlock was a major currency crisis and a recession in Europe," said a report by Morgan Stanley's European experts.

So, as an investor, what do you do? One, keep some investment in cash, or two, profit from the insanity with UltraShort positions, short positions, and put options.

My readers profited handsomely from the subprime, Alt-A, credit fiasco, the downfall of the UK economy, and banking disasters in 2007 and 2008.

And it won't be a problem profiting when the next disaster hits.

Food Price Inflation

My wife and I went food shopping this weekend... And despite our cost-cutting, coupon-using efforts, five bags of groceries cost us $155. And we hardly got anything. But we're not alone in our frustration. Millions of Americans are not only struggling to pay for gas just to get to the food store, they're struggling to pay the grocery bills.

And as much as I'd like to tell you it'll get better, which will eventually happen, it won't happen soon, no thanks to high waters in the Corn Belt.

But instead of fretting over cost, you can learn how to profit. We'll show you 7 ways to profit from food price inflation below, but first let's go into a little background.

Food Price Inflation: Corn Could Surge to $10 a Bushel

In the Corn Belt, flood waters are high. Crops are destroyed. And corn continues to set record highs, with some calling for $10 a bushel, near-term. Current estimates peg Iowa loss at one million acres of corn and two million acres of soybeans, or about 20% of grain output.

That means supply is tight. And it's too late in the season to start replanting corn and any opportunity to plant soybeans in time for the fall is quickly disappearing.

For grocery shoppers, the destroyed corn means pricier corn, soda, cereal... even cough syrup, pudding and gravy. It's also used to feed livestock like pigs and chickens. Soybeans are in everything from flour and milk to oil.

Going Bananas Over High Cost

Even banana costs are rising. Chiquita Brands, for example, citing higher costs stemming from poor weather in Central America and Ecuador, said that it expects to post a "significant loss" for Q3 2008, and is reporting that weather increased the costs of high quality bananas. While the company was trying to make up for higher banana cost by passing it on to consumers, it was unable to bridge the cost gap.

Higher grain cost have already punished food companies like Kraft Foods and Sara Lee, too, which rely on corn and wheat to make their products. Livestock producers like Smithfield Foods have also been knocked down.

In the end, we'll just have to get used to higher grocery cost. It makes it worse, considering that grocery prices rose 4% last year. And some estimates peg another 7% to 9% increase in grocery bills this year alone, thanks to flood-induced shortages.

We may even see a 10% in poultry, hog and cattle, according to industry experts. We may not have felt the "protein pinch" yet from higher meat costs, but it is coming. Says Richard Bond, CEO and President of Tyson Food (per Wall Street Journal), "retail chicken prices will have to jump by double-digit percentages in 2009 for poultry producers to recoup their feeding cots and current prices."

You don't need to stockpile food. But you may want to buy a little more when your favorite products are on sale.

How to Profit from Food Price Inflation

One thing I've noticed is that all the chicken products are gone from grocer shelves, while other meats are left untouched. One of the reasons why chicken costs less is because of corn. It takes two pounds of corn to produce a pound of chicken, as opposed to four pounds for other meats.

That means that chicken producers may be able to increase prices at a slower rate than a pork or beef producer. This may benefit beaten down companies such as Tyson Foods (TSN:NYSE), which has great exposure to chicken. But don't risk the house. Tyson is no longer a pure play on chicken. When Tyson bought IBP it also became a processor of pork and beef.

For further diversification - usually a prudent measure - consider these food stocks, as well.

Monsanto Company (MON), a leading producer of genetically modified seeds (GMO) is betting that the food crisis will create a market for GMO. After turning itself into a $5 billion agribusiness with 20% profit margins and a stock price up more than 1,000%, it's now moving to feed the world.

At the UN food summit in Rome, the company announced goals to boost global food production, while pledging to double corn and soy yields by 2030. And it says it'll distribute seeds to African farmers, royalty free. Other GMO companies to consider are Origin Agritech (SEED).

Fertilizer stocks are cashing in on rising demand for food, including Agrium (AGU), CF Industries (CF) and Mosaic (MOS). There's also Sociedad Quimica (SQM), which has a supply of potassium nitrate, a cheaper fertilizer alternative.

Or, to make or save even more money, do what my wife and I do before grocery shopping. Clip coupons.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

Power Grid Stocks

This past Wednesday, Alternative Energy Speculator's Nick Hodge spoke about smart investing in power grids. And I'd like to revisit that article and add a stock to the five stocks he mentioned here.

But first some background on why antiquated power grids must be updated.

California's energy consumption efforts have done little to prevent blackouts. From 1979 to 1999, California residents jumped from 23 million to 33 million. Today, there are 38 million and expectations for 45 million residents. In the long, hot, sticky days of summer, there will be blackouts. Greater electrical dependency from a larger population makes it difficult to say everything will be fine.

The California Independent System Operator has already warned that the "likelihood of going to a Stage 3 power emergency is 10 percent compared to 3 percent last year." Stage 3 allows the state to cut power to certain customers to prevent power system failure.

San Diego Gas and Electric saw record electricity demand in 2006. That record was then broken in 2007. And while the company has taken measures to reduce 2008 blackouts, the only way to prevent blackouts is voluntary conservation and "on-call interruptible loads."

And when the power grid can't take the pressure this year, we'll see widespread power failures.

New York, for example, doesn't have enough electricity to satisfy consumers.

As Hodge said Wednesday, Tuesday was the "second straight day New York set a record not only for high temperatures, but for electricity usage as well."

As temperatures soared, Consolidated Edison scrambled to fix failures across parts of the Bronx, Brooklyn and Queens. It affected homes and public transportation. And it's only June.

Look, if temperatures persist through the hot sticky months of summer, more strain will be put on electricity supply, resulting in further blackouts. Parts of Brooklyn saw a 45% jump in peak demand in a week's time. Again, it's only June.

And just today, a power outage caused a blackout in parts of Washington, D.C., including the White House, leaving many without power and causing major delays.

We'll likely hear similar news throughout the hot summer months, as too much demand is put on antiquated power grids. It's the reason we like Beacon Power (BCON:NASDAQ).

Beacon Power

For some background on how well this stock has moved on power outage news, check this out.

On August 14, 2003, a power failure in the northeastern USA and central Canada hit 50 million people. BCON popped from 25 cents to $1.25.

On September 19, 2003, Hurricane Isabel destroyed electricity for 4.3 million people across the United States and part of Canada. BCON popped from 60 cents to more than $1.

On September 4, 2004, five million people in Florida lost power after Hurricane Frances. BCON ran from 25 cents to 75 cents.

On August 26, 2005, 1.3 million people in Florida lost power because of Hurricane Katrina. BCON ran from $1 to $5.

The stock ran slightly in 2006 on the Queens Blackout news, and again in 2007.

And that's because of the company's potential.

This is the company with flywheel technology, which stores power. These guys can buy power from the grid at cheaper costs and sell it at higher cost.

Just the other week, they got a $340,000 contract to provide their energy storage system to support a wind integration project sponsored by the California Energy Commission. And they recently received environmental approval to build a 20-megawatt flywheel plant in New York.

Better yet, not only did Kaufman Brothers report that BCON can "likely tap into a $700 million energy storage market and post revenue from commercial clients by the end of the year," they started coverage at a Buy rating with a $3 price target.

And they just received a commitment for up to $5 million in loans that'll help fund expansion of a production facility from Mass Development's Emerging Technology Fund and the Massachusetts Technology Collaborative.

Remember, there will be more blackout news this summer. There are antiquated U.S. power grids that will not be able to handle the demand on scorching hot days.

Good Investing,

Ian L. Cooper

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of June 9, 2008.

Precious Metals Mining Stocks: Get Out of the US Dollar Now!
Investors worldwide in various markets appear to have had their fill for market risk after watching their investments lose significant value in recent months. This has been particularly true with the junior mining share market where investors have become skittish in buying shares for the time being as shares corrected beyond what most analysts had expected.

Chinese Jewelry Sales up 36% Yr-on-Yr: Up US$3 Billion Since 2005
Growth of the jewelry industry in China has been developing much faster than anyone expected.

They're At It Again: Another Dog And Pony Show
So it looks like the Saudis want to hold a summit to discuss how to handle the rising cost of oil, declaring that they will guarantee the availability of oil supplies now, and in the future. Of course they neglect to state how much oil they're guaranteeing. But I can tell you one thing - it'll be less than the global demand.

The Impending Oil Export Crisis: Never Mind Peak Oil; Worry about Peak Exports
The problem is simple: Net oil exporters are awash in the cash from their oil exports. As they grow up and continue to industrialize, they consume more of their own production, which cuts into their exports.

Colorado Oil Shale: Don't Get Caught in This Oil Investment Trap
About a month ago, Goldman Sachs raised their oil price forecast to $141 a barrel during the second half of 2008. The analysts over at Morgan Stanley said crude oil could reach up to $150 a barrel by July 4, 2008. Even Russian natural gas giant Gazprom set their prediction to a whopping $250 a barrel in the "foreseeable future" (whatever that might possibly mean). So in the face of record oil prices, why won't I invest in the Green River Basin oil shales?

50% Gains for Reading a Blog: Not a bad start, considering we're only warming up
On June 3, 2008, Lehman had just broken multi-year support. We mentioned that the "best way to trade the possible drop was to buy the October 25 put options (LYHVE)." At the time, the option traded at $3. Today, as LEH breaks $25 to the downside, the put option trades at $4.55 - a 52% gain in days.

The Economy's Worst Nightmare: Disaster by April 2009?
"With the subprime mortgage crisis already crippling the U.S. economy, some experts are warning that the next wave of foreclosures will begin accelerating in April, 2009."

"Homeowners" Buy and Bail: The Latest Twist in Fraud
Here's a story from the housing world that is a perfect example of that trait. It seems that a number of upside down homeowners have decided to take matters into their own hands.

UK Recession Investments: Where To Invest As The United Kingdom Stumbles
You know the UK is in trouble when the Organization for Economic Cooperation and Development (OECD) singled out the UK economy with gloom and doom forecasts.

Alzheimer's Drug Stocks

No one is quite sure what causes the disease that gradually robs sufferers of memory and the ability to care for one self. There's no known cure, and current drugs are only temporary pain relievers.

So wouldn't it be nice if the drug companies got it right?

Alzheimer's Drug Stock: Anavex Life Sciences (AVXL.OB)

One of the companies basing its Alzheimer's drug on oxidative stress theories is AVXL.OB. Brian Hicks introduced you to this company in November 2007.

Better, we wouldn't be shocked if Anavex was a buyout candidate.

In short, if drugs like Anavex's can slow or prevent diseases like Alzheimer's there's no telling how many buyout offers would flood Anavex offices.

Anavex 7-1037 (for colorectal cancers) preclinical trial treatments, for example, shows a 69% reduction (with minimal adverse effects) in tumor growth.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com

P.S. We're reiterating a buy on iDcentrix Inc. (IDCX.OB) at market.

Soon Federal law will require that most people carry these cards if they want to fly on airlines, or even enter a federal building- strict new security measures to protect us from the next 9/11.

Reports show the White House is in the process of bringing in consultants to help figure out how to set up the Real ID distribution process, as well as how to implement new security measures. Sure, the Real ID Act won't fully kick in until 2011, but the White House needs to jump on the process "that will take a while and cost a lot." It's a process that could soon splash the iDcentrix name across national newspapers.

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of June 9, 2008.

Chinese Jewelry Sales up 36% Yr-on-Yr: Up US$3 Billion Since 2005
Growth of the jewelry industry in China has been developing much faster than anyone expected.

Smart Grid: Smart Investing in the Smart Grid
We knew it was coming. There is simply not enough electricity in New York to satisfy all of its over-heated citizens. Editor's Note: In addition to the companies mentioned by Nick Hodge, also take a look at Beacon Power (BCON:NASDAQ).

Weekend Meeting at AIG?

There's a coiled spring at $35 support on an American International Group (AIG) chart. According to CNBC, the company is holding a weekend meeting, and believes that the current CEO is on thin ice with the board. If this is the case, and the CEO is given the heave-ho, upside is a near-term possibility at AIG.

The news follows a June 11 Reuters piece that says, "Shareholders of American International Group Inc are demanding changes to the management and board of the world's largest insurer, which has been struggling with the fallout of the subprime mortgage mess. Former director Eli Broad and fund managers Shelby Davis of Davis Selected Advisers LP and Bill Miller of Legg Mason Inc wrote in a letter obtained by Reuters that ‘significant and immediate changes at both the management and board level are clearly called for.'"

Any change at the top could be seen as bullish, and catapult beaten down AIG shares. The August 2008 AIG 35 calls (AIGHG) look attractive.

50% Gains for Reading a Blog?

In preparation for our eventual all-options letter, we're warming up in The Options Pit blog.

While we don't often provide free trades in our blogs, we did make mention of these five.

On June 3, 2008, Lehman had just broken multi-year support. We mentioned that the "best way to trade the possible drop was to buy the October 25 put options (LYHVE)." At the time, the option traded at $3. Today, as LEH breaks $25 to the downside, the put option trades at $4.55 - a 52% gain in days.

On June 10, 2008, Wall Street was bracing itself for further UBS writedowns. Considering the held $15 billion in subprime securities and $17 billion in Alt-A, further downside was a no-brainer. It's why we made mention of the September 22.50 UBS put (UJWUX). The UBS put traded for about $1.30 yesterday. They now trade at $1.50.

While the next three positions didn't come with a mention of a buy, we did receive mentions of what some of you bought.

Had you bought the November 20 put (CCEWD), for example, around $1.05, you'd be up about 60% today as it passes $1.70.

Had you bought the MAS October 20 put, for example, around $3 that day, you'd be up about 27%.

Not a bad start considering we're just getting warmed up.

UK Recession Investments

You know the UK is in trouble when the Organization for Economic Cooperation and Development (OECD) singled out the UK economy with gloom and doom forecasts.

"This 'excessively loose fiscal policy' left little, if any, room to cut taxes and save the economy from a deep decline," said the OECD (according to Telegraph), which also forecast a 10% decline in home values, rising unemployment, and for another 200,000 people to lose their jobs over the next 18 months.

But who didn't see this coming?

It was March 29, 2008 when we called for the downfall of the British pound, as a severe credit crunch, a crippled housing market, and a cutback in consumer spending fueled economic mishap.

Even George Soros is now reportedly short the pound again.

Below, I'll share two ways to profit off the UK Recession. First, the backdrop...

UK Recession: Housing Tumbles, Debt Spirals

We knew that just as the U.S. has struggled for some control over sub-prime, Britain had to get aggressive or risk a stressful economic future. In the UK, more than 90% of all mortgages are adjustable-rate or floating-rate mortgages. More than 1.5 million homeowners are considered sub-prime, and another four million are seen as high risk because of imperfect credit histories.

On top of mortgage debt, British consumers owed $2.8 trillion on credit cards, hold 2.8 credit or debit cards, and have a household debt-to-income ratio of 1.62, as compared to 1.42 in the U.S.

Home prices are tumbling, having just fallen another 2.4% in May. Foreclosures have reached their highest levels since 1999. More than a million homeowners have ARMs that are expected to reset higher in the next twelve months. And consumer confidence has plunged to new lows.

It was also March 2008 when UK mortgage lender Nationwide said it would turn away business to get more control over the "amount it lends."

In an attempt to become less competitive, Nationwide was increasing the "rates on its tracker deals by more than half a percentage point," said the Times. "This will come as an added blow to homeowners already facing large increases in their monthly mortgage repayments."

That means 1.4 homeowners will likely be saddled with higher rates at the end of current fixed-term deals. It's a move that could easily be mirrored by other banks, making the repayment burden much worse.

Again, who didn't see this coming?

A year ago, no one thought it would come to this. Northern Rock and Bradford & Bingley were sailing along nicely, packing mortgages. The Treasury and the Bank of England had no reason to be concerned. Consumers were happy. The economy was growing well, and the Bank was raising rates to slow things down.

But behind the scenes the availability of cheap debt was coming back to haunt the UK.

These days, the Bank of England is reporting that mortgage applications have fallen about 50% over the last year to levels not seen since the early 1990s. Manufacturing numbers are on the verge on recession. The construction sector is free-falling and services, which account for three quarters of economic output, fell into recession territory.

With inflation preventing the Bank of England from cutting rates, there's growing fear of stagflation. Unemployment is rising, reducing demand. More banks are in trouble. House prices are falling. And negative equity is stalking homeowners.

Even the Halifax house price index recently fell more than 6%. And house price declines like this only happen when the economy is in recession and unemployment is rising. But that's not the case... yet. The other reason for house price declines is when there's a loss of monetary policy control. And that's happening as a result of the credit crunch, which has lessened the availability of credit.

In the doom and gloom of the UK economy, is it a shock that two-thirds of consumers believe the UK is already in a recession?

Fortunately, while it may feel like a recession, technically the UK economy is still growing.

We could go on, but think you get the point. The UK is, unfortunately, in trouble. But things will eventually turn around.

In the meantime, with the UK another victim of credit woes, there are two ways to profit.

2 Investments To Pop on the UK Recession

1. Continue shorting the pound by buying put options on the CurrencyShares British Pound Sterling Trust (FXB). Or...
2. Buy put options on the iShares MSCI United Kingdom Index (EWU) for further downside potential.

Good Investing,

Ian L. Cooper
http://www.wealthdaily.com