This 'smart money investing' system was simple enough... buy and hold the same stocks that the billionaires were buying in the open market. It worked brilliantly.

We followed Sumner Redstone religiously in 2002 and 2003, as he bought millions of shares of Midway Games and WMS Industries in the open market.

And it turned out to be one of the best trades we made all year.

Midway games (MWY) quadrupled in price in 2003, flying from $3 to more than $12.

WMS Industries (WMS) went from $12 to $21 inside of six months.

And we did it again in 2008 with T. Boone Pickens.

Trading alongside billionaires - the ultimate in "Smart Money Investing" - is easy money.

"You have a chance to make a fortune following one billionaire who has snapped up millions of shares in a small energy stock. He's acquired a 3 million share stake in a natural gas company that currently trades a market value of about $600 million," said Brian on February 13, 2008.

That company was Interoil (IOC:AMEX).

And we were spot on...

After holding IOC for only two months, the underlying stock is up $7.23 from our entry price, and our June 2008 20 call options are up 91% in Pure Energy Trader.

It made sense not to bet against Pickens. He's not one to throw around investment dollars at just any company. A man of his intelligence and stature is sure to have done plenty of research, and is sure to be well in the know before investing in any company.

It's why we followed his lead into Interoil after he increased his holdings in the beaten down oil play with explosive opportunities in Papua New Guinea.

Yep, thanks to Pickens, IOC became the smart money buying opportunity of a lifetime for Pure Energy Trader.

And it paid off just as we planned.

After months of waiting, our Canadian company with operations in Papua New Guinea announced a gas and gas liquids discovery in the Antelope structure in its Elk-4 well.

Says a recent press release:

"The Elk-4 well has successfully penetrated the Antelope structure, a new discovery which will significantly augment the gas found at the Elk-1 discovery well. Drilling operations experienced a gas kick and a flow of gas and gas liquids to surface which was circulated and flared. The well is now being prepared to drill deeper under pressure followed by comprehensive evaluation.

‘This well confirms the presence of hydrocarbons in the Antelope structure," said Mr. Phil Mulacek, CEO and Chairman of InterOil. "We are very excited about this early result and we look forward to drilling ahead to establish the commerciality of this discovery.'"

And there's still further upside for IOC.

But as with most billionaires, diversification is key to profit making.

"When I go into these markets, I expect to make money on them. I don't expect to lose," says Pickens.

With plans to spend some $10 billion to build the world's biggest wind farm, the billionaire has gone green.

Yep, this June, Pickens' Mesa Power will start buying land and ordering 2,700 wind turbines that could generate 4,000 megawatts of electricity (enough to power a million homes). They'll be built on over 200,000 acres of Texas panhandle.

And it's a smart move, as we deal with $122+ oil.

"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, the editors of SC Trading Pit are familiar with the potential as well...

Says Brian Hicks:

"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 smart money investing play 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.

I've personally read reports from the U.S. Department of Energy stating that wind energy supplied in just three U.S. states could potentially power the entire nation!

Think about it for a minute.

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!"

While there are publicly traded wind energy stocks out there, Brian recommended a $2 wind stock on February 21, 2008 that has since rallied to $3 in SC Trading Pit with near-term $5 potential.

Lesson learned... Anyone who says you can't make money following billionaires isn't making the money we're rolling in.

Good Investing,

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

When it comes to energy, T. Boone Pickens is a man with his finger on the pulse of numerous industries.

Coal, oil, natural gas, nuclear and wind power, Boone has an opinion on all of it.

And the basis of all of his arguments is as simple and as it is undeniable. We consume more power than we produce.

Take oil for instance.

At present worldwide oil production stands at 85 million barrels a day. Meanwhile, worldwide demand is over 87 million barrels a day.

And as Boone is quick to point out 85 simply doesn't cover 87 no matter how hard you try.

The result is a supply and demand imbalance that can't be conned. That's why even the slightest drop in output can send the price of crude much higher.

Correcting that imbalance then requires two things.

One is that demand must come down dramatically—to the tune of 2 million barrels a day. That's highly unlikely, however, even if the U.S. goes into a recession.

In fact, according to the International Energy Agency (IAE) oil demand will increase by 2% this year no matter what happens in the states.

The second is that supply has to increase markedly to make up for that "oil gap".

That is easier said than done. After all, new fields take years of development before they eventually can be brought to market.

Oil from ANWR, for instance, would take nine years to get to market if they started drilling there tomorrow. And we all know that's not going to happen.

The same thing, of course, is true in Brazil, the Bakken, the Gulf Coast, and any other new oil-rich area that you can name.

And that doesn't even consider the fact that many of the existing fields are already in a state of declining production. So even without the oil from any of these new finds, supply is headed in the wrong direction.

So you can definitely expect this imbalance to get worse in the short term-not better.

After all, the price of oil is high for a reason. It is a simple as supply and demand.

By the way, here's a link to a great talk on energy that T. Boone Pickens delivered a few weeks ago. It runs long at over an hour but is worth every minute. Pickens simply covers it all.

Here's the link: Boone's outlook for oil, U.S. energy policy, and alternative energy including wind and solar power.

So if you really want to understand where we are in the world of energy today, it is must see TV.

— Brian Hicks, Publisher

Stalin wouldn't approve of decadent Big Macs.

But on a recent trip, from the top of a staircase above McDonald's and across the hall from a casino, I noticed the ruthless Soviet premier's face pointing the way to Prague's Museum of Communism.

Fast food restaurants are just one of a striking set of symbols that exemplify post-Cold War Europe's economic transition. With that in mind, let's take a look at some of the U.S.-listed tickers that have come to us from behind the Iron Curtain.

Eastern Europe Investments: Capitalize on New Capitalism

The Soviet Union, Czechoslovakia, and Yugoslavia are no more. But the countries that comprised them now enjoy some of the world's highest economic growth rates, creating ever-increasing options for investors.

After enduring plenty of economic pain under central planning, Slovakia's new open economy and flat tax plan have brought billions in foreign investment and staggering 8.8% GDP growth in 2007.

With low debt and low inflation they are a model for new EU states, and in turn, the continental body will reward Slovakia with euro accession in 2009.

Let's face it, good national planning makes citizens feel wealthier. We're seeing the flipside of that Stateside these days as Washington's ugly balance sheet has consumers down in the dumps.

But, in former Eastern Bloc countries, optimism rules, and spending on all kinds of goods creates opportunities for companies to move products in and out.

Take Central European Distribution Company (NASDAQ:CEDC), whose base in Poland eases its spread into new European Union member states and the strong euro currency zone.

CEDC, which specializes in liquor distribution, has seen the home-country economy take off too, as the Polish economy logged a robust 6.5% last year.

The result of this regional progress for the company has been a steady and impressive revenue rise, as we see in the CEDC revenue chart below from Morningstar:

Since its founding in 1990 as Carey Agri by intrepid American executives, CEDC has prospered in free Poland and its environs.

CEDC shares have nearly doubled over the past year, and in April the company issued guidance for the coming year that exceeded analysts' estimates, making this a solid hold for emerging Europe exposure in your portfolio.

So what about Mother Russia, the seat of Eastern European power for half a century?

Is Russia Returning to Old Ways?

There's a new president in the Kremlin as of May 7, as Dimitri Medvedev has taken the reins from Vladimir Putin. Putin will stay on as prime minister and head of the new United Russia party, but Medvedev's leadership should bear some of its own hallmarks.

After all, Medvedev is the first Russian head of state to have earned his stripes entirely in the post-Soviet state apparatus.

Most importantly from a business standpoint, Medvedev is also the head of Russia's natural gas monopoly Gazprom.

Russia provides a quarter of Europe's natural gas. That puts Moscow in a position of power, rolling in the rubles and signing a slew of bilateral agreements with EU members and others eager to secure supply.

But there are relics of Soviet times in Russia's new energy economy: central planning and tight control of political opposition.

The Other Russia coalition, headed by chess legend Garry Kasparov, complain of intense government security monitoring and heavy-handed crackdowns on protest marches.

Yet Russia has had 9 straight years of economic expansion and 7% growth in 2007, putting it in the BRIC pantheon of emerging markets, along with Brazil, India and China.

Gazprom is listed on the London Stock Exchange and Russian stocks in the U.S. have enjoyed a sustained rise.

Hefty Gains from Russian Stocks

Shares of Vimpel Communications (NYSE:VIP), Mechel OAO (NYSE:MTL), and the Market Vector Russia ETF Trust (NYSE:RSX) prove that investor confidence in the country has recovered substantially since the Russian debt default of 1998.

• Vimpel shares have gained 1107% since 2003 after trading sideways for the five years before.

• Mining and steel group Mechel has ridden the Russian wave along with surging worldwide materials demand to a 350% one-year gain.

• The RSX ETF is heavy on Gazprom and Norilsk Nickel—both of which only trade over the counter in the U.S.—and since launching in 2007 RSX gained a handy 38.96%.

Hey, the United States is most people's reference point for capitalist wealth, but we still have plenty of kinks to work out. The progress Russia and former satellite states have made in under two decades is extremely impressive, and it's yielded real returns to investors who stayed up on the latest developments overseas.

There are more Eastern European investment opportunities in the offing. Romania and Bulgaria joined the EU in 2007, and most of the former Yugoslavia is at the doorstep. Stay tuned and we'll let you know where to buy in as those stories develop.

Next week, we'll dive into China, Vietnam, and other Asian countries where socialism is still officially the name of the game, but market economies are really driving progress.

Regards,

Sam Hopkins

Six trading days later, the stock was up 18%. The option was up 180%. And we still see no reason to sell with a price target of $105.

Why sell?

It's not a credit lender. It won't take a financial hit from the mounting credit delinquencies or tumultuous write offs waiting at the doors of Discover, Capital One, and American Express. It, like MasterCard, only processes cards. It gets paid a transactional fee per swipe, and doesn't have to worry that over the next 12 months defaults on credit cards will only rise.

When $6.3 billion was rung up in revolving credit debt in March, Visa took a fee from each transaction. And as cash-strapped consumers, whose incomes can't keep up with inflation, turn to credit cards, the likes of Visa and MasterCard will see even more transactional fees.

Visa doesn't worry that overdue payments reached their highest levels since November 2004. Though, those that saw more than 4% of loans fall into delinquency in February and March will, including American Express, Bank of America, Capital One, JP Morgan Chase, Citigroup and Discover.

MasterCard and Visa weren't on that list because they only process cards. They're smart enough not to issue credit.

Across the country, a group of Americans recently started cashing in on one of the greatest moneymaking secrets of the decade...

It's an opportunity to collect massive checks in the mail -- all because of laws that are now forcing major corporations reduce their emissions.

One affluent American uses this secret to pull in $3,082.25 every 30 days...Another already added $70 million to his estate. In fact, they're so profitable that the New York Times recently reported, "The handful of domestic ‘Clean-Air Cash-Out' stocks has been surging.

Click Here to find out how -- right now -- you could still take advantage of the biggest ‘Cash-Out' yet.

Credit Lenders have More to Worry About

The Federal Reserve is moving forward with credit card industry regulation that would make in harder for lenders to raise interest rates, while giving borrowers more time to pay bills. If successful, the regulation could protect borrowers against late fees and stop lenders from making offers deemed to be deceptive.

But, says the banking industry, the move would be bad for borrowers. It could lead to even higher interest rates, if the regulation is finalized by year end.

As it stands now, the regulation would prohibit:

• Unfair time constraints on payments. Payments would not be considered late unless the borrower is given reasonable time to pay; 21 days for example.
• Assigning payments among balances with different interest rates, with lenders crediting payments to balances that have the lowest balances.
• Charging exorbitant fees when borrowers exceed credit limits.
• Double cycle billing, which calculates interest over a two-month period and can result in higher finance charges.
• Making deceptive credit offers.

And, "the proposal would address concerns regarding subprime credit cards by prohibiting banks from financing security deposits and fees for credit availability (such as account-opening fees or membership fees) if charges assessed during the first 12 months would exceed 50 percent of the initial credit limit," according to this report from the Federal Reserve.

Again, Visa and MasterCard do not extend credit. They only process cards.

Listen, if you want to make money in this market, continue buying MasterCard and Visa. Short Capital One, Discover, and American Express.

Or, if you want a safer "backdoor" bet on Visa, check out the First Trust IPOX-100 (FPX). SC Trading Pit readers are up 7% on FPX in about 12 trading days.

Take care,

Ian L. Cooper

————————-

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 May 5, 2008.

The Marcellus Shale Formation: The Rush to Big Natural Gas Profits
That's why 175 landowners showed up in a meeting yesterday in Whitney Point, New York to discuss exactly how to deal with the energy companies that have suddenly shown up on their doorsteps looking to lock up their land in search of natural gas. The message at the meeting, however, was quite simple...

Wave Energy Stocks: How to Harness the Wave Energy Revolution
Since the passage of Washington State's renewable portfolio standard, requiring 15% renewable energy in the mix by 2020, there has been what some are calling a 'land rush' on the Puget's waters.

Rockefeller vs. ExxonMobil: Peak Oil: A Turning Point for Big Oil
Last Thursday, in my second appearance on Fox Business, Neil Cavuto asked me whether or not I thought it was a good idea to tax the "windfall" profits of Big Oil, and let Congress spend them on alternative energy.

Organic Photovoltaics: The Next Evolution Of Solar
In the past, we've discussed potential moves in the field of organic photovoltaics. This is what many researchers are looking to as the next evolution of solar. But after attending the Organic Photovoltaics conference in Philadelphia last week, I suspect it might be some time before we see any solid plays in this area.

The Media is To Blame for Housing: Why buy a house now?
"The financial press is worried that they might have gone too far - paralyzing the nation into recession by piling on housing. So they're finally beginning to question the indexes where they get their data, and whether the news is really as bad as it seems. Slowly but surely, headlines are changing from Don't Buy A Home Now to Is It Time To Buy? Stop listening to the media. Go buy a home."

David Lereah Comes Clean: Ex-Shill Calls for More Pain
Lawrence, by the way, has done a marvelous job in Lereah's absence, promising on every occasion that now is the right time to buy real estate. Go figure.

Emerging Market ETFs: 2 "Must Own" ETFs Right Now
Eight years into Chen Shui-ban's Taiwanese tenure, the benchmark index barely moved, even as Hong Kong's market rallied 75%, and as Shanghai's nearly doubled. But things are about to change, in a big way as we get close to May 20, 2008.

Copper and Gold Stocks: Exeter Resources Returns 719 Meters Grading 1.0 g/t Gold and 0.38% Copper
Many investors are surprised to learn that large copper mines often recover considerable amounts of gold and other metals as a byproduct of operations. This gold often generates hundreds of thousands of dollars per day in gross cash-flow for public copper production companies, making them copper and gold mining stocks.

Russian Renewable Energy: Russia: The "Sleeping Giant" of Renewable Energy
You may know that Russia is the kingpin of the international natural gas trade. But did you know that with over 10 million residents still off the grid and leaders aiming to maximize gas exports, Russian renewable energy could be a huge boon to the country? Now we have to convince the Russians-starting with their new president.

Here's the word on the ongoing mortgage mess from Warren Buffett and his partner Charlie Munger. 

It seems they are all for the creative destruction that capitalism sometimes visits on those who take big risks. This time is no different.

In fact, Buffet even said that, "Capitalism without failure is like Christianity without hell."

I'll let you ponder that one.

Meanwhile, here is the rest of what was on their minds in their latest interview.

From the AP by Josh Funk entitled: Lenders deserve to suffer, Buffett says.

"Billionaires Warren Buffett and Charlie Munger say the pain many financial institutions are feeling because of the credit crunch is well deserved.

The chairman and vice chairman of Berkshire Hathaway Inc. said Sunday that the financial companies that engineered subprime mortgages and the investment funds backed by those mortgages don't deserve much sympathy as they record losses now.

Buffett said the current financial crisis is a byproduct of a system that encouraged executives to "paint pretty pictures."

Munger said lots of financial institutions acted with stupidity and overreached to improve earnings in recent years.

"I think you have to start with the idea that a lot of the current troubles are richly deserved," Munger said.

The complexity of the tactics that financial institutions often employ makes it difficult to determine what those companies are worth — even for Buffett.

"There are some financial institutions I can't value," Buffett said.

He said if someone had $1 million to invest in 10 stocks, it would be easier to find good values in the Korean stock market than among U.S. banks because the banks are so complicated.

Buffett said he recently read a 270-page annual report that an investment bank filed with the Securities and Exchange Commission, and he had unanswered questions for about 25 pages of the report.

"They're cleaning up their act now to some degree because they had to," Buffett said.

Munger said he doesn't think investment banks spend enough time thinking about risk and ways to avoid it like he and Buffett do at Berkshire.

"We try to behave as if Berkshire stock was all owned by crippled relatives," Munger said.

Buffett said the pain isn't over yet for financial institutions, but he said nobody can predict how many more times banks will have to write down the value of their assets.

The largest U.S. bank, Citigroup Inc., alone has taken more than $45 billion of write-downs and credit losses since June 30.

Buffett reiterated that he believes the U.S. economy is in a recession by his definition, even if it hasn't yet met the commonly used criteria of two quarters of negative growth.

He said his definition of a recession is when most people and businesses are not doing as well as they were three, six or nine months ago.

"I would say that we're in a recession clearly," Buffett said."

Now that is a couple of smart guys.

No wonder they are billionaires. 

Eight days into Pure Energy Trader's latest recommendation, the team is up 25%, as it nails new all-time highs. But there's still time to buy, the team tells me. Credit facility increases and it's exposure to Bakken could easily send this $2.50 stock to $5 near-term.

Oh, and the team is buying oil at $73.

Today's Wealth Daily

"[We] just plain missed on pharmaceuticals... we probably should have recognized the fact that some sort of group purchase might have made sense. But we didn't do anything about it."

Those were the very words painfully uttered by Warren Buffett and Charlie Munger at a 1998 Berkshire Hathaway meeting.

And it's almost guaranteed Buffett won't miss the opportunity again... and neither should you.

These days, Buffett and even George Soros are investing big on biotech and healthcare technologies, betting on aging populations that'll heavily rely on biotech drugs.

And they're buying on the cheap because these companies won't be cheap for much longer.

Even big pharma is aware of that.

"The high price [GlaxoSmithKline] it is paying for such early-stage research underlines the current hunger among large pharmaceutical companies for promising biotech assets," mentioned Reuters after GlaxoSmithKline bought Sirtris Pharmaceuticals (SIRT.O) for $720 million in cash.

Glaxo inked a $600 million collaboration agreement with Regulus Therapeutics, bringing it to the forefront of RNA technology.

Takeda Pharmaceutical is paying out $8.8 billion to buy Millennium Pharmaceuticals. And while the deal may weigh on short term stock prices and profits, it's a great move long run. The buy gives Takeda a foot in the cancer drug market door, strengthening its pipeline.

And if Buffett, Soros, and big pharma are buying... so should you.

The Biotech Boom Potential

As a group, biotech stocks have staged extraordinary runs since 1993. And if you were in the right names at the right times, you would have done even better.

Look at the explosiveness of the group.

In 1995, the Index traded at $75. Three years later, it was up 160% to $195.

From 1998 to 2000, the Index ran 700% from $100 to $800.

In 2000 alone, after pulling back, it ran 100% from January to mid-year.

It ran another 63% in 2001 from $300 to about $850.

And, after another pullback, the Index jetted 183% higher from $300 to more than $850.

Of course, after explosive, outrageous runs, we've seen our share of busts, too, with biotechs losing up to 50% of their value. But there's no denying the run potential.

But the time has come for the next explosive leg up.

What's to like about biotech these days? Buffett, Soros, and big pharma are buyers of biotech stocks these days.

Our Biotech Stock Pick... Why We're Still Excited about Anavex Potential

Buffett and Soros aren't buying Anavex. But the explosiveness of the stock is hard to overlook.

Anavex is developing the next generation of biotech drugs based on platforms based on sigma receptors.

And, as we've told you, it'll be huge.

There's already massive amounts of literature that supports sigma receptors as a potential way to treat... and in some cases prevent... of a whole range of diseases, including Alzheimer and epilepsy to breast and lung cancer.

In other words, we could be looking at a silver bullet in biotechnology. It's like watching the work done on stem cells 10 to 15 years ago.

But what really gets us excited is recent news.

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 a drug 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, show a 69% reduction (with minimal adverse effects) in tumor growth.

Listen, we've spoken of Anavex now for months. They're holding potential multi-billion dollar drugs. And it's only a matter of time before the likes of Buffett, Soros and big pharma give this company the attention it deserves.

Buy. Hold. Sit tight. This is going to be a fun ride.

Good investing,

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

Here's a thought.

Anytime your GDP depends on consumer consumption for the bulk of its growth, you're in trouble—-especially when those same wallets start closing up.

It's just that simple.

Unfortunately, that's exactly where we find ourselves today since consumer spending accounts for 72% of the U.S. Gross Domestic Product.

That's a heavy burden in an age of declining real incomes and fast rising prices.

Sure, it worked like a charm when home prices doubled, but now that housing is in decline it has gotten much tougher to maintain.

But in America, there is a way to get blood from a stone. It's called credit, and to many it's their lifeline.

That goes for the overall economy too-buying stuff keeps us afloat.

That's why in the wake of 9/11 we were urged to head off the mall. And it's the reason why the IRS can't get those "stimulus checks" out fast enough these days.

However, the problem is that none of that "free money" solves anything for long.

And when it's all said and done, the truth remains—-we spend considerably more than we earn.

That to me is something of a problem, not a solution.

You see, we used to be a nation that saved and produced. Today, however, all we do is spend and consume.

That's how you end up depending so heavily on consumer spending for growth.

But what happens when those same consumers decide to step away from the game?

That's what's in the news today as consumers struggle to make ends meet.

From AP by Anne D'Innocenzio entitled: Consumers give stores some relief but still spend cautiously

"Consumers gave some of the nation's retailers a little relief in April after months of dismal sales, gravitating toward less expensive discounters and wholesale clubs but generally still shying away from stores selling clothes and other non-necessities.

Monthly sales reports issued Thursday were better than expected, but still pointed to a consumer contending with rising gas prices, sagging home values and worries about jobs. Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the top performers last month, while most mall-based apparel stores struggled.

"Consumers are focusing on value and price points and stretching their dollars," said Ken Perkins president of RetailMetrics LLC, a research company in Swampscott, Mass. "They are feeling the pinch on multiple fronts."

He and other analysts expect only a modest uptick in sales in May and June as consumers spend tax rebate checks that are starting to arrive.

"There's too much going on," in the economy, Perkins said. He and others expect shoppers to use the extra cash to pay down debt and catch up on utility and food bills."

Meanwhile, consumers are increasingly turning to their credit cards in an effort to pay the bills.

From Bloomberg by Vincent Del Giudice entitled: U.S. Consumer Debt Rises More Than Forecast in March

"U.S. consumer borrowing jumped more than double the amount economists forecast in March, indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt.

Consumer credit increased by $15.3 billion for the month to $2.56 trillion, the biggest monthly rise since November, the Federal Reserve said today in Washington. In February, credit rose by $6.5 billion, previously reported as an increase of $5.2 billion. The Fed's report doesn't cover borrowing secured by real estate, such as home-equity loans.

Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing. The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

``Consumers are strapped as incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. ``The days of extracting cash from one's home to spend on goods and services are long gone.''

Economists forecast an increase of $6 billion in consumer credit for March, according to the median of 34 estimates in a survey conducted by Bloomberg News.

Total borrowing, a key element of consumer spending, increased at a 7.2 percent annual rate in March after rising at a 3.1 percent pace during February, the Fed said.

Household spending grew at the slowest pace since the 2001 recession in the first quarter, according to Commerce Department statistics. Consumer spending accounts for about two-thirds of economic growth.

A Fed report two days ago showed the proportion of banks making it tougher for companies and consumers to borrow approached a record in the past three months.

About half of U.S. banks said they tightened terms on existing home-equity loans, mainly because of declines in home values below appraised values, as well as increased defaults and changes in borrowers' finances, according to the Fed's quarterly survey of senior loan officers released May 5."

So here's my instant analysis: It's getting ugly out there.

After all, you can't borrow your way to prosperity forever.

By the way, here are two charts. One is the personal saving rate and the other is consumer credit. Notice how it all began to change in the early 80's.

That's about when I got my first credit card offer. I was a sophomore in college.

His brainstorm? It was driving a pipe down the well to keep the hole from caving in.

And contrary to popular opinion, it didn't happen anywhere near any Texas oilman. Those guys and their ten-gallon hats didn't even exist yet.

Instead, the first commercially viable oil wells were drilled in Pennsylvania, which is why there is such a thing as Quaker State and Pennzoil in the first place.

Pay dirt for Colonel Drake came 70 feet beneath the surface in Titusville, PA., making him the first person to ever successfully drill for oil. And with that single well, the Pennsylvania oil rush was born as speculators from all over the place gobbled up Pennsylvania land in the name of crude.

One of them was a guy you might have heard of. His name was John D. Rockefeller Sr., the world's first billionaire.

The Marcellus Shale Formation

Now some 149 years later, it's happening all over again with the renewed interest in the Marcellus shale formation, an area that runs through Pennsylvania, Ohio, West Virginia, and New York. But it's not oil this time that has gotten everyone so excited, it is natural gas.

That's why 175 landowners showed up in a meeting yesterday in Whitney Point, New York to discuss exactly how to deal with the energy companies that have suddenly shown up on their doorsteps looking to lock up their land in search of natural gas.

The message at the meeting, however, was quite simple. It was don't give up the farm-which is what some people unwittingly did as they leased their land for as little as $100 an acre.

Meanwhile, others have hit it much bigger by negotiating leases for up to $2500 an acre along with 15 to 18 percent royalties.

"If the wells come to fruition, it will mean life-changing money," said Nicole Gwardyak, who owns 322 acres within the Marcellus formation and negotiates lease deals on behalf of energy companies in Pennsylvania.

You call yourself a serious investor. And you can "booyah" with the best of them. But I have my doubts.

You buy at the top... You sell at the bottom... And you take on way too much risk. And every time you set foot,
you're in the water, I'm there too... waiting to eat you alive.

So don't even think about getting in alone -- even if some maniac on TV says it is OK. Protect yourself instead with a subscription to The Wealth Advisory. It's a serious education for the retail investor and it will be the best $49 you have ever invested.

So click here for more information about The Wealth Advisory.

My better is better than your better.

Naturally, the sums of money being spent in search of natural gas the Marcellus shale formation are enormous.

In fact, according to Thomas B. Murphy, an educator who runs a program to instruct landowners on their rights, companies will invest $700 million this year alone developing the Marcellus Shale.

In all, Murphy says up to 20 oil and gas companies are working the region with up to one half of that cash being invested in Pennsylvania.

Fueling this Marcellus land rush, in part is the increasing cost of natural gas. Because at present, the cost of the commodity is rising now right along with the price oil and reduced natural gas inventories.

The only question now it seems is exactly how high the price of natural gas can climb in the future.

But by comparing the price of natural gas to the rising cost of a barrel of oil these days the answer seems to be much higher.

That's because when you break down the cost of natural gas into its equivalent found in a barrel of oil, natural gas is significantly under priced at the moment.

Here's why.

Historically, natural gas typically trades at a price that is equal to the price of a barrel of oil divided by 5.8. That's because each barrel of oil contains approximately 5.8 million BTUs vs. its counterpart in natural gas.

That means with oil now trading as high as $120 a barrel, the price of natural gas would need to rise to $20.69/million BTU(MBTU) to be on par with crude. And even if you go so far to discount the price oil to $80 a barrel, the price of natural gas would need climb to $13.79 to reach its historical relationship with oil.

So with natural gas currently trading at $11.32/MBTU the commodity is likely headed much higher.

The Marcellus Formation's Land Rush to Profits

That's the simple math that has helped to spur the rush to develop the energy resources found buried deep within the Marcellus shale formation, even though we have always known that they exist.

One of the companies that is leading the way in the Marcellus is Range Resources Corp. (NYSE:RRC). They have been active in the area since 2004.

In fact, according to reports, the Fort Worth, Texas based company will invest at least $426 million in the region. Moreover, Range owns 1.1 million acres within the Marcellus that the company estimates could add as much as 10 to 15 trillion cubic feet of gas to its reserves.

To date, Range has drilled and completed 63 vertical and 15 horizontal Marcellus Shale wells and has an additional seven verticals and four horizontals waiting on completion.

Those horizontal well are key, since that is the technique considered by most experts to be the most effective in the Marcellus. In this year alone, Range hopes to drill 40 horizontal well in the play.

The results so far have been encouraging to say the least with its latest well drawing 4.7 million cubic feet of natural gas a day setting the high water mark for the company.

But Range is hardly alone in its success. Several other companies are also very active in the region.

That means that the land rush throughout the Marcellus Formation will continue. And with our energy resources currently stretched to the limit it will also mean big profits for investors in the Marcellus Formation now and in the future.

And it is all taking place in the region where it began 149 year ago with Col. Drake and his drilling innovation.

Drake, by the way, never did make much money for his troubles. He failed to patent his new drilling technique and missed out on a fortune.

Others however did earn a bundle on what he discovered. You can join them with an investment in the companies that have returned to the area where it all began.

Your natural-gas-loving analyst,

Steve Christ

Chief Investment Analyst

The Wealth Advisory

PS. With the energy situation now getting much worse, I've identified a group of energy companies that stand to book big profits as we work our way forward to new solutions. One of them is and under the radar play with positions in both Brazil and the Marcellus. It's part of an energy portfolio that I'll be introducing to Wealth Advisory subscribers soon. To learn more about The Wealth Advisory click here.

On the Puget Sound, about an hour south of British Columbia, a group of three high school students are making electricity from waves.

The trio of 16 year-olds mounted a solar panel on a decades-old canoe to make a ramshackle barge. The solar panel powers a pump that keeps the 'barge' from taking on water.

It's also fitted with a metal mast that contains swinging pendulums. As wind and waves rock the boat, the pendulums turn a generator, creating electricity.

Of course, this is a rudimentary way of deriving power from a resource that has already been the recipient of millions of dollars of research and development.

Nonetheless, the ambitious youngsters are on the right track. And they're in the right place.

Puget Sound Wave Energy

Since the passage of Washington State's renewable portfolio standard, requiring 15% renewable energy in the mix by 2020, there has been what some are calling a 'land rush' on the Puget's waters.

From start-ups to established utilities, the race was on to claim prime waters for electricity generation and to file regulatory permits.

The first utility to file with the Federal Energy Regulatory Commission (FERC) for a tidal energy project was Tacoma Power.

Since receiving permission over two years ago, Tacoma power has investigated eight sites for possible installation of tidal generators.

And there are plenty of others itching to get into the wave business in the Pacific Northwest.

In January of this year, Green wave Energy filed an application for the Oregon Coastal wave Energy Project. The proposal includes plans for six wave parks, each containing up to 90 buoys with total generation capacity not to exceed 790 gigawatt-hours.

There are a few other projects that are currently in the pre-permitting stage . So I suspect a slew of wave energy stocks from this area in the future.

You see, the Electric Power Research Institute estimates that waves off the coasts of Washington, Oregon and California could produce anywhere from 250 to 500 terawatt-hours per year.

If we could harvest the upper limits of that range, nearly 13% of the 4,000 terawatt-hours we consume annually as a nation could be produced there.

And that's just a tiny percentage of the energy the ocean has to offer.

World Wide Wave Power

Globally, it's estimated that the ocean, in the form of marine energy, can provide twice the amount of electricity than we currently consume.

Of course, it would take massive deployment and investment to reach those levels. But with such massive potential, you can bet there will be more than a handful of winners in this space.

One of the sure (shore?) bets in the business is a technology dubbed CETO.

Unlike other technologies that deploy underwater turbines and transmission lines, CETO uses wave energy to pressurize and pump water.

The pressurized water can then be used to desalinate water (a very hot industry) or to produce electricity for delivery to the grid.

The technology is owned by a renewable energy holdings company, which incidentally is a part of the Green Chip International portfolio.

And CETO has been licensed for use in the Southern Hemisphere to another renewables company that could soon be in the portfolio.

But the opportunities don't stop there.

The Alternative Energy Speculator also is primed for the wave energy explosion.

I've chosen to play this angle in that portfolio with a small company that has ties to both the Puget Sound and to the wave-rich UK.

Feel free to check out those services at any time.

This is just the beginning of the opportunities in this nascent sector. We'll undoubtedly dive continually into these types of ocean energy plays going forward.

Call it like you see it,

Nick

Yet, she can't figure out why the real estate business shouldn't be trusted?

Why buy a house now? You've been getting bad information. Here's why, she says.

"The financial press is worried that they might have gone too far — paralyzing the nation into recession by piling on housing. So they're finally beginning to question the indexes where they get their data, and whether the news is really as bad as it seems. Slowly but surely, headlines are changing from Don't Buy A Home Now to Is It Time To Buy? Stop listening to the media. Go buy a home."

Blanche, Blanch, Blanche... Blaming the media and pretending the housing crash is non-existent is so 2007. Join the ranks of David Lereah. Come clean.

Truth is the housing slump isn't over. It'll get worse. If Blanche was so confident, she'd be out buying homes herself.

Housing Outlook is Bleak

When the nation's biggest buyer of home mortgages racks up $2 billion in quarterly losses and forecasts a steeper drop for home prices, it's not a time to buy anything. Fannie Mae lost $2.57 a share ($2.2 billion) in Q1 2008, as compared to a year earlier profit of 85 cents a share ($961 million). And if it takes on too much financial risk, as foreclosures continue to mount, the global financial system will be rocked.

Even David Lereah has put down his housing pom-poms.

Last time we heard former NAR chief economist, David Lereah, he was leaving his post, discredited by years of pumping a dying housing market, and daily blog attacks.

But has the cheerleader that declared a market bottom in September 2006 changed his tune? Yep.

"We're not at the bottom. [People] want it to be near the bottom, but we're not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low ... There's still supply out there in abundance ... This thing is going to get worse before it gets better."

The housing boom he says, "go so out of hand, and none of us realized the magnitude of it until it was too late."

If only we could convince Lawrence Yun and Blanche Evans.

Shill: (slang)-verb

1. to advertise or promote a product as or in the manner of a huckster.

It has been quite a while since we last heard from our favorite real estate guy, David Lereah.

He slipped out the back door a year ago, leaving Lawrence Yun behind to pick up where he left off.

Lawrence, by the way, has done a marvelous job in Lereah's absence, promising on every occasion that now is the right time to buy real estate. Go figure.

Of course, it was his pal Lereah who practically swore that real estate never declines during the bubble heydays.

But now that he is now longer shilling for the National Association of Realtors, Lereah has changed his tune entirely. In fact, in many ways he has finally come clean.

Housing he says now is "not at the bottom" after all.

Gee thanks David.

Here's Lereah's new tune from Newsweek by Daniel McGinn entitled: It's Going to Get Worse

"Whenever a boom goes bust, there's always a round of finger pointing and blame assigning, of people asking "Why didn't the experts see this coming?" So as the housing bust has morphed from a cyclical downturn into a full-blown crisis, there's been no shortage of culprits. Some blame Alan Greenspan for badly orchestrated monetary policy, a charge against which he's lately been fighting back. Some blame the subprime lenders and the brokers who found clients for them; together they underwrote many of the loans that are now causing so many foreclosures and so much pain.

And at least a few observers include an industry economist in this lineup: David Lereah, the former chief forecaster for the National Association of Realtors, whose irrational exuberance for real estate has led to some measure of ridicule.

It's been more than a year since Lereah left NAR, so I called this week to check in. It turns out he has recently set up a new firm called Reecon Advisors, which is advising Wall Street firms and institutional investors about the real estate market. "Wall Street has an intense interest in [this], because they're looking for when is the recovery going to come, and at what point does the cycle turn," Lereah told me.

His answer: not yet. "We're not at the bottom," he says. "[People] want it to be near the bottom, but we're not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low ... There's still supply out there in abundance ... This thing is going to get worse before it gets better."

Lereah says that the industry may begin to see a slight uptick in sales later this summer, which could signal the start of the recovery. Home prices, however, will continue to fall. According to the latest numbers from the Case-Shiller index, the average U.S. home has lost around 15 percent of its value since the market's peak. "We're probably going to end up with a 20 percent [decline], but if I'm wrong it will be even more than that," he says.

That's quite a turnabout from the view he articulated in his book, first published in 2005. There he argued that the solid economy, strong demographics (including immigration and aging boomers), and a lean supply of homes should lead prices to continue rising for years to come. "Today's real estate market is the result of rational decision making based on supply and demand conditions," he wrote. "With today's economy, home owners are in no danger of experiencing a widespread fallout of home prices.

 Oops. "You knew there were a couple of [regional] balloons out there, and [I] said you could have a couple of these balloons pop," Lereah says now. "But I didn't think this would turn into an all-out bursting of a balloon for the whole nation." He, like other prognosticators (including Greenspan), points to his lack of understanding of the profound effects that subprime lending was having on housing markets. "[I] just didn't realize the scope, the extent, the magnitude of the loose underwriting-not looking at incomes and wages, just providing so many mortgage loans based on [expected] future price appreciation rather than the creditworthiness of the borrower," Lereah says. ‘That got so out of hand, and none of us realized the magnitude of it until it was too late.'"

So nobody could have known huh?

What a clown. Baghdad Bob would be proud.

But things are about to change, in a big way as we get close to May 20, 2008.

That's the day Ma Ying-jeou takes office and when, according to China "hints" talks between Taiwan and China could begin. Chinese president Hu Jintao and Taiwan vice president-elect are already in agreement to "start talks as soon as possible."

And if all goes according to plan, not only will Taiwan see an increase in airline connections and tourism, it'll see stronger investment opportunities - a move that'll easily boost EWT and related Taiwanese stocks, including GigaMedia (GIGM:NASDAQ). We could even see direct shipping and flights between the countries, which would benefit retailers, hotels and restaurants.

But what makes the situation even more exciting is a change of opinion from a former Taiwan Solidarity Union lawmaker that once advocated Taiwan independence.

Taiwan's incoming China policy coordinator Lai Shin-yuan is stepped back from her pro-Taiwan independence stance, pledging to promote harmony under the new government.

This is big news. Nowadays, she's all for improving ties with China, promising to honor the 1992 Beijing-Taipei agreement, where both sides agree there is only "one China" open to different interpretations.

It's a move that takes Taiwan's economy one step closer to economic health and the iShares MSCI Taiwan ETF (EWT) from rocketing higher.

If you haven't bought this emerging market ETF yet, do so now. You have 15 days.

Already, in anticipation of newfound cash flow from China, Taiwan real estate is heating up.

Home prices are reportedly up 30% since the election, and could be up another 60% by the end of 2008. High end apartment prices are up more than 50%. And it's only expected to improve on Ma's pledge to open the Taiwan property market to Chinese investors.

Even office space is expected to be under heavy demand on he heels of Taiwanese business expansion. Vacancies have already dropped to five year lows of 4% in some areas. Don't be shocked when office rentals can't keep up with demand. Forecasts peg high end office rates at US$3.60 a square foot - a record rate that has never been seen in Taiwan.

Again, if you haven't bought the EWT ETF, do so now.

iShares MSCI Brazil Index (EWZ) - The Other Emerging Market ETF "Must Own"

Rallying 8% on an unexpected investment grade upgrade, the Brazilian rally has only just begun.

Standard & Poor's surprised the market when it lifted the country's long-term sovereign credit rating to investment grade, thanks to faster Latin American growth and a decline in international debt.

Plus, Brazil's GDP is forecast to grow 4.8% this year after a 2007 expansion of 5.4%, and isn't expected to be impacted much by the U.S. slowdown ripple effect. That's because its exports to the U.S. makes up only 2.5% of Brazil's GDP.

Most of tour expected "boom" growth in Brazil is likely to come from domestic consumption and improved government spending on infrastructure.

"The upgrade ‘is a strong long-term positive for the country's financial markets' and probably will reduce the cost of capital by 40 basis points to 5.7 percent."

But if the ETF is a bit too costly for you, consider Brazilian stocks like Vivo Participacoes S.A. (VIV), a $7 wireless communications company riding the rally coattails.

Good Investing,

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

That's a 64% drop from the $45,000 shelled out just one year ago.

My only question... would the man whose reputation has been beaten in the wake of the housing collapse, sign a copy of "Greenspan Bubbles: The Age of Ignorance at the Federal Reserve" for me?

By comparison, tennis lessons with Agassi stand at $70,000. VIP seats for Jim Cramer's Mad Money are going for $10,000. Attend the 2009 Inauguration Ceremony and meet the new president for $60,000. Or, meet Oprah for $12,000.

Don't get me wrong. It's for a great cause. But there's nothing like watching a bruised Fed ego get bruised even more.

Energy is a price factor in everything you buy.  And that realization will drive international online commerce companies for years to come.

Listen... I'd be a jerk to pretend internet stocks are shock-proof. After all, eBay fell from a high of 27 bucks per share all the way down to 7 back in the year 2000.

But here's what happened to buyers who recognized the unstoppable momentum of the internet-based economy and went long on eBay in 2001...

They racked up 728% gains in just a few years.

By the time the stock split at the beginning of 2005, NASDAQ:EBAY had blown through its Y2K high to $58 per share.

In tracking the world's budding e-commerce plays, a few major factors are known to be driving the sector forward:

• convenience

• fuel prices

• re-urbanization

You'll notice that those three major motivators of internet retailing hinge on energy. That's no accident.

From petroleum pellets that make plastic goods, to truckers who honked around the Capitol last week for fuel relief, then finally to consumers sick of driving across town to find shrinking savings at Wal-Mart... 

Everybody in the traditional retail sector is hurting, helping online sales.

SUVs and suburban life have fallen out of favor in the U.S. Along with that, countries where city cores have always been strong are witnessing a surge in e-commerce that comes from higher internet use.

Investing in International Internet Stocks

Argentina's economy grew by 8.7% in 2007, continuing to recover from an almost total meltdown at the turn of the millennium.

Argentina's upward climb is continuing in 2008, with 4.5% GDP growth forecasts beating Uncle Sam by 650%.

Latin America's high-speed internet market grew at a jaw-dropping 54% compound yearly growth rate from 2003 to 2007. Which, by the way, turbo-charges small enterprises in countries like Argentina... taking start-ups from street stalls to websites, where they can reach millions in milliseconds.

My Favorite Internet Stock Right Now 

Online marketplace MercadoLibre.com (NASDAQ:MELI) is your stock play on Latin America's internet commerce boom.

Since its IPO in mid-2007, MELI rocketed from $28 to $78 a share before falling hard in early '08. As with eBay, though, those with strong stomachs are still up big. MELI now sits at just over $52.

Branching out of Buenos Aires, MercadoLibre has brought hundreds of millions of web surfers into its reach. As a matter of fact, this isn't even an ADR with a local listing in Argentina, it's just a Nasdaq stock.

Buyers and sellers in over a dozen Latin American countries and the U.S. can make use of MercadoLibre—which incidentally is Spanish for "free market."

Delivering services essentially the same as eBay, including online payment features similar to eBay's PayPal arm, MercadoLibre has justified its 2008 recovery with stellar earnings.

Q4 revenue in 2007 jumped at a year-on-year rate of nearly 74%, net income skyrocketed by 188.5%!

That's exactly the kind of growth potential we're talking about.

E-Commerce Growth Will Continue

This is what it comes down to: the e-commerce convenience of delivery and the advantage of competing bids serve you better than traditional retail.

Even in Canada, far from MercadoLibre's hot Latin American turf, the sector is booming.

A new national report says online sales, payments, and other internet-based transactions in Canada increased by 27% in 2007.

The top reasons execs gave for ramping up online business? Lower costs and new customers.

That means steady margins and increasing revenues, which is music to any stockholder's ears.

Finally, let's face the facts... You're reading this online, which means you're probably at least knee-deep in the internet economy already.

So why not play it?

Yours digitally,

Sam Hopkins

By the way, I recommended an Asian e-commerce play to Global Growth Stocks readers straight from my research junket in November, 2007. That stock logged a double-digit gain in one day last week after its earnings beat the snot out of Wall Street's estimates. Fact is, we're super-bullish on global e-commerce, and there are more plays in the works. Don't miss the next one—join GGS today.

Here's some more news about our favorite troubled lender—Countrywide Financial.

Shares of the mortgage company are tumbling today on the news that two analysts have decided that Bank of America's deal to purchase them is a little rich given the risks.

In fact, one of the analysts, Paul Miller, believes that the deal should be priced for somewhere between $0 and $2 a share. That's pretty big haircut from original the $7 a share offer.

My only question is why did it take so long for someone to figure out how badly this whole deal stinks?

Countrywide, by the way, is worth zero. In fact, the bondholders will be lucky if they get paid back.

Funny stuff, huh Angelo?

Anyway, here's the skinny on the latest news.

From Reuters by Tenzin Pema entitled: Analysts say BofA may lower Countrywide deal price

"At least two analysts said Bank of America Corp will likely lower its purchase price for Countrywide Financial Corp  with Friedman, Billings Ramsey analyst saying the bank may bring down its deal price to the $0 to $2 level or completely walk away from the deal.

Friedman analyst Paul Miller, in a note to clients, said Countrywide's loan portfolio has deteriorated so rapidly that it currently has negative equity and the proposed takeover of the company will be a drag on Bank of America's earnings due to the elevated credit expenses at Countrywide.

Miller cut his target on Countrywide's stock to $2 from $7

Bank of America, which in January agreed to buy Countrywide for $4 billion, said in a filing last week there was no assurance that any of the mortgage lender's outstanding debt would be redeemed, assumed or guaranteed.

"Bank of America announced that it might not guarantee Countrywide's debt, which is most likely the first step in renegotiating the entire deal," Miller said. "We estimate that if fair-value adjustments to the loan portfolio could exceed approximately $22 billion, this would increase the odds of Bank of America renegotiating the transaction or walking away."

Miller, however, added that given the rapid credit deterioration and weak secondary market demand, markdowns on Countrywide's loans could easily exceed Bank of America's estimates when the company performed due diligence and the cushion was built into the deal.

He expects markdowns on Countrywide's $95 billion loan portfolio — which includes $28 billion of option adjustable rate mortgages (ARMs), $14 billion of home equity line of credits (HELOCs), $20 billion of fixed rate second lien mortgages, and $19 billion of Hybrid ARMs — to be material.

"We believe Countrywide has significant credit risk on its balance sheet, not only in its loan portfolio, but in its subprime and HELOC securities and residuals, its representations and warranties on loans sold, and in loans held outside of banking operations," Miller said.

On Friday, Standard & Poor's cut the credit rating of Countrywide to junk status on concerns that Bank of America may not support as much as $24 billion of the mortgage lender's debt once it completes its proposed takeover.

Countrywide, in a February regulatory filing, had said a loss of its investment grade rating would result in the acceleration of some secured debt obligations and hurt its ability to manage and hedge its inventory of loans.

In addition to increasing Countrywide's financing costs and potentially hurting its ability to attract and retain bank deposits, up to $4.2 billion of its custodial deposits could be transferred to another bank if it were cut below investment grade, the company had said."

Hmmm now let see what we've got here.

There are $34 billion dollars worth of second mortgages that will likely get wiped out and $28 billion dollars of loans in the most toxic mortgage of program of all time—option arms.  That doesn't even begin to consider the rest of the mess that Countrywide brings with it to the deal.

Any way you cut it, it kind of looks like a death spiral to me. 

But to understand the potential we've spoken of, let's revisit the Interoil (IOC:AMEX) stock we spoke of in December 2007.

Granted, this is not a Bakken stock. But it exploded Thursday on a gas discovery. And I bring it to your attention, because it's the same kind of "discovery" pops we're looking for with Bakken.

"I learned long ago not to bet against T. Boone Pickens," I reported in December. "He's not one to throw around investment dollars at just any company. A man of his stature is sure to have done plenty of research, and is sure to be well in the know before investing in any company."

That's why when he increased his holdings in this beaten down oil play with opportunities in Papua New Guinea, Interoil became the "buying opportunity of a lifetime."

"But to make real money in Interoil, you have to play it smart," I advised Pure Energy Trader (PET) readers in a February 2008. "Hedge your bets with IOC puts and calls."

It turned out to be a smart move. Two months into the IOC trade, the stock pulled back sub-18, which gave PET readers the opportunity to cash out the puts for up to 29% gains.

But we also saw no reason to sell. In fact, we're seeing more reasons to buy.

Here's why.

Oil: Still the Buying Opportunity of a Lifetime

In early July 2007, it took four days for shareholders to send Interoil Corporation (IOC) to pre-Elk1 discovery at Papua New Guinea levels — a 58% plunge on nothing more than rumors of a dry well that cast doubt on the Elk structure.

As an Australian company, Interoil is required, on a weekly basis, to produce drilling results. But when IOC failed to report test volumes, it was viewed as a negative. Shareholders got nervous, and sent the stock screaming lower violently to the downside.

"But, nowadays, even at $20, it remains quite a bargain - something made very clear by T. Boone Pickens' two million share ownership of Interoil after a 943,964 share buy in August 2007," I told readers.

While it isn't known why T. Boone Pickens made his move, we do know that IOC is developing that natural gas project in Papua New Guinea. Say reports, Merrill Lynch Commodities, Pacific LNG Operations Ltd, and Interoil have agreed to develop a liquefied natural gas project in New Guinea, with hopes that the project will begin production by 2012.

But to realize the full potential of IOC, you had to have patience.

After months of watching it dip, rise, and trade sideways, patience finally paid off Thursday morning.

Yep, for patient investors, there's plenty of good news.

"Despite a substantial Interoil (IOC) pullback, which gave us a 29% gain on half the Interoil June 20 put (IOCRD), we held... and it's a good thing we did," I told PET readers.

After months of waiting, our Canadian company with operations in Papua New Guinea announced a gas and gas liquids discovery in the Antelope structure in its Elk-4 well.

Says a recent press release:

"The Elk-4 well has successfully penetrated the Antelope structure, a new discovery which will significantly augment the gas found at the Elk-1 discovery well. Drilling operations experienced a gas kick and a flow of gas and gas liquids to surface which was circulated and flared. The well is now being prepared to drill deeper under pressure followed by comprehensive evaluation.

‘This well confirms the presence of hydrocarbons in the Antelope structure," said Mr. Phil Mulacek, CEO and Chairman of InterOil. "We are very excited about this early result and we look forward to drilling ahead to establish the commerciality of this discovery.'"

Needless to say, this is great news. And with more news likely followed by hopeful upgrades, the sky's the limit for our Interoil stock... This, my friends, is the potential we see behind Bakken stocks.

Who said you couldn't make money following billionaires?

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

Inside this new report, you'll learn the details surrounding a little-known U.S. Government application. It's a form that every company operating in this area MUST fill out. Amazingly, shortly after Uncle Sam decides to approve it, the company's share price often launches.

Best part is... it's published BEFORE anything typically happens to the share price.

To get our new report, click here.

——————

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 April 28, 2008.

Bakken Oil Stocks: OPEC Won't Rule Out $200 Oil... Making This Play All the More Enticing
Sure, a recession is technically defined as two quarters of negative GDP, but "you can throw that model out," he says. "I think it's defined by the man in the street a little differently than whether there's been two quarters of reported (negative) GDP growth. We're in a recession, unless you want to stick strictly to the technical definition, which I think really doesn't have much meaning to the fellow who has lost his job or is facing a money market fund that isn't paying him out or whatever it may be."

Peak Oil: Living on the Banks of Denial: On Accepting Peak Oil—And Finding Profit
I have often reflected on how coming to grips with peak oil is much like the process of grieving, as identified by Elisabeth Kübler-Ross in her 1969 book, On Death and Dying. In peaker terms, I'd describe it like this...

Water Infrastructure Stocks: How to Get Your Piece of a $374 Billion Emerging Market
The Environmental Protection Agency (EPA) recently estimated that $374 billion will be needed over the next 20 years for water main replacement and renewal. That works out to about $18 billion per year. The problem: we currently only spend about $1.1 billion per year. But that spending is growing at a 25% annual clip and is expected to continue to do so for the immediate future.

Home Depot Shutting Down 15 Stores: Big Boxes are Going Empty
If you're looking for signs of a weakening consumer, here's another one. Home Depot has decided to close 15 stores over the next two months. Poor performance is the reason. It is a dubious first for the renowned big box chain.

Countrywide Strikes Out Again: Lender Loses Big in 1Q
Somewhere in his private moments, Angelo Mozilo must be laughing his head off today. After all, Angelo "earned" $10.8 million last year and cashed in on $121.5 million in stock gains as his company, Countrywide Financial (CFC), got absolutely hammered by losses on idiotic mortgage loans. Not a bad payout. In fact, all told Mozilo made over $450 million on sales of CFC stock as the company he founded began to fall apart. But his best work was saved for Bank of America CEO Kenneth Lewis.

Investing in CNG: How to Fill Your Tank for $5
That's what some car owners are doing in Utah, where gas is selling for $0.638 per gallon.

69% and 9% in Two Days... Bank Half
Smart strong hands, including you and I knew better, and held, only to watch the stock tack on $7 upside in two trading days.

Special Report: Trading Secrets of the 3160s
As companies acquire new permits to drill (3160 letters), the rapid hit-and-run trades we'll take advantage of will more than cover any rising cost of food and gas. In fact, with the doubling of permits expected this year, just using this one area carefully could triple your money this year.