My Home     About Me

0001 EDT Monday July 24, 2006 Good Morning: As market sentiment approaches near depression levels, it is time to be on very high alert for the kinds of sudden buying surges that we have so far nailed with deadly accuracy over the past two months and have resulted in some of the largest one day gains in years. What could cause the markets to rebound unexpectedly again, might be a cessation of hostilities in Lebanon, or perhaps a further easing in Energy prices or both and with such a high negative sentiment, the debate rages on whether we will have a soft-landing or worse.   Our take is more towards the soft landing, if at all. In fact we would prefer and actually strongly believe that we will likely get the economic equivalent of: "A Touch and Go Landing". That's what pilots do at air shows when they like to show off how they can take their plane in all the way to a touchdown and then put on the afterburners and soar skyward. There are many compelling reasons why this may well be so.   The 1 reason being this may turn out to be the one of the most skillfully engineered mid-decade slowdowns of all time, will enure with all the attendant consequences of such a high level of present economic activity as the base for the next liftoff, the sky may truly be the limit.                                There have been many occasions over the past few years where economists have prematurely called for an end to economic growth, but not us. Long term readers will know that we've remained unequivocably bullish on the US Economy since April 2003 and by January 2004 had christened it right here: The Best Economy Ever and have remained steadfast right up to the 1st Quarter's stunning 5.6% GDP growth.   Now we're aware of that expression: "Pride Comes Before A fall" and we are ever mindful of that. Not because of what we are saying now, because we do believe the US is in a domestic led slowdown, but not necessarily an export led slowdown, since exports are still booming and are helping to cushion whatever slowdown might eventuate and thanks to massive exports from great companies like Boeing, that "Touch and Go Landing" idea just might be the ticket. We were also cheered by the ebullience of former economic advisor to President Reagan, Arthur Laffer, who Friday on CNBC's Kudlow & Company gushed: "We have never had an economy in better shape than it is today - It's a phenomenal economy" - That has us just a wee bit worried, even though he paid us the mother of all compliments... But it is interesting that he noted, how with corporate profits at their highest percentage of GNP ever, with numerous other positive indicators, that he, like we do, foresees even better times ahead once the Fed starts easing rates again. And as Arthur Laffer also highlighted, stocks may also be close to their most undervalued levels in history, by many and varied measures, including the incredible negative sentiment that currently exists, which is a lot like main street's impression that there is no boom out there, when this is actually one of the best ever. He's been right on with this economy for as long as ourselves, so for others to second guess Arthur Laffer, may be doing so at their peril...   Our feeling is that the Fed has cast a pall over the economy and markets, that is the backdrop of negative sentiment and economic denial.   And as we already know, as soon as interest rates start falling, that is automatically bullish for stocks and can raise stock price valuations dramatically, which is what we expect will occur in the coming years as many of the undervalued Dow heavyweights that have been basing out for six years, like Microsoft and Wal-mart, begin to increase as their awesome growth over the past few years begins to be manifested.   Is GM insanely undervalued along with numerous other Dow Jones and Blue Chip issues?   The Carlos Ghosn Trilogy is that he surely wants to run GM and help turn it around, just as he so brilliantly accomplished with Renault and Nissan. He may the first and only CEO in history to run two Global 500 corporations simultaneously but we don't think he will be satisfied until he is running all three, including GM. Why? Because as the insidious Kirk Kirkorian that everyone thought was nuts in taking on such a large stake in GM with a view of turning it around, few investors really understand how absolutely insanely undervalued GM may truly be:   Followers of MODAR will know that we made our first of several "Million Dollar Buy Recommendations" on GM over the past few weeks and last week GM rose by 5% in a very bad market. The reason is, when you want to make money in a large cap stock, you have to bet big to get results. It's the same for Kirk Kirkorian or Carlos Slim. When you're already worth Billions and you want to double your net worth you have to bet big on a grand scale and the surest way to do that is to buy extremely undervalued assets on the cheap, just as Slim did with MCI when nobody else wanted it and the same way Kirkorian has litten a fire under GM, which you may recall Investment Intelligence recommended initially at under $20 with a target price of $40 and along with that MODAR shorted Toyota Motors TM at $116.60 in May as we correctly surmised that TM was "insanely overvalued", being at the time worth more than GM, Ford and Daimler Chrysler combined and reminded us of Yahoo at $135 per share, being worth more than the Norway, Portugal and some other European nation combined and we all know where Yahoo went next and Toyota has been in a virtual freefall also since. And Why? Because we believe that the Auto Industry is at an inflexion point in history, where some dramatic technological breakthroughs are imminent that will transform the auto industry into a vastly more profitable version of its former self, wherein GM is not unlike the near death experience that IBM suffered in 1993 before it too was buoyed by a technology revolution that catapulted it stratospherically higher under leadership and turnaround artistry of Lou Gerstner.   We earnestly believe Carlos Ghosn wants to be the Lou Gerstner of General Motors, because he knows that without GM, his continued success at Renault and Nissan may be difficult to endure, but under the wings of GM, these two companies can be an East West Global platform for GM in two dynamically growing regions, but more importantly, just as Kirk Kirkorian and other astute investors already have, he has figured out that GM is unbelievably undervalued, which is why he wants both Nissan and Renault to invest in their combined future and he also knows, that GM's ultimate success and ability to capitalize on its true valuations that by some measures could be upwards of $100 per share, or even one day meet its justly enterprise value of today, which according to some estimates is as high as $274.31 Billion or $485 per share. The fact is GM at $29 is in a lot better shape today than IBM was back in 1993 and one reason is a high breakup value.   GM currently has $33.282 per share in cash, along with book value of $27.274, but that in of itself doesn't amount to much if you are losing money. But, GM's turnaround plan is well under way and cost cutting is actually going much better than expected. So, with the extremely valuable, unique knowledge and experience that Carlos Ghosn has already gained in turning around two left-for-dead auto behemoths, that almost overnight he has transformed into Superwinners, not only in the showroom, but near invincibility on the Formula 1 circuit, as almost beyond imagination, a few years ago when Renault was a Formula 1 non-performer and left in the dust by Ferrari, now the opposite is true, which kind of makes the supremely confident and able Carlos Ghosn, uniquely qualified to pull off what could become automobile legend...   The former management of GM squandered a monumental opportunity to get GM out of longer term financial difficulties by not raising the necessary cash when the stock price was at an all time high above $90 in late '99. If they could have raised $20 to $50 Billion back then, it might have been a whole different story that would have negated having to sell off extremely valuable assets to raise cash, but as has often happened before in business history, by their ineptitude they may have handed current and future owners and managers of GM a fortune...   One final point: Last week, on the 37th anniversary of the first lunar landing, another giant step for mankind may have been introduced to the World in the form of a technological breakthrough with immense future promise as unveiled by Tesla Motors at www.teslamotors.com .   An high performance electric sports car with the equivalent of 135 miles per gallon or 250 miles per charge, thanks to a 5 fold increase in lithium ion battery technology over Toyota's Prius means that just as it was only a matter of time before the high performance limo that the Japanese managed to run at 180 MPH for one hour in 2000 could be modified and improved to run longer at less speed, so that it now may too be only just a matter of time before further improvements could usher in a whole new dimension to hybrid technologies as any increase in battery storage capacities could yield incredible mileage improvements of up to 250 MPG, as already achieved in many California tests.   Could this be GM's chance to trump Toyota? Just as Microsoft should have bought Google before they got too big: Perhaps GM should be offering plant and production capacity or joint venture collaboration to improve technologies even further or even double efficiencies again...   They should already be courting the founders of Google and Paypal who are the financial backers of Tesla Motors electric car technology, that could ultimately lead to being the "Google" unleashed on an "unwilling-to-change auto industry" to deliver the long promised 1 cent per mile that Fuel Cells might one day bring that's about to be proven by Tesla in a quantum leap improvement from today's 16 cents or higher:   With economic transportation cost savings as exceptional as this, it could be the beginning of major transformational shifts in automobiles and with growing needs of a zero-emission vehicle World the possibilities of developing and converting buses and trucks to this kind of new kind of high performance electric based technologies that are potentially more efficient than combustion engines has massive implications.   Each decade tends to have an overriding theme. In the 50's it was the space race. The 60's: The race for the moon. The 70's JumboJet age is the dawn of Globalization. The 80's PC revolution begins and in the 90's the internet brings a collapse in in the cost of communications. And as we wrote here up to 10 years ago this decade's theme would be a paradigm shift in terrestrial transportation just as we believe that the theme next decade will be a paradigm shift in aviation and the decade beyond will likely be one of advanced aerospatial transportation.      Market Outlook Remains Very Fluid    As we again emphasized last week, while the coming week unfolds going into month's end may be punctuated by rebounds, there is an outside chance that a major low of significance could be put in anytime over the next three weeks or so, with some kind of retest that may come in October and we therefore have to be mindful and alert for this to happen. With some 800 companies reporting next week, one has to acknowledge that if more companies surprise than expected, then this could pave the way to a recovery. What might also be a catalyst behind this could be any growing evidence of weaker data that could still foment a rally into the next FOMC meeting in August anticipating a pause in rate hikes or an ending of same. While domestic growth may be slowing domestic economic growth, there is still strong evidence that overseas growth virtually Worldwide is showing no signs of easing and the outlook for the coming year could well be an average Global approaching 5%, which would appear to be without historical precedent and could continue for years to come based on the massive infrastructure projects that lie ahead that can continue to fuel China's astonishing growth potential. This could contribute a few percentage points to US growth and keep the US economy from slowing down too much and at the same time boost US exports on the back of a weakening US Dollar. There is no doubt that a weaker US Dollar at this time would likely boost US Equities and Metals markets. Trade Well From the Desk of Savant

Basic Materials sector   Technical chart patterns   support/resistance levels   ETFs (exchange traded funds)   Deron Wagner   iShares Hong Kong (EWH)   S&P 500 chart pattern   emini's S&P 500   earnings   economic data   Biotech HOLDR (BBH)   Emini's Nas 100   Short selling ETFs   exchange traded funds   sector rotation   etfs   corn futures   selling options   commodities   mcio