Week of May 30 in the Stock Market

So I think I am going to try something new. I will be covering major events coming up in the week and making my predictions on what the economy will do in the next 5 days (4 this week because of the Memorial Day holiday in the US).

This week of May 30 to June 3.

The first thing I would like to talk about is Germany's goal to abandon nuclear power by 2022. This is a very significant announcement that will hurt an already troubled nuclear industry. The Fukushima disaster that is currently ongoing and has already hurt the nuclear industry. Germany's Chancellor Angela Merkel plans to offset the 25% of power currently supplied by nuclear power with renewable resources. My play on this is buy Siemens (SI $128.19) and sell Powershares Global Nuclear ETF (PKN $19.75). Siemens is one of Germany's largest corporations and is heavily involved in renewables. Not only are they involved in renewable energy but everything from high speed trains to healthcare. Powershares Global Nuclear ETF is a global play on the nuclear sector. While its exposure to Germany may be limited I believe that these events will negatively effect the whole industry world wide.

The best piece of investing advise I have been told is look around at what is going on in your world and see investing opportunities. Today as I was stopped by a passing train and thought that this would be a great opportunity to observe where the economy was going. Around 40% of all freight in the United States is shipped by rail so it is a good barometer of the economy Where I am from, in a small town in Northern Minnesota we have a lot of agriculture so grain cars coming back from the fall harvest are expected at all times to be going to and fro. I was intrigued by the number of cars carrying lumber products going by, it had to be about half. Tied with the Mississippi flooding events, the Japanese tsunami, and the Joplin tornado I think wood prices are going to shoot up. Price took a huge hit during the housing collapse and have yet to recover. New building permits have been steadily increasing and with the summer building season starting for us northern states I see an increasing demand for building materials especially lumber. My play on this news is Weyerhaeuser (WY $20.75), Weyerhaeuser is a leading supplier of forestry products and of the lumber cars I saw go by, half were full of Weyerhaeuser wood. I hear your criticism that I live in only a snap shot of the global economy but I feel strongly that what you see around you is a good indication of the economy, but not the only.

A few more comments for the long term, after listening to Fareed Zakaria talk to the Prince Al-Waleen bin Talal about oil prices I agree with the Prince that oil prices will begin to go back down. The Saudi's, the worlds largest producers of oil acknowledged that with $100 a barrel prices the US and others will begin to seek alternatives and 10 years down the road will not need to import oil anymore. I also think that the uprisings in the Middle East have begun to cool down just look at Gadhafi, he is ready for a ceasefire. Speculation that drove up the prices will calm down and I believe $80/barrel will come by September.

Please leave your comments below on what you like and what you would like to see. Also leave your ideas for or against my predictions.

Cheers

Bringing Back My Blog

I decided my summer project will be to start a blog. After trying to sign up for one I realized that I already have one. The posts from 2008 are from my senior social studies class. It was kind of interesting to see my opinions then and how they have changed now.

Blog posts after this one will be strictly about economic issues, maybe a few fun ones but they will all relate back to econ. What I hope it will look like is Greg Mankiw's. He is an Economics professor at Harvard and I have used his text book before. I will not be as dry and boring as him I hope. Sorry Greg, you are too Old School Keynesian for me, its been done before. But I do respect he work here is his blog... http://gregmankiw.blogspot.com/