Jay Taylor: Turning Hard Times Into Good times

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Bruno del Ama: Powered by Lithium

The Energy Report: Bruno, your firm recently launched the Global X Lithium ETF (NYSE:LIT). Why lithium? Why now?

Bruno del Ama: Lithium is of huge interest today for a number of reasons. The primary reason is that demand for lithium is growing by about 10% a year. Most of that growth is fueled by lithium-based batteries used in small consumer appliances, cell phones and laptops, as well as other portable electronic devices.

What really hasn't been factored into that growth is lithium-ion batteries used in electric vehicles. Lithium-ion batteries are the best technology and all new hybrid and electric vehicles are adopting it. The amount of lithium that's required for electric vehicles is much, much larger than what is needed for a laptop, for example.

That growth hasn't been factored into a market that's already growing very quickly. We expect the electric vehicle and hybrid market to grow very significantly from where it is today, which is basically non-existent. That should have a tremendous impact on the demand for lithium.

TER: But why form an ETF for lithium?

BDA: It's basically impossible to invest in lithium today. There's no futures market for lithium. There are no other investable products for lithium. The only way to invest in lithium today, or until these products are available, is to buy individual stocks in lithium mining or processing companies. What this ETF does is provide an easy package for investors to get access to the full lithium market.

TER: What type of investor is investing in the Lithium ETF? (more)

Setting Up for a Year-End Rally

THIS METRONOMIC RALLY—averaging a daily gain of 0.3% since Aug. 31 without even a 2% setback, the cadence conditioning traders to buy every noontime dip for a four-hour lift into the close–has finally lulled enough folks into a state of ease that to be bullish at today's prices and over the very short term is to be in copious, if not entirely trustworthy, company.

The American Association of Individual Investors weekly survey showed the greatest number of bullish respondents since early 2007 and the fewest bears in three years. The Ned Davis "crowd sentiment poll" hit the excessive bullish zone.

The persistent overanticipation of turmoil to come, as gauged by the premium in Volatility Index (VIX) futures, has at last succumbed to the calm market uptrend. New 52-week highs have ebbed, even as the indexes have levitated. And, for the second week in a row, the ratio of corporate insiders' dollar-weighted stock sales to purchases (see "Insider Transactions.") remained at or above the elevated 30 level.

This mix of bullish feeling and smart-money caution comes as we enter a week with three intuitive sell-on-the-news excuses: the midterm elections Tuesday, the Fed's expected detailing of another asset-purchase plan Wednesday and the monthly employment numbers Friday. A look at the news clippings from the lead-up to prior midterm balloting shows far less chatter about how market-friendly this quadrennial ritual would be. (more)

10 Market Bubbles That Could Soon Burst

The president of the Minneapolis Federal Reserve, Navayana Kocherlakota, recently published a paper in which he argues that government guarantees helped fuel the bubble in real estate. While his paper was largely aimed at prescribing solutions to this problem, it raises the question: What other bubbles are lurking out there in the global economy? We asked several experts and to our surprise, they had a long list:

1. Gold. The price of gold bullion has risen from $294 an ounce in 1998 to $1,404 today, an increase of 377%. "It's the biggest, baddest bubble of them all," says Robert Wiedemer, author of Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown. Gold has no intrinsic value. A telltale indicator that gold is a bubble: incessant cocktail party chatter about buying gold and endless TV commercials offering to buy gold jewelry. The SPDR Gold Trust ETF (GLD) is up 28% since the beginning of the year.

2. Real estate in China. Chinese real estate prices are up only 9.1% this year, which may seem more frothy than bubbly. But rising prices are generating rising demand, which is a clear sign of a bubble, says Vikram Mansharamani, whose book, Boombustology: Spotting Financial Bubbles Before They Burst, will be published early next year. The participation of amateur investors like waiters and maids in the property boom is a clear sign of a property bubble in China. The fact that developers are building more apartments than there are buyers is another giveaway. (more)

Roubini Tweets: US Banks at Risk of Insolvency

Nouriel Roubini, the star economist whose gloomy forecasts have earned him the nickname of Dr. Doom, is at it again.

This time he has taken to Twitter to predict pain. The New York University professor was reacting to a report by Laurie Goodman, senior managing director at Amherst Securities, who says one in five distressed homeowners in the U.S. faces, or may face, foreclosure, Housing Wire reports.

She says 11.5 million home loans are non-performing or highly distressed at present.

And Roubini says that spells trouble. “Amherst Securities Goodman estimates that 11.5 million households could default on their mortgages, not the 4 million priced in by markets,” he tweets.

“If 11.5 million more households default on their mortgages, most U.S. banks would be insolvent again. That's why Goodman's estimates are scary.”

Last week, Roubini used Twitter to forecast failure for the Federal Reserve’s latest easing effort. “QE2 will be followed by QE3 and QE4, as QE2 will fail to revive the real economy and to prevent deflationary pressures,” he tweeted. (more)

Stocks To Watch wednesday

(MarketWatch) -- Among the companies whose shares are expected to see active trade in Wednesday’s session are Cisco Systems Inc., Macy’s Inc. and Polo Ralph Lauren Corp.

Cisco (NASDAQ:CSCO) is expected to report fiscal first-quarter earnings of 40 cents a share, according to analysts surveyed by FactSet Research.

Macy’s (NYSE:M) is forecast to post earnings of 3 cents a share in the third quarter.

Polo (NYSE:RL) is estimated to report a profit of $1.67 a share in the fiscal second quarter.

Computer Sciences Corp. (NYSE:CSC) is expected to report earnings of $1.18 a share in the fiscal second quarter.

After Tuesday’s closing bell, International Game Technology (NYSE:IGT) reported it swung to a fiscal fourth quarter profit but not enough to satisfy Wall Street estimates. More on IGT earnings.

Watch list

Allstate Corp. (NYSE:ALL) announced a $1 billion share buyback program. More on Allstate.

General Growth Properties Inc. (NYSE:GGP) said it emerged from bankruptcy and will launch an initial public offering. Read more on General Growth.

Invesco Ltd. (NYSE:IVZ) said that it was launching a secondary offering of shares owned by a Morgan Stanley (NYSE:MS) affiliate. More on Invesco.

Lions Gate Entertainment Corp. (NYSE:LGF) swung to a second-quarter loss of 22 cents a share on debt charges. More on Lions Gate.

MBIA Inc. (NYSE:MBI) said it narrowed its third-quarter loss as it paid off claims on mortgage-backed securities. More on MBIA’s results.

Prudential Financial Inc. (NYSE:PRU) said it restored its annual dividend to 2007 levels. More on Prudential’s dividend.

Tesla Motors Inc. (NASDAQ:TSLA) said its third-quarter loss widened, but narrowed on a per-share basis since the electric car maker went public, as sales slipped.

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In a tough economy, old stigmas fall away

(AP) -- The Goodwill store in this middle-class New York suburb is buzzing on a recent weekend afternoon. A steady flow of shoppers comb through racks filled with second-hand clothes, shoes, blankets and dishes.

A few years ago, opening a Goodwill store here wouldn't have made sense. Paramus is one of the biggest ZIP codes in the country for retail sales. Shoppers have their pick of hundreds of respected names like Macy's and Lord &Taylor along this busy highway strip.

But in the wake of the Great Recession, the stigma attached to certain consumer behavior has fallen away. What some people once thought of as lowbrow, they now accept -- even consider a frugal badge of honor.

EDITOR'S NOTE -- The Great Recession has been over for nearly a year and a half, and the economy is slowly growing again. But many of the drastic changes that Americans made in how they spend money have endured -- and may be here to stay, some economists think. In a three-part series, The Associated Press examines the state of the American consumer.

And it's not just about Goodwill. Americans, even those with jobs, are shopping for brands, buying at stores and eating at restaurants that they shunned before because they are trying to get more for their money.

At the supermarket, shoppers are buying more store-labeled products, like no-name detergents and cereal, and not returning to national brands. (more)