Elliott H. Gue

Elliott H. Gue brings an international perspective to Investing Daily, analyzing the complexities of global energy markets and related industries for Personal Finance as well as more specialized publications.

From traditional fuels like coal and crude oil to the latest alternative energy sources, Elliott’s semimonthly newsletter, The Energy Strategist, unearths the most profitable opportunities in this booming sector and outlines the interrelated economic and geopolitical forces that drive these markets.

In addition to his work on energy markets, Elliott is co-editor of MLP Profits, an online newsletter that takes the guesswork out of identifying high-growth, high-yield partnerships through studied advice and sound market intelligence.

With Stocks on the Run, Elliott teams up with fellow KCI editor Yiannis Mostrous, seeking out opportunities for triple-digit profits in 3-9 months.

Before joining KCI, Elliott lived and worked in Europe for five years, earning a bachelor’s degree in economics and management and a master’s degree in finance at the University of London—the first American student to complete a full degree at this prestigious business school. He also coauthored a book on investment opportunities in Asia, The Silk Road to Riches: How You Can Profit by Investing in Asia’s Newfound Prosperity.

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Content Posted by Elliott H. Gue

Where to Invest: IT Spending Boosts GDP

Consumer spending might be weak, but US corporations are investing in information technology.

Income Investing: High-Yield Energy Stocks

Master limited partnerships (MLP) and oil-tanker stocks offer far higher yields than US government bonds and other traditional income-oriented sectors--not to mention leverage to growing demand for energy commodities.

Leading Economic Indicators

The market is reading way too much into some moderation in US economic data--the indicators are far from signaling recession. This major market overreaction sets us up for an important buying opportunity over the next few months.

Recession Proof Your Portfolio

Although I remain relatively bullish on the economy and markets, I also recommend taking steps to recession proof your investment portfolio.

Hot Topics for Energy Stocks: Natural Gas Liquids (NGL) and the Moratorium on Deepwater Drilling

The price of natural gas liquids has declined recently, but investors shouldn't worry about this seasonal weakness. However, the Obama administration's moratorium on deepwater drilling in the Gulf of Mexico is a bigger concern.

No Double-Dip Recession

A dispassionate analysis of the data doesn’t support the conclusion that the world is headed for a double-dip recession, nor does it back up the idea that the EU’s newfound fiscal responsibility will doom the global economy. Rather, the data suggests that we’re in for a slow, grinding recovery.

Alternative Energy: Don't Believe the Hype

Don’t buy the hype surrounding alternative energy; this sector faces severe headwinds that will only intensify as EU nations prune budgets.

Winners and Losers from the Gulf Oil Spill

Tim Guinness, the London-based manager of Guinness Atkinson Global Energy (GAGEX), shares his take on the oil spill's impact and the future of the US energy sector.

A Typical Summer Market

With the S&P 500 near the low end of its trading range, a move to the top of that range could be in the offing.

An Economic Compass

Don’t confuse long-term risks with cyclical trends; the recent pullback is a correction, not a new bear market.

The Makings of a Summer Rally

As credit markets begin to stabilize this summer and economic data remains broadly positive, I see the potential for a meaningful summer rally.

Macondo and $100 Oil

Macondo is an environmental disaster, but investors must separate pre-election political rhetoric and sensationalist media coverage from reality and history. Odds are that Macondo will turn out to be far less of a disaster than BP’s most vocal critics suggest.

Jobs and the Economy

The most recent jobs report was disappointing because it comes on the heels of two strong releases. But as prior cycles have demonstrated, employment reports can be volatile on a month-to-month basis. Jobs creation is never smooth in the wake of the recession.

Buy Strength When the Stock Market Dips

My basic rule is simple: When the market corrects, look to buy groups that are showing relative strength.

Limited Downside for Oil Prices

Some have argued that the recent decline in oil prices represents an abnormal trading pattern or the beginning of a bear market in oil. But past experience doesn’t support that conclusion.

Think 2004, Not 2008

Markets most likely will remain calm this summer while fiscally irresponsible European governments pass austerity packages. It will also take time for investors to gain confidence that the Greek credit contagion hasn’t derailed the global recovery. The markets likely will trade sideways before rallying to new highs by year-end.

The Mistake of Selling Too Early

Don’t panic during market corrections; they are a normal and a healthy part of every market advance.

Buy Master Limited Partnerships Now

Many of our favorite master limited partnerships have pulled back to attractive valuations. Now is the time to buy.

Interesting Times

There’s an ancient Chinese curse, “May you live in interesting times.” Between Greek's sovereign debt crisis, yesterday's unprecedented selloff in the stock market and the oil spill in the Gulf of Mexico, it's clear we live in interesting times.

The Skinny on Exchange-Traded Funds (ETF)

Exchange-traded funds (ETF) are taking the investing world by storm. This week I sat down with Benjamin Shepherd, co-editor of Global ETF Profits, to get his take on how investors can use ETFs to profit from uptrends in specific commodities, sectors and markets.

Why Some Natural Gas Is Worth $7.28

The actual value of natural gas produced from some of the most important US shale gas fields is currently running at over $7 per thousand cubic feet.

More Upside for the US Economy and Stock Market

The US and most developed economies face long-term headwinds such as excessive debt and deteriorating public finances, but none of these challenges preclude a cyclical recovery for the economy and another leg higher for the broader markets.

Apple of the Eye

Few companies ever achieve Apple’s (NasdaqGS: AAPL) profitability and success, but corporations have by far the cleanest balance sheets of any major sector of the US economy. Like Apple, many of the biggest firms have been paying down debt and building up solid cash positions.

Sell Wind and Solar Energy Stocks

Don’t expect wind and solar energy stocks to perform well this year. Even with demand likely to bounce back, both industries face massive overcapacity and falling profit margins.

Statistics for a Spring Recovery

Railcar loadings data has broken out of a year-long range. The inescapable conclusion is that the economy is getting stronger.

Lessons from the S&P 500's First-Quarter Performance

According to the first quarter results of the S&P 500, the energy and financial sectors turned in a divergent performance. But a closer look reveals that both groups offer upside.

Master Limited Partnerships and Taxation

Master limited partnerships (MLP) can offer significant tax advantages to investors.

Investing in Fuel Efficiency

Rising oil prices coupled with the lack of readily available substitutes raises the value of any steps a company or individual can take to reduce crude oil consumption.

Health Care Fiction and Fact

Health care reform legislation pushed by President Obama is about to come down on investors. The end of the debate is positive for health care stocks.

Sour Grapes

Emotion is an ever-present enemy for investors. One way to control its pernicious influence is to identify a set of well established indicators or data points that you’re willing to follow consistently.

There's No Magic Number

One of the most important lessons I learned from my accounting instructor years ago was that the investment valuation process involves a lot more than calculating a bunch of ratios and putting them into some sort of a grand formula to understand a stock’s true value.

Back to Iraq

Producers will earn below average returns on Iraqi contracts but will need to spend big on services to meet their contractual goals.

The Costs of Credit

I’ve always been more interested in what private-sector companies are doing than in the nefarious machinations of governments. Sovereign debt markets remain a key longer-term macroeconomic risk, but the more interesting story in the near term is the corporate bond market.

GDP Suggests Tech

We’ve been looking for this cycle to kick in for some time, and it’s one reason the IT sector is among my favorites; in fact, I just added a play on this trend in the most recent issue of Personal Finance.

Popping the Green Bubble

Widely hyped solar and wind power companies have handily underperformed the broader markets and the energy sector as a whole so far this year. One reason for that is simple politics: Alternatives are completely dependent on government subsidies and mandates for growth.

Downfall of the Cotton King

One of Livermore’s most costly trading mistakes involved a man named Percy Thomas, who was known as the “Cotton King” to his contemporaries. Thomas had a reputation as a well-informed and successful speculator in the cotton markets and attracted a considerable following in both the US and Europe.

Revenues on the Upswing

Nearly three-quarters of the companies represented in the S&P 500 have reported fourth-quarter results as of February 12. Of that total, 75.7 percent have beaten consensus analyst earnings estimates.

Orlando Q & A

One of my favorite aspects of this year’s Orlando MoneyShow was the question-and-answer (Q&A) sessions held at the end of each of my presentations and on an impromptu basis in the corridors at the show. Here’s a rundown of some of the most common questions posed and my answers to each.

Behind GDP

Given the economic improvements and recovery in corporate profits, I expect this correction to ultimately offer investors an outstanding buying opportunity. Among my favorite sectors to play the upturn: energy, technology and health care.

Keep it Simple

Trying to process a mountain of data and statistics either leads to an unwillingness to act at all or, ironically, to falling back on gut feelings and emotion. Neither is a profitable strategy.

Borrowers or Lenders

The lack of consumer lending has as much to do with consumers’ newfound thrift as it does with bank’s unwillingness to lend money. Bankers might make a convenient scapegoat for politicians looking for someone to blame for the tepid economic recovery, but major economic upheavals have historically left lasting scars on consumers’ psyches.

Shades of 2004

There’s a chart that’s been making the rounds lately comparing the S&P 500 in 2003 and 2004 to the current pattern in the same index. It’s always dangerous to blindly compare two different periods in market history, but in this instance there are some striking similarities.

Don't Get Carried Away

There's a great deal of misinformation published on the Internet and in print media concerning MLP taxation. Back in 2007 a series of articles published in major media outlets claimed that Congress was working on legislation to end the MLP tax advantage. The same rumors have cropped up again lately.

The Mythical Double-Dip

Of course there’s a chance the recovery could stall and the economy re-enter recession next year. But you need to appreciate just how rare double-dip recessions have been in US history.

Exxon's Blueprint

A series of recent deals across a wide swathe of energy-focused sectors are setting up 2010 as another big year for M&A activity. Once again, ExxonMobil is a primary instigator.

A Tale of Two Nations

Even when markets experience a secular decline, cyclical fluctuations around the trend that can lastfor years. We are currently experiencing such a cyclical rebound, and investors would be well advised to invest accordingly.

Coal's Bright Future

While the US coal market is far from dead, the international coal market is positively booming. Here's how to profit.

Think Des Moines, Not Denmark

A perfect storm is building in the Midwest that will mean far more to investors than the wording of any press release on carbon emissions that originates from Copenhagen.

Another Look at GDP

As artificial boosters fade, GDP growth will face additional headwinds. However, there’s enough slack in inventory data and additional stimulus in the pipeline to keep the economy growing for the next few quarters.

Oil Shale versus Shale Oil

Some exploration & production firms are looking to grow their oil production more than 50 percent in 2010 by exploiting unconventional oil plays like the Bakken Shale. At current oil prices most producers believe that wells in the core part of the Bakken Shale offer after-tax returns on investment of 100 percent and remain profitable even at significantly lower prices.

Unemployment by the Numbers

Rather than listen to the endless hyperbole that perpetuates in the media’s discussion of employment statistics, let’s examine the actual data and unemployment trends during prior recessions.

What Recession?

Although most global markets performed poorly amid last year’s financial crisis, global economies didn’t follow the same path. And as credit markets began to heal this year, some countries have been far quicker to recover than others.

Reaching for Yields with MLPs

In a market where most income-oriented groups offer near record-low yields, investors are starving for income. All MLPs offer market-beating distributions, as well as attractive tax advantages, but fight the temptation to blindly reach for the highest yields.

Steady Revenue Beats

We’ve been overweight staples in Personal Finance all year, and our favorites have actually beaten the S&P 500 despite the perception that they’re boring and defensive.

Parsing GDP

There’s enough slack in inventory data and additional stimulus in the pipeline to keep the economy growing for the next few quarters.

EPS and MLPs

In the case of master limited partnerships (MLPs), focusing on earnings per unit--the MLP equivalent of EPS--not only provides an incomplete picture of a company's health but it's also downright misleading.

The New Normal

Discussing long-term headwinds is an interesting intellectual exercise, but it’s not going to make you a dime, or even a euro-cent. As investors, our mission isn’t to dig up new indicators to justify a long-term bearish position. The mission is to make money.

Focus on Earnings

Investors will be scouring earnings releases and conference calls this quarter for any further evidence that companies are seeing a real turn in business conditions.

Strong Parents Make Healthy MLPs

MLPs offer investors a simple value proposition: double-digit, tax-advantaged yields and strong recession-resistant growth potential.

Buying Natural Gas

Although natural gas prices recently hit a seven-year low on the spot market, the action in longer-dated futures and gas-related stocks suggests that a marked improvement is around the corner.

Growth Confirmed

This marks the fifth straight monthly gain in LEI, one of the most impressive run-ups in the indicator in decades. On a year-over-year basis the LEI is up 1.9 percent, well into positive territory.

On Track for Recovery

An interesting indicator to evaluate economic conditions is the weekly railcar loadings data released by the Association of American Railroads. This data tells us the quantity of goods and commodities being shipped over America’s freight railroads.

Managing Risk

Two suggestions for the current market: Don’t ignore more defensive sectors in your zeal to participate in market upside, and don’t be afraid to sell some stocks.

Giant Oilfield Spells Upside for Prices

As production from existing oilfields decline, producers will need to drill more aggressively and use more sophisticated production techniques to stem decline rates. And as production from easy-to-produce fields wanes, producers will be forced to target ever more complex fields such as those in the deepwater.

Changing Engines

The US economy will see a few quarters of strong growth as we snap back from depressed conditions, but longer-term growth prospects remain subpar.

Recession Is Over, Beware the Recovery

A disappointing pace of recovery and longer-term fiscal imbalances remain major risks, but this is a concern for next year, not the next few months. For now, enjoy the rally.

Earnings Leverage

US corporations have a great deal of earnings leverage to any recovery in final demand and should be able to post some truly impressive year-over-year growth numbers as we head into the latter months of 2009.

More Jobs

The current data remains consistent with my forecast that the US recession will end either late this quarter or early in the fourth quarter of 2009. Don’t be fooled by the naysayers who will tell you a still-weak jobs recovery will delay the turn until 2010; this view is not consistent with historical norms in employment data.

Safe Houses

GDP is a backward-looking indicator. But Friday's report largely backs what I’ve been saying for months: The US recession is easing and will likely end later this quarter or early in the fourth quarter.

Don't Buy Oil Speculation

Consumer and producer behavior from 2004 through mid-2008 is not consistent with artificially high oil prices. The speculation argument has little basis in reality. The real cause of rising prices is unusually strong demand growth coupled with sluggish supply response despite record spending.

The Recession Is Ending

I suspect the coming economic recovery will be weaker than past expansions. However, the data clearly points to a recovery. Investors who linger on the negatives will miss the boat.

The Politics of Carbon

HR 2454 is a mammoth, 1,200-page bill filled with many complex clauses and definitions. What follows is a rundown of some of the main issues, provisions and controversies.

The Real Wireless Revolution

Revenue from wireless data and advanced services will dwarf that from basic cellular service itself. Here are the winners.

Improving Tone

Although crude could still retest its July lows, economic stabilization in the US combined with resurgent growth in emerging markets is bullish for energy commodities and related stocks through year-end. In the near term, the stock market will be focused on second-quarter earnings. In today's issue I take a detailed look at earnings releases from three companies that have broader implications for energy-related investments.

The Dark Side of Cap-and-Trade

Alternative energy companies are probably getting the most attention as potential beneficiaries of HR 2454; after all, the use of these technologies would be mandated by the RES, and putting a price on carbon tends to make energy sources that don’t emit carbon more attractive. But don’t go overboard; the bill isn’t a legitimate reason to aggressively buy alternative energy stocks.

The Employment Picture

Although the jobs picture isn’t pretty right now, the data is actually pointing to a cyclical recovery, not continued recession. Short-term market pullbacks aside, this bodes well for an end-of-year rally for the S&P 500.

Gathering Yields

Partnerships engaged in the gathering and processing business have taken their lumps over the past year thanks to lower commodities prices and weaker drilling activity. But these conditions won't persist forever; we highlight a high-yielding MLP that offers significant growth potential for aggressive investors.

7/16/09 BUY - Aggressive MLP

Read More...

The New Consumer

Believe it or not, the consumer isn't dead.

G8 Reflections

The G8 summit itself is evolving; it’s become obvious that any summit that excludes countries such as China, India and Brazil is completely toothless. Developing countries have been the key drivers of economic growth in recent years, and it appears that these nations are bouncing back more quickly from the recent economic crisis than the developed world.

Crude Alternatives

I reiterate my outlook for crude oil prices, in addition to analyzing Iraq's failed auction of oilfield production contracts and the real prospects for alternative energy in the US.

Healthy Buying Opportunity

President Obama’s health care plan spooked the market. Although the sector is pricing in a worst-case scenario, the most radical elements aren’t likely to survive. Here’s how to profit.

The Long-Awaited Pullback

A weak US recovery will likely begin late in the third quarter or early in the fourth quarter, but there will continue to be volatility in economic releases. I’m looking for the market to sell off as a short-term response to conflicting data, setting us up for a year-end run-up to new 2009 highs as the recovery takes hold late this year.

Rising Income

High, tax-advantaged yields are the prime attraction for most investors in master limited partnerships (MLP). And there’s good reason for that: The average MLP in the industry benchmark Alerian MLP Index yields nearly 9 percent, far higher than the 4.3 percent yield available in US Treasury bonds, the 7.2 percent yield on BBB-rated corporate bonds and the 7.8 percent average yield on the Bloomberg REIT Index.

The Politics of Carbon

Most in the media hailed the House of Representative's passage of climate change legislation as a major victory for President Barack Obama. Clearly, the president lobbied hard for bill to clear the House before the July 4 holiday; the president is trying to push both health care and climate change legislation through Congress this year. In this issue, we'll take a look at how carbon legislation is likely to affect your energy investments and look at a handful of companies that may actually benefit from carbon cap-and-trade.

6/29/09 - Breaking News

Breaking news about one of the holdings in our Conservative Portfolio.

An End in Sight

Clusters of positive monthly gains in LEI above 0.5 percent typically suggest an end to recession. Given this backdrop, I’m sticking with my projection that the recession in the US will end either late in the third quarter of 2009 or early in the fourth quarter. I suspect there’s more upside to come for stocks as the market snaps back from the worst recession since at least 1982.

Buying Opportunity

Look for buying opportunities as the markets stutter, and don't sweat the spate of capital raises among master limited partnerships.

The New Consumer

Consumers are cutting spending and saving more, but this isn’t a death knell for retailers. Here’s how to profit from a more frugal consumer.

The Pause that Refreshes

The US economy isn’t out of the woods just yet, but the pattern in LEI looks similar to those of prior recovery cycles. This, coupled with strong growth abroad, should help support more upside in stocks over the next six to 12 months.

Maritime Rules

The shipping business is well-suited for master limited partnerships (MLP), and several companies in our coverage universe are involved in the industry. The key to investing in maritime transport MLPs is to look for firms that have signed time charter contracts and have little exposure to spot rates or expiring contracts.

The Drilling Dozen

As commodity markets stabilize, the groups most leverage to this recovery tend to be services and contract drillers. I've written extensively about services companies in the past few issues of The Energy Strategist. In this issue, we'll take a closer look at one of the most widely watched--and poorly understood--sectors of all, the contract drillers.

Green Shoots Must Bloom

If this rally is to continue we’ll need to see more evidence that these green shoots are resulting in actual economic growth. After all, there’s a big difference between stabilization in the rate of economic decline and actual economic growth. This week’s retail data suggests that some of these green shoots are already flowering, but there will undoubtedly be some noise in future data. Not every economic release will be better than expected this summer.

$70 Oil: Myths and Reality

Oil's rally was a major topic in the financial media on Tuesday and Wednesday, and a long list of pundits have attempted to explain the recent rally in crude prices. Many analysts asserted that oil's run-up has little to do with fundamentals of supply and demand, citing murky arguments related to the weaker US dollar and speculative fervor. But fundamementals are still at the heart of oil's recent move.

More Electricity, Less Carbon

Booming electricity demand and more stringent environmental regulations are powering growth for nuclear power and alternative energy. Here’s how to profit.

Special Report: Energy Riches: How to Pocket the Other Yellow Metal

Nuclear power fits in well with this mix of power generation technologies and helps to address the three key goals of meeting power demand, enhancing energy supply security and minimizing environmental impacts.

Fishy Weather, Agriculture and Energy

The weather is an important factor for investors to consider; expectations and forecasts, even when they ultimately prove incorrect, have a meaningful impact on some key market sectors. In this regard, one of the factors I watch most closely is El Niño Southern Oscillation, more commonly known by the acronym “ENSO.”

The New Super-Cycle

Because of constrained supply and reviving demand, the energy patch looks to be in the early stages of a major advance. Gains to date have been impressive, and I’m wary of the potential for a 5 to 10 percent correction at some point before fall. But such a pullback would be a buying opportunity. Valuations remain under control and, if history is any guide, there’s a lot more upside to come.

Growth Themes

I expect the stock market recovery to persist through at least the end of this year amid gradually improving economic conditions. The most obvious question is how best to play this rally from a growth perspective. Here are a handful of the key themes we’re following or playing inside the Personal Finance Growth Portfolio.

The Great Gas Boom

When investors think of natural gas production, the first regions that come to mind are Russia, the Middle East and, perhaps, parts of Africa. It might surprise many to learn that the US is actually the second-largest gas producer in the world and, perhaps more importantly, the fastest-growing producer.

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