No Relief for U.S. Consumers

By Paul Carton and Jean Crumrine

The tiny signs of stabilization we picked up in our January consumer spending survey proved extremely short-lived.

ChangeWave's February survey results point to yet another leg down in U.S. consumer spending going forward. Consumer sentiment has also taken a big hit, as 2-in-3 respondents said they now believe the overall direction of the U.S. economy is going to worsen during the next 90 days.

Keep reading to get the grim details.

Riding the Great Stimulus Bandwagon

The U.S. stock market is about to deliver its worst decade of performance ever -- actually leaving investors poorer for the first time. But if you adapt to the new realities, you stand to make more money in the next 10 months than you did in the past 10 years. You will win not because President Obama's stimulus plan ushers in an era of growth, dazzling leadership, vision and reform. And not because Wall Street will settle down and get back to going up. You will win by buying the rallies, exactly as described in Your Recovery Plan.

Hot Tickets From the Alliance

Each week Alliance members submit "Hot Tickets" as a way of presenting new observations and ideas on investable opportunities to ChangeWave. Today we're focusing on the alternative energy sectors that industry members believe will be hurt most by the falling cost of raw materials.

* Note: These Hot Tickets are for informational purposes only. They do not represent recommendations from ChangeWave.

Question asked: Which of the following alternative energy sectors do you believe is most negatively affected by the falling cost of raw materials?

(A) Biomass Sector (Including Biofuels and Bioproducts)

• WID02162 writes: "In the case of vehicle use, biofuels are a direct substitute for fossil fuels. Consumers are going to go with the less-costly choices, making a one-time choice based on present-day economics, and probably go back and forth as prices fluctuate. This makes the demand for biofuels difficult to predict."

• TJP95290 writes: "Biofuels cost more to produce than they provide back, which is always a problem. So the lower raw material costs don't bring the same benefit of lower manufacturing costs."

(B) Hybrid/Electric Vehicle Sector

• JON93663 writes: "Hybrid vehicles rely on end consumers, not utilities (like solar), to purchase them. With falling fuel prices and the poor economy, hybrids will be hurt."

• CWN99794 writes: "As long as it remains cheaper to buy and drive a petroleum-based vehicle, they will remain the preferred means of transportation. The hybrids are only cost effective if the cost of gasoline and diesel remain high."

(C) No Sector Negatively Affected

• SUP59207 writes: "Raw material costs are what are driving up the cost of these alternatives. Lower material costs will lead to lower development costs."

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