To OTC Journal Members: 
 

By the end of this week I'll have a new BLOG up on every security I'm currently following. If you go to the home page, you will note there has been a change in the layout of the real estate. The Video player has been replaced with the BLOG section to make it easier for you to find the latest entries. There haven't been many BLOG entries of late, as the market has been trapped in a trading range for about two months.

Today, I posted new BLOG entries on NIHK and CGYV today. Here's a recap of the BLOG on CGYV.

The BLOG is your opportunity to ask questions and offer comments. I will make an effort to answer every legitimate question. If I don't know the answer, I will contact the management and get the answer. Alternatively, if you have questions you don't want publicly displayed, you can always email me directly at editor@otcjournal.com. If you submit a comment or question, it will not appear on the site until I have responded.

One quick correction to yesterday's update on my current easy money trade- TBT- I inadvetenly said there would be about $1/2 billion in new Treasuries auctioned this quarter. That was a typo. I meant $1/2 trillion- as one reader pointed out, $1/2 billion is chump change. For those who are interested, the number is actually $487 billion. US Treasuries are going down in price thanks to excess supply, and TBT will go up as they do. 
 

China Energy Recovery: The China Macro and Micro Picture

It's time to explore what's happening on both a micro and macro level at China Energy Recovery (OTC BB: CGYV). Micro- meaning what's happening at the company and specifically to the stock- Macro- meaning what's the big picture in China?

First, the China Macro Picture.  There is a global recession, and it has had a very negative effect on the Chinese economy. Everyone understands this, and accepts it. Here's the debate- is China going to come out of their recession sooner than the US, and has the recession been fully discounted by the stock market?

There are some early indications China will emerge from the recession sooner than the US. I believe when money starts to look for growth again, it will find it in China far sooner than it will in the US. Back in November, China announced its own version of stimulus package, and it's scope should be far greater than that of its US counterpart. In Beijing, they just decide to do it. There is no political wrangling or compromise.

China cut interest rates 5 times in less than 4 months, and unlike the US, they can cut further. Their $600 billion stimulus package represents a full 20% of GDP in China, making it a significant to the economy.

Chinese banks are writing loans as they are not plagued with bad debt, and the government has implemented some major incentives for home purchases. New borrowing last month was double the previous year.

Furthermore, the Chinese are making investments in commodities to insure cheap supplies when the recession has run its course. They are investing in iron ore in Australia, and other areas around the world.

Even CNBC TV Personality Jim Cramer is strongly recommending China stocks, and he has a strong buy recommendation on one of my favorites- the China Large Cap ETF- FXI on the NYSE ARCA.- He believes China is getting the stimulus package right, and we are getting it wrong.

With regard to China's initiatives in climate change, there's some new and interesting information available. The Asia Society on US/China relations, based in Beijing, recently released a report aimed at giving the Obama Administration a new road map to enhanced relations on the climate change front. The report was  coauthored by John L Thornton, a Professor at Tsinghua University, and Dr. Stephen Chu, President Obama's choice for the new US Secretary of Energy.

This document provides a blue print for collaboration between the two biggest energy consumers and producers of green house gas emissions.

Armed with a $600 billion stimulus package they can write the check for, the Chinese government has plans to commit significant resources to the reduction of green house gas emissions and the deployment of green technologies on all fronts to reduce future energy dependence.
 

China Energy Recovery (OTC BB: CGYV): The Micro Picture

That's the macro picture. Now, let's look specifically at China Energy Recovery (CGYV). The stock is currently what I would consider a "tweaner". It's somewhere between trading really well and trading extremely poorly.

The CGYV idea is now smack in the middle of a good idea and a money loser. As you can see from the chart, the timing for introducing this idea was absolutely the worst it could have been. Late September was the death knell for every equity, and CGYV was no exception.

We started at about $3, and in pretty short order a $.90 bottom was made as the company's financiers simply blasted the stock with no regard for price. They had their own problems.

However, since making the $.90 bottom, the stock has delivered a 150% gain to its highest rebound level of about $2.25.

Now, the stock is kind of range bound in the $1.50 to $2 range. There seems to be sellers near $2, and buyers surface near $1.50. Volume is a bit lighter. So, while the market is trying to make new lows, this stock has gained back a healthy percentage of its loss. That's not bad.

On the fundamental side, the company is achieving something no company is supposed to be able to do in today's economy- it's growing like crazy and making money.

Sequentially, '06 was $5 million, '07 was $12 million, and '08 looks like it will be about $23 million. That's phenomenal growth with the ugly backdrop we have today.

You would think the company might slow down in 2009. So far, indications are the growth will continue. There's no slow down at China Energy Recovery (CGYV).

They have booked about $30 million in business for 2009 already, and we're not even 25% of the way through the year. I expect the company to deliver north of $40 million in 2009, and net $3 million to $4 million.

This is not supposed to be possible in today's world.

As the China stimulus package finds its way into "Green Theme" strategies, China Energy Recovery is positioned to benefit in the extreme. Energy recycling and pollution is a huge problem in China, and CGYV is perfectly positioned for additional massive business flow as funds begin to pour into energy efficiency and the reduction of green house gases.

The stock is going through a consolidation period. I hope it is being transferred out of "weak" hands who need cash today, into "stronger" hands who have a longer term perspective.

When money comes looking for growth in China "Green Themes" it will find CGYV. When the big money comes for this stock, I hope you are positioned to make a killing. The question is, of course, is the Big "W"- "WHEN?"- when it's going to happen I can't say. But, when it does, I hope you benefit in a big way.

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