Last week's dry bulk vessel costs - as measured by the London-based Baltic Dry Index - hit an all-time high of 7,702, virtually doubling in the past 12 months. That pushes the cost of a Panamax vessel to almost $60,000 per day, a record high, forcing some countries to import cereals in containers designed to carry other goods like electronics and clothes. Shipbrokers estimate that, on average, a dry bulk shipment costs $50 to $70 per ton of cereal, while the same cargo in a container costs $35 to $40 per ton. It takes as many as 3,500 containers to replace a single Panamax (a medium-sized dry bulk carrier), but the price savings outweighs the challenge of managing thousands of containers filled with grains - normally stored in the hold of one ship.

Several countries, such as India, South Korea, China and Taiwan, are faced with rising food prices so they are willing to use the cheaper container ships. For example, the State Trading Corporation of India, the government company in charge of international bulk trading, recently told cereal suppliers that it was ready to import by container. Asian countries, which export textiles and electronic goods, might obtain containers at discount rates, as many of the vessels return empty from Australian, Canadian and the U.S. ports. The Australian government estimated that about 40% of the containers leaving Sydney and Melbourne to Asian ports are empty, a wasting asset that can now be used profitably by filling them with agricultural commodities.

The International Grain Council recently said that several important grain routes, notably from the U.S. to Asia, doubled their transit volume in the past year, contributing to rising dry bulk carrier freight costs. Asian countries traditionally rely on Australian grain, but the severe drought there forced them to turn to the U.S. This is one cause of the dramatic rise in U.S. exports.

The other factor that is keeping rates for dry good shipping high is China's reliance on coal-fired power plants, which provide approximately 70% of the electricity in China. Although China used to be a coal exporter, its soaring domestic demand has caused China to become a net importer, which has put even more pressure on dry bulk shipping rates. This has particularly benefited Excel Maritime Carriers Ltd. (EXM), which is one of my favorite shipping stocks in my Global Growth service. EXM was up 9% last week. Additionally, India and the Philippines have put export taxes on their coal reserves to save for their own domestic demands, so China is now forced to import coal from farther away - from South and North America. This is much more expensive and drives day rates even higher for companies like Excel Maritime Carriers.

The U.S. is the "Saudi Arabia of coal," but due to increasingly strict environmental rules in the U.S., more coal will continue to be exported. Since coal prices in the U.S. are erratic, due to uncertain domestic demand, the best way to profit from booming coal exports is to buy companies like Excel Maritime Carriers that specialize in shipping coal to China. Incidentally, Excel Maritime bought two new supramax vessels in July to boost its fleet to 18 ships, in part to meet China's growing demand for coal.

The charade is over. For the past couple of years, a lot of people on Wall Street were pretending to be something they were not. Mathematicians were posing as financial experts, and they came into town determined to make a quick buck. With their computer programs in place, they pumped more than $100 billion into complex investment vehicles known as arbitrage hedge funds.

I'm sure you've heard about this in the news lately. Arbitrage investing is when someone purchases securities on one market and then resells them on another market for a profit. Traders in the Japanese yen carry trade, for instance, buy Japanese currency and then convert it into another currency, profiting from the interest rate differential.

Traders invested in these, as well as other super-risky investments, such as hedge funds that were bursting at the seams with subprime loans. Others placed big bets on the idea that financial stocks would continue to plummet and sold them short.

Well guess what happened? In August, many of these trading schemes blew up. We witnessed multiple short-covering rallies that decimated many arbitrage hedge fund strategies. As the credit crunch escalated, investors fled battered hedge funds in droves, and many of these arbitrage players were left holding the bag.

These math guys who thought that they were so smart didn't anticipate that liquidity often dries up in August, and as a result, their computerized trading systems were simply overloaded as markets were violently whipsawed. These arbitrage players have been forced to de-leverage their positions, since their trading schemes failed and they're now facing mass redemptions. Record trading volume ensued as they de-leveraged and unwound their positions. Finally, on August 16, the stock market got its capitulation day, which marked the definitive stock market low, when the Dow staged its incredible 344-point intraday reversal. This was important, since Wall Street was finally convinced that the stock market had bottomed out.

I must say I am absolutely ecstatic with how well my Emerging Growth stocks performed last month. After multiple arbitrage strategies blew up, our stocks saw persistent and relentless buying pressure from institutional investors.

While this summer will go down as one for the record books, what happened is further evidence that the market's "seismic shift" from value stocks into growth stocks is under way. Arbitrage is out of favor, and fundamentals are back in. I guess those arbitrage quants run by younger guys with all their hair gel can learn a lesson from an old guy like me (I'll be 50 this year). In fact, they may want to check out a copy of my new book, "The Little Book That Makes You Rich." It'll be hitting bookstores next month.

The U.S. dollar just hit a 15-year low against a basket of currencies. This is causing exports to boom:

The value of U.S. exports of goods and services to the rest of the world increased 2.7% in July, the fastest seasonally adjusted growth in more than three years, the Commerce Department reported Tuesday.

With imports growing 1.8%, the deficit between imports and exports narrowed by 0.3% to $59.2 billion in July, close to the market's expectations, from an upwardly revised $59.4 billion in June.

Both exports and imports reached record levels in July, reflecting strong global demand and higher prices. U.S. producers exported record values of capital goods, consumer goods, autos and foods, while U.S. consumers imported record values of foods and feeds.

The only question left is will next week's rate cut be 25 basis points or 50 basis points.

Not your old McDonald's:

Word is getting out about McDonald's coffee. In March, Consumer Reports magazine reported a taste test of basic black coffee found McDonald's stronger blend beat brew from Starbucks, Burger King Holdings Inc. and Dunkin' Donuts Inc.

Consumer Reports' "trained tasters" visited two stores of each company. McDonald's coffee was "decent and moderately strong," while Starbucks was "strong, but burnt and bitter enough to make your eyes water," the magazine said.

Athena Gallins, a widow in Winston-Salem, North Carolina, found Starbucks coffee so "strong and bitter" that she took it back to be diluted. "It's not worth the money," said Gallins, who meets friends at McDonald's at least three times a week.

In the U.S., McDonald's coffee sales climbed 20 percent through June from the February 2006 debut of the stronger blend. Sales that include hot, iced and specialty blends are up 34 percent this year, it said.

I recommend McDonald's in my Blue Chip Growth Letter. I was very happy to see that the company just raised its dividend by 50%.

MarketWatch notes: "McDonald's has raised it dividend every year since it started paying one in 1976 and that pace has accelerated, and it's now six times the 2002 level."

Everyday there are more and more orphans on Wall Street, and I have to be honest--I think it's great news!

By orphans, of course, I mean orphan stocks. These are publicly traded stocks that aren't followed by a single analyst on Wall Street.

This is good for investors because when there are fewer eyes watching a stock, there's a greater opportunity for us to uncover a hidden gem. In fact, finding these under-the-radar stocks has been one of the keys to my long-term investing success.

I'll look almost anywhere to find a great stock. That's one of the reasons why The New York Times called me "an icon among growth stock investors." My results speak for themselves. Since 1985, the average stock on my legendary Emerging Growth Buy List has jumped over 50-fold. That's nearly four times better than the market.

One of the reasons why we've been so successful is that we don't do what everybody else is doing--and that means we've had the help of many orphan stocks.

Let me give you a great example. In June, I recommended selling Hansen Natural (HANS) from my Emerging Growth Buy List. The energy drink stock was an enormous winner for us. In just three years, we made over 1,100%. Today, a lot of folks know about the stock and the company's Monster Energy Drink, but when I first recommended it, Hansen was practically unheard of. A few people thought I was crazy to recommend it.

Some investors hate going off the beaten path. Others are just plain skittish about investing in an unknown company. Not me. I looked at Hansen's fundamentals and I liked what I saw. Sales and earnings were growing rapidly, margins were strong and the company had a smart business plan. When I recommended the stock, I think the company had only one analyst following it. Today, there are seven. Of course, that's only happened after its huge run.

The reason there are more orphans today is that Wall Street has drastically cut back on its research departments. In fact, Prudential recently decided to eliminate its research department entirely. One reason for this is cost and another is that fewer investors trust what the research has to say anymore. As a result, the big research departments are getting scaled back. I think we're going to see more and more of this as time goes on. The result will be that only the big stocks will be followed.

Google (GOOG), for example, is followed by over 30 analysts. Heck, that's enough people to start their own search engine! Let me be clear about Google--this is a stock I really like. I recommend the stock in my Emerging Growth service and my subscribers are up over 25% in less than two years. I like almost everything about Google, but one thing I don't like is that nearly every firm on the Street has an analyst covering it. That means every little misstep will be noticed, often to dramatic results

Now let's look at another stock I like, U.S. Global Investors (GROW), an asset managed company. Last October, my analysts and I spotted this stock and we instantly became intrigued. Once again, I pored over the numbers and liked what I saw. I knew the Street was missing something because the company looked so strong. Would you believe that U.S. Global Investors wasn't followed by one analyst? I added it to my Emerging Growth Buy List and before the end of the year, the shares had tripled! That's a 200% gain in just 12 weeks! Now do you see why I love orphans?

U.S. Global Investors' shares have been much steadier lately, but the stock is still completely ignored by Wall Street. I currently rate GROW an aggressive buy up to $26 a share.

My advice is to ignore the crowd and don't be afraid of a stock that's not widely known on Wall Street. After all, all big-cap stocks once started out as small-cap stocks.

We know that the subprime problems fueled the recent credit crisis. And the recent payroll report was simply disastrous, revealing that the economy contracted by 4,000 jobs versus expectations of a 115,000 job increase in August. We now have proof that the job creation machine ground to a halt during the August market sell-off. It's obvious that the subprime woes and credit crisis have now spread to other areas of the economy, and the situation is getting serious.

The Mortgage Banker's Association (MBA) recently reported that the number of mortgage loans entering foreclosure has reached the highest level in the 55-year history of their survey. The sun-belt states of Arizona, California, Florida and Nevada had the fastest rising rates of foreclosure, although rust-belt like Michigan and Ohio as well as some states in the Deep South continued to post high foreclosure rates as well.

Foreclosure delinquencies rose to 5.12% in the second quarter, and subprime delinquencies rose to 14.82%--the highest level in five years. The big difference between now and five years ago, however, has to do with absolute size. In the second quarter of 2002, there were 1.19 million subprime mortgages outstanding, while now there are about 5.9 million outstanding. Yikes! Now you know why major banks and other financial stocks have been performing so poorly lately.

It's apparent that the housing mess has seeped into other areas of the economy, and analysts suspect the rise in foreclosure delinquencies is due to resetting Adjustable Rate Mortgages (ARMs). If this is the case, the Fed should act fast and cut interest rates. Mortgage delinquency rates could rise even more sharply if new job creation does not resume, and that might not happen without lower interest rates.

This brings us to the "R" word. Eight of the past ten recessions have been preceded by overinvestment and then a slump in housing. While economists have placed about a 35% chance of a recession happening in 2008, I disagree. Since Ben Bernanke is the former head of President Bush's Council of Economic Advisors, and he and every voting member of the Fed is a Republican, I believe the chance of a recession next year is nil.

Even though President Bush isn't running for re-election, Politics 101 states that you need to keep the economy strong going into any election. President Bush's dad (#41) learned that lesson the hard way back in 1992, when the economy was in the dump, and surprise, surprise, he didn't get reelected.

While I don't think we're nearing a recession, I do believe that the Fed should act fast to help stop the housing meltdown and keep the economy afloat. Originally I believed the Fed would cut rates a total of 0.75% (in three 0.25% cuts), but I now expect that by the time the year is out, they will have cut rates by a full percentage point.

A big rate cut may not completely fix the housing troubles, but at least it will give some much-needed relief to the battered housing market. Homeowners will be able to refinance at more attractive mortgages rates, and it will also prevent any more housing fallout from affecting the economy. Don't listen to Jim Cramer when he says that we're facing a recession. The Fed won't let that happen.

The market soars:

The Federal Reserve rolled out its most powerful interest rate weapon on Tuesday in a bid to stop the turmoil in housing and financial markets from bringing down the overall economy.

But even as stock markets soared in a thunderous rally, the Fed carefully stopped short of implying any commitment to reduce rates even more in the months ahead. Indeed, policy makers cautioned that they still have lingering worries about inflation -- a concern that would weigh against stimulating the economy further with cheaper money.

In reducing its benchmark interest rate by an unusually large one-half percentage point, to 4.75 percent from 5.25 percent, the central bank made it clear that policy makers viewed the turbulence and disruptions of the past couple of months as too dangerous to ignore.

The reaction in stock markets was ecstatic: the Dow Jones industrial average jumped 200 points almost instantly and ended the day up 335 points, or 2.51 percent, at 13,739.39.

Here's the Fed's statement:

Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.

Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Developments in financial markets since the Committee's last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Expect more rate cuts before the end of the year.

This morning Goldman Sachs (GS) reported that its earnings jumped 79% last quarter. Whereas Bear Stearns (BSC) reported that its earnings plunged 61% in the same quarter.

Think about that. Two companies that are in the same industry working in the same environment and facing the same obstacles but had earnings that came to radically different results.

How could this have happened?

The answer is very complicated, but I'll give you the short version. Goldman made some very smart moves and Bear made some very dumb moves. Sometimes business is as simple as that.

This is an important lesson for all investors. Being in the right sector isn't enough. You need to own fundamentally superior stocks as well.

In my Blue Chip Growth Letter, that's exactly what I show investors how to do. I've been able to beat the market for over 20 years by focusing on leading companies in all kinds of sectors.

I don't care if it's health care or tech or even selling animal feed in Saskatoon, I'll go anywhere to find a great stock. Actually, one of my favorite stocks does sell animal feed in Saskatoon! Subscribers to my Blue Chip Growth service are sitting on a nice gain in Canada's Potash Corp. (POT). Sure, the company doesn't carry with it a lot of glitz and glam, but as long as it's fundamentally superior, I like it. Potash is a great stock with enormous growth potential. It also doesn't hurt that the Canadian dollar is at a 30-year high against the U.S. dollar.

My advice to you is, don't be fooled by sector investing. Lots of times a company can look great on the outside, but that's simply because it's in a hot sector. Wall Street tends to behave like a manic crowd. If something is hot, they'll keep buying. That is, until earnings come out and investors learn what it is they've been buying.

Since March 2004, shares of Sprint Nextel (S) have been basically flat. Yet, I looked at the same sector and found a great stock. The hitch is that I found it outside the United States. In March 2004, I recommended America Movil (AMX) to my Blue Chip Growth subscribers, and the stock has been up over 430% since then.

Every sector has a diamond and a lump of coal. Learn to tell the difference!

Most new investors are surprised to learn that strong companies in lousy sectors can be great investments. It's true, and I'll give you a perfect example. In 2002, Money Magazine celebrated its 30th anniversary, so the company wanted to find out what was the best-performing stock during the last three decades.

You would think the winner were some high-tech outfit, right? Some Silicon Valley hi-flier that invented the 12th dimension maybe. Nope. The top-performer was Southwest Airlines (LUV). The best stock not only came from a boring sector, it came from the worst sector imaginable! Nearly every day a new airline is either entering, or promising to leave, bankruptcy. Yet Southwest was able to follow its simple business plan of offering no frills service, and the public responded. (Also, I'll let you in on a secret; this boring sector gets much more exciting when you look abroad. China Southern Airlines (ZNH) has been a tear in my Global Growth service.)

Keeping one's eyes open for fundamentally superior stocks is a lesson for every investor, and it's especially important in this market. The current market is ideal for my style of investing because I'm a stock-picker. Two days ago, the Federal Reserve gave us stock-pickers a green light by slashing interest rates by 0.5%. The market responded by soaring 412 points in two days. I expect more rate cuts before the end of the year, so more good news is sure to come our way. I love this market, and I'm so excited by the great stocks I see.

We now know that there was an Israeli air strike in Northeastern Syria near Dayr az Zawr on September 6, when Israeli commandos seized some nuclear material of North Korean origin during a raid, according to sources in Washington and Jerusalem. The attack was launched with U.S. approval, after seeing evidence of nuclear-related materials there. This event is the main reason behind soaring crude oil prices reaching $84 per barrel last week. Syria has protested to the United Nations, but it is not clear how they can defend themselves if they co-operated with North Korea on the importation of nuclear materials to use against their arch-enemies in Israel.

From what we know so far, a ship from North Korea docked at the Syrian port of Tartus and delivered containers, which Israel believes held nuclear materials. Officially, Syria says the North Korean ship contained cement, which virtually no one believes. Three days later, Israel carried out its boldest attack against nuclear threats since its 1981 air raid against Iraq's Osirak nuclear complex. It remains unclear what the U.S.'s role was, but it is widely believed that the U.S. shared its intelligence with Israel after watching the North Korean ship via satellite. The biggest irony is that North Korea may have been shipping nuclear equipment to Syria while it was simultaneously promising to dismantle its own nuclear program.

Last week, it was also reported that President Bush quietly warned North Korea against supplying nuclear know-how to Syria. One thing is absolutely clear: Don't mess with Israel. If there is any suspected nuclear material that Israel believes is a threat, it will strike. In addition, the new U.S.-made Predator drone, costing over $60 million per plane, can carry the payload of an F-18 and is ideal for taking out Iran's nuclear facilities. It is unclear if the U.S. is providing Israel with any drones--but it really doesn't matter, since if Israel strikes Iran, the U.S. will be blamed anyway.

Tensions remain extremely high in the Middle East due to Iran's and Syria's nuclear ambitions. On Wednesday, another anti-Syrian member of Lebanon's parliament was killed in a massive car bombing, likely sponsored by Iran. Iran's proxy war with Israel by arming Hamas and Hezbollah in Syria is clearly escalating. Additionally, the Iranian Revolutionary Guard is training and equipping Shiite extremist militias to fight U.S. coalition forces in Iraq near the Iranian border.

Iran's loony President, Mahmoud Ahmadinejad, is visiting the United Nations in New York. Here and elsewhere, he has been sending the following message: If anyone dares attack our nuclear facilities, we will fully activate our proxies, unleashing unrestrained destruction on Israel, killing moderate Arabs and Iraqis acting to support U.S. interests. Additionally, if Iran mines the Straits of Hormuz, Iran could cause an acute oil crisis and worldwide recession. Iran has moved world attention to Syria, since Iran apparently needs more time (perhaps two years) to develop a nuclear bomb. Iran believes that once it goes nuclear, it will become the regional superpower that no one would mess with. For leverage, Iran's proxy armies in Gaza, Lebanon, Syria and Iraq stand ready to attack Israel and U.S. forces in Iraq if anyone dares to stop Iran's nuclear ambitions.

Iranian President Ahmadinejad's appearance at Columbia University caused a big stir yesterday. Ahmadinejad has repeatedly stated that United Nations Security Council sanctions will not stop Iran's nuclear ambitions. Meanwhile, the U.S. has been waiting for the Iranian people in various internal opposition groups to stop President Ahmadinejad's apocalyptic folly.

Israel has no patience at all, and the U.S. is rapidly losing its patience. A U.S. naval blockade on Iran is possible. In the interim, French President Sarkozy is talking about war. All this rhetoric makes the Iranian president's U.S. visit and the United Nation's general assembly very controversial. The resulting tension will almost certainly keep crude oil prices high. In addition, three of my favorite Israeli stocks in my Global Growth service, Ceragon Networks Ltd. (CRNT), BluePhoenix Solutions Ltd. (BPHX) and Alvarion Ltd (ALVR), each rose strongly (+8.5% on average) last week, as the increased perception of greater Israeli security always tends to help our Israeli stocks.

While Wall Street is focused on the Federal Reserve and all the talking heads are debating Ben Bernanke's next move, I have to let you in on a secret--that's not where the real action is. No, the really big development on Wall Street is the dramatic shift out of value stocks and into growth stocks.

Write this down because it's going to be the leading market theme for the next several months. Institutional investors have been quietly dumping value stocks and are slowly picking up shares in many major growth stocks. Not only is this a big move, but it's happening right under the noses of individual investors. Already this year, the Russell 1000 Growth Index is up 12.35%, which is twice as much as the Russell 1000 Value Index--and the gap is about to get much wider.

My money management firm just completed a thorough analysis of the growth and value sectors, and we still see enormous opportunities in growth stocks. Now, you might say that I'm a little biased towards growth stocks. After all, the New York Times called me an "icon of growth stock investors." Also, I currently run four investing services: Blue Chip Growth, Emerging Growth, Quantum Growth and Global Growth. So yeah...I guess you could say I'm a little inclined towards growth stocks!

Here's what my analysts and I found: The ratio of the Russell 1000 Growth Index to the Russell 100 Value Index is at its lowest point in nearly 30 years. This tells us that despite growth's rally this year, it's still significantly lagged the market this cycle.

Not all growth stocks are created equal. It's a big mistake for you to put all of your eggs in one growth basket. Our research has found that large-cap stocks are outperforming all other size sectors of the market. The market-cap phenomenon has been very dramatic through the first eight months of this year.

My research team and I ranked every stock by market cap, and we then examined its one-month return. We found that the largest stocks have significantly outperformed smaller stocks on a year-to-date basis.

What's causing this to happen? Well, for one, it's very likely that the weak dollar combined with a strong institutional bias toward mega-caps and multinationals is accelerating this trend.

We also looked at each stock's price/earnings ratio compared with its projected earnings growth rate. This is also known as the PEG ratio. We did this for the entire universe of stocks. We then divided the market into ten groups ranked by market size. We found that the stocks in the largest market cap group had the lowest PEG ratio (meaning these are the best values). So even though large-cap stocks have had a good run, they still appear cheap relative to all other market cap ranges.

I'll give you a great example of a large-cap growth stock that's benefiting from the current market, especially the weak dollar. That stock is Monsanto (MON). The St. Louis-based company is one of the world's leading multinational agriculture biotech stocks, and Monsanto loves the weaker dollar. As you might imagine, the company's business is booming. By my estimate, earnings-per-share will be up about 50% this year.

The good news is that I don't see Monsanto slowing down anytime soon. In fact, yesterday Monsanto predicted that it could triple the amount of farming acres planted worldwide with its genetically engineered seeds. Think about that!

According to the Biotechnology Industry Organization, biotech crop acreage increased 13% between 2005 and 2006. Business Week notes:

Begemann said Brazil will be a hot spot for sales growth after Monsanto's purchase of the Agroeste seed company. The acquisition boosts Monsanto's market share in Brazil to 40 percent. That will give Monsanto the outlets it needs to introduce new strains of crops like YieldGard Corn Borer, he said.

Monsanto has increasingly invested in "advanced breeding" techniques to develop new crops without genetic engineering. Instead, the company uses gene markers and advanced computers to rapidly breed plants with desirable traits.

Subscribers to my Blue Chip Growth service have nearly tripled their money in Monsanto. Don't think you arrived too late to the party. I currently rate Monsanto a strong buy for conservative investors up to $79 a share.

My advice is to take full advantage of the market's shift to growth stocks. This will be a major theme in 2008.