The stock market has gotten pummeled of late, and it doesn’t really make sense. A handful of giant companies are finally turning in positive earnings reports, and investors are just shrugging the shoulders. Perhaps, it’s Obama’s plan to penalize the banks? Or it’s the health care bill? Or the fact that five banks have failed this year?

Investors feel shaky. Nonetheless, there are glimmers of hope out there. A lot of them that shining though yesterday:

1) Amazon holiday profit beats, sees strong 1st qtr. From Reuters, we learned Amazon.com, Inc.’s (NASDAQ:AMZN) Q4 revenue was up 42 percent. That beat estimates, and the company sees an even rosier Q1 in 2010.

2) Samsung Jumps Back to Profit in 4th Quarter. South Korea-based Samsung Electronics Co. earned $2.6 billion in Q4 2009. That’s an improvement of nearly $20 billion over the year before.

3) New Windows helps Microsoft see profit jump 60%. “The software giant’s revenue climbs 14% in the fiscal second-quarter, boosted by demand for its Windows 7 operating system,” the LA Times reports on Microsoft Corporation (NASDAQ:MSFT) .

4) In a big turnaround, Ford posts a profit of $2.7 billion. Ford Motor Co. (NYSE:F) posted a $2.7 billion profit for the year. That’s 86 cents per share versus a loss of $6.50 per share in 2008!

Here are some more:

Kia 4Q Net Soars; Targets 3% Global Market Share In 2010
Nokia Profit Rises on Smartphone Sales and Cost-Cutting; Nokia Corp. (NYSE:NOK)
Its First Profit in 5 Quarters Pushes Kodak Stock Up 25%; Eastman Kodak Company (NYSE:EK) shares shot up 24.6 percent on the news!
P.&G. and Colgate Post Higher Sales in Quarter; The Procter & Gamble Company (NYSE:PG) and Colgate-Palmolive Company (NYSE:CL)
SanDisk posts 4Q profit on memory card sales; SanDisk Corporation (NASDAQ:SNDK)

What’s it all mean?

Samsung’s sales seem most promising. The company reported that most of their strength came from the sale of flatscreen TVs, cellphones and computer chips. In case we’re wont to forget in America, flatscreen TVs and computers are big-ticket, luxury items (even if they’re “marked down”). Once consumers start shelling out more cash for goodies at home, companies will start hiring, unemployment will fall, the GDP will rise and America just might feel like America again. That’s the theory anyway. And it just might be true – at least until inflation hits.

A titan in the gold and copper mining world, Freeport-McMoRan Copper and Gold Inc. (NYSE:FCX) closed at a three-and-half month low after dropping 3.5 percent yesterday (Jan. 26, 2010). While calling the bottom on any stock isn’t easy, there are a number of reasons to consider moving into FCX on an uptick in price.

The stock’s gotten pummeled since distributing a 15 cent dividend on Jan. 13 falling 18 percent in eight trading days. That’s too far to drop in too short a time; particularly as gold prices have stabilized. Here’s three reasons then to give Freeport-McMoRan a look:

1) Profit-to-earning ratio. Freeport-McMoRan’s the third-biggest gold mining stock on the major exchanges with a market cap of $31 billion. The only mining companies with bigger market caps are Rio Tinto Plc. (NYSE:RTP) at $96.4 billion and Barrick Gold Corporation (NYSE:ABX) at $35 billion. Freeport-McMoRan is currently the only profitable company among them, though. And they’re trading at a P/E of 12.62.

2) Earnings Report. On Jan. 21, Freeport-McMoRan reported profits of $2.15 per share. That smashed analyst estimates of $1.73. That’s great news after FCX underwent an enormous restructuring last year at a cost of $11.3 billion. Tighter belts and well-lubed wheels mean they’ll likely outperform their peers in the years to come.

3) Copper showing signs of life. As several economies around the world rebounded last year, industrial demand for copper started climbing. A report released yesterday showed that orders for the metal rose 2.7 percent in Europe in November, and analysts are predicting it may hit record prices this year on that demand. More importantly, demand from China has shown little sign of diminishing. Copper prices doubled in 2009, and FCX is the world’s lowest-cost copper producer. The company’s positioned perfectly then if things truly due turn around.

Shares in Tanzanian Royalty Exploration Corp. (AMEX:TRE and TSE:TNX) surged after an injection of capital in late December, and they rose another 9.5 percent yesterday. All told the stock’s up 39 percent over the past month, and the chart is starting to look scarily steep:

Even if you think the TRE’s due for long-term gains, that steep uptick presents a great time to sell out and buy back in later.

Why the jump in price?

Investors started salivating over Tanzanian Royalty when the company announced they’d raised $3.14 million by selling 1,155,835 shares of stock on Dec. 22. The plan? Use the money to finance the equipment to do bulk sampling of the Kigosi Gold Project in the Lake Victoria Goldfields of Tanzania.

That could be a major step forward toward capitalizing on TRE’s outsize holdings in Tanzania. Indeed, TRE controls more than half of all the gold projects in the entire country, and they’ve got a 60 percent stake in the Lake Victoria region (Barrick Gold – NYSE: ABX – has the rest, and that’s a sign in itself that the mines there should be taken seriously).

Still, investors are fickle people. They might be interested in Tanzanian Royalty for a few months, but they’ll tire before the results of samples come in. And that’s when you can buy again. Still, if the results of the samples are positive, the stocks recent gains will pale in comparison to their future spikes and Tanzanian Royalty just might become profitable.

Update: The day after writing this story, stock in Tanzanian Royalty plunged 14 percent making it the biggest loser among gold and silver stocks on the day. Support seems to have clustered around $4.

Analysts at Swiss banking giant Credit Suisse Group AG (NYSE:CS) released a report revising down their forecast for gold prices. “Our analysis of the gold market leads us to take a bearish stance with regard to the gold price in 2010.”

Specifically, in a report posted on Zerohedge, they argue that gold will hit $990 per ounce in the second quarter of 2010. That’s a drop of $135 an ounce from current levels. They also forecast gold prices dropping further in Q3 to $980 before rebounding back above $1040 in Q4.

Why all the bearishness? “In 2009 we reasoned that the main drivers of the gold price were significantly linked to the trade weighted dollar, increased investment demand, central bank purchases and market sentiment. The increase in investment demand for gold ETFs, in our view, had an ‘accelerating and reinforcing effect’ on market sentiment and the safe haven status of gold which resulted in upward pressure on the gold price which rose 24.6% during 2009. We do not expect the 2009 rate of investment in ETFs to continue at the same pace in 2010.”

Of course, others (myself included) would argue that we’re not out of the water yet. All we need is one black swan to swoop in and suck the air out of the hyped-up, government-fueled rally we’re in. A major bank collapse, perhaps, or continued losses across multiple sectors in Q1 2010 would do the trick.

More likely than a black swan, though, is a series of gray swans – a gradual and steady accumulation of bad news that skirts along the edge of the mainstream media. Perhaps we’re already there. See, yesterday’s article at AmericanBankingNews.com: “Bank Closures in 2010 Begin in Earnest: Three More Closed, One with No Buyer.”

An economy can’t keep losing a net number of jobs and expect to grow. Jobs drive the economy.

Since there aren’t any jobs, though, its been the government’s job to provide growth. And that’s ballooning the federal deficit. So long as the trend continues, inflation is going to be a very real threat – more so than it was last year. And that’s what leads me to disagree with Credit Suisse.

The threat of inflation drove the rally in gold last year, and it’s going to keep driving it this year. It might be slow and riddled with sell-offs, but it’ll keep going (unless, of course, we meet another black swan).

All that said, why then might Credit Suisse publish a report that’s bullish on the economy and negative on gold. The writers at Zerohedge have one theory: self-interest.

“Such optimism, even as the global economy is poised on the edge of the double-dip?” they write. “We wonder who Credit Suisse recommends its clients sell their gold to? Could it be… Credit Suisse?”

I wouldn’t go that far, but I would argue that Credit Suisse’s analysis comes with an enormous glittering caveat: if there aren’t any disruptive events, bank collapses, inflation, bond defaults, bank runs, massive layoffs or housing crises, then, perhaps, gold prices will take a tumble.

Definition of the day

Black Swan: An event that is highly improbable (and unforeseen and therefore omitted from models) that nonetheless occurs and has a significant impact (Source: moneyterms.co.uk)

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