Joy Global (JOYG) jumped 7% after reporting 80 cents in earnings per share for its fourth quarter, beating most investors' expectations by five cents per share and my own estimate by four cents. JOYG also guided 2008 earnings slightly higher than most investors were expecting. This wasn't just some financial engineering trick, as revenues were up almost 8% during the quarter.

On its conference call, JOYG managers were remarkably buoyant, stating that the five-year outlook for commodities mined with the company's equipment was both positive and improving. JOYG mostly provides equipment for coal miners, but its machines are also used in iron ore, copper and gold mines. JOYG said that customers in China have been trying to buy locally, which has hurt sales in that country by a touch. But on the other hand, the company said that many other customers around the world are moving into "green field" expansions, which means that they will do a lot more infrastructure development for which JOYG equipment is ideal.

This is good news for JOYG, as selling equipment to mine coal makes up about 70% of the company's business, and about half of its business is done overseas. I've also been impressed with new chief executive Mike Sutherlin's efforts to try to dampen the company's reliance on such a cyclical business by adding new customers around the world and innovating new products to stretch beyond the company's base in coal mining. Revenue growth is likely to average around 12% over the next few years, buoyed in large part by aftermarket sales of parts and services.

Ecolab (ECL) is the largest player in the industrial and institutional cleaning and sanitation business -- a sector that has outperformed the market by 20% since the beginning of 2007. It produces and sells products ranging from textile and silverware washing systems to detergent, vehicle-care and pest-elimination products. Restaurants, hotels, hospitals and schools are some of its largest customers, and it gains almost half of its revenue from abroad.

The company's primary advantage over competition is its scale, boasting $5 billion of the $47 billion of global sales in the fragmented industry. Its closest rival, JohnsonDiversey, has sales of roughly $3 billion, and it stopped providing direct service to its North American customers in 2006. This left Ecolab as the only provider with the resources to serve large customers in the United States. And while it engages in manufacturing and distribution, it's the company's direct service model that is at the heart of its success.

A motivated sales force earns as much as 75% of its compensation in variable pay, and it's these highly-trained reps that keep the company's products on order and functioning correctly. Customer retention hovers around 90% due to the outstanding service its sales people reportedly provide with regular calls. And while many of the products that it sells could be purchased through a number of manufacturers, Ecolab sets itself apart by providing customers with specialized equipment that's only compatible with Ecolab-branded products. The gear helps customers save money and makes switching to competing products more expensive.

Ecolab's scale, reputation for service and sustained customer relationships have helped it post consistent growth over the last decade. It recently reported strong third-quarter results with overall sales up 11% over last year on higher volume, pricing gains and foreign exchange benefits. Operating earnings per share were in line with the Street's estimates at 49 cents, though operating income slid 5% due to a $27 million charge for ongoing investments in the company's new business systems. It also acquired Microtek Medical Holdings for $274 million last quarter, and with its growing healthcare business, the purchase looks like a great strategic long-term play.

The news item that kicked investors into a panic last week was an employment report out of Washington D.C. that just has to be considered recessionary. There's no two ways about it.

The reported gain of 18,000 jobs was very narrowly distributed, with key sectors of the economy posting big losses. Private sector employment was down 13,000 jobs, and goods providers were down 75,000. Most of that was in residential and commercial construction. Manufacturing jobs were also down 31,000, and retailers were down 24,000, seasonally adjusted. The only positive sectors were health care, up 28,000, and bars and restaurants, up 27,000.

One of the best independent economic analysts that I know, Phillipa Dunne, quipped that the new U.S. economic model appears to be very simple: Eat, drink and check into a hospital.

We need to note that job growth sank materially in the second half of the year. Payroll gains in the first half were up 134,000 per month. In the second half, they were up only 87,000 per month. The yearly growth rate has fallen to 1.0%, which is the worst since early 2004.

The only good news out of all this is that a declining employment rate tends to push down expectations for inflation. Makes sense, right? Joblessness tends to put a damper on employees' demand for higher wages and bonuses. If the lack of pressure on wages helps to offset the rise in raw materials costs, it gives the Federal Reserve more room to cut rates more quickly over the next six to twelve months. I do think that they will get down to 3% for the Federal Funds rates by the end of the year, which would bring down the rates that individuals and companies pay to levels that could finally spark more buying. Rates that low would also bring long-term fixed mortgages under the 6% level, which has historically been the point at which houses become affordable to more people without all the fancy teaser rates and tricks used in the mid-2000s.

Finally, I just want to point out the fact that the unemployment rate jumped from 4.7% to 5% in a single month was very curious. That is a huge jump, and the cynical side of me says that it was more manipulated than ever. The cynical view says that the government wants to make the economy in the first half the year look as bad as possible so that they can make it look stronger later in the year during the election season and take credit for it -- helping the Republican candidate win. My many years of covering politics for newspapers has led me to believe that you can never be too paranoid about the motives of politicians and appointed bureaucrats' motives when they are facing the possibility of being swept out of office, so don't count out the possibility that we're being set up for a reversal.

The greater part of this century has been marred by visible global conflict, yet most of us forget about the war that we fight as a species -- one that cost us 2.1 million lives last year, according to the World Health Organization. That's right, I am talking about the war against HIV and AIDS, which has been fought for over two decades now and will continue for the foreseeable future. Leading the charge on the side of humankind is pharmaceutical trailblazer Gilead Sciences (GILD). Health-care stocks are on a roll right now, and Gilead is leading the way.

Gilead creates and markets medicines that fight life-threatening diseases, such as HIV/AIDS and hepatitis B. The California-based company traditionally focused on viral ailments, but in 2006 it expanded its portfolio to include respiratory disease and cardiovascular treatment with the acquisition of Corus Pharma and Myogen. The company's stellar board is made up of folks like Paul Berg, winner of the 1980 Nobel Prize in Chemistry and current CEO John Martin, who was previously the director of antiviral chemistry at Bristol-Meyers.

Within Gilead's broad portfolio, the impetus for growth in 2008 comes from the company's extraordinary HIV franchise. A touch more than 80% of the company's $2.5 billion in revenue came from HIV products in 2006 -- a whopping $1.2 billion courtesy of their star product, Truvada, which is increasingly forming the backbone of HIV therapy around the world.

The company's newest HIV drug, Atripla, is the first and only once-daily, single tablet regimen that received approval in the U.S. in 2006, and it has since become the most popular treatment in this market. In the first year alone, Atripla raked in 8% of total revenues, showing that it can pull its own weight in the future. In December last year, the drug received marketing authorization in the European Union, Norway and Iceland. Sales of Atripla in Europe and America, along with increased global sales of the tried-and-tested Truvada, should prop up growth quite nicely this year.

An estimated 250,000 HIV-positive Americans remain undiagnosed today, which is why the Centers for Disease Control and Prevention has wisely recommended that HIV testing become a part of routine medical care. As a result, Gilead's HIV sales should benefit, considering that 80% of new patients receive either Truvada or Atripla for treatment.

As recessionary fears mount and strong defensive positions become ever more difficult to find, General Dynamics' (GD) rank as one of the top five military contractors makes it stand out among its big-cap peers. The Virginia-based producer of naval ships, military combat systems and Gulfstream business jets has been trading within 6% of its recent all-time highs, and it is up 10% over the past year. The company generates about two-thirds of its total revenue from the U.S. government, which might make you a little nervous in an election year where Democrats are recommending troop withdrawals from the Middle East. But even if the next president decides to move troops out of the Middle East, analysts say that defense and military spending forecasts will remain strong.

General Dynamics has received numerous contracts from the U.S. military recently. Notably, this month, the company received a $99 million order for 183 mine-resistant, ambush-protected, or MRAP, vehicles for troops overseas. And we'll continue to see orders like this roll in as ongoing global terror risks will keep the military's infrastructure growing regardless of what ensues in Iraq and Afghanistan.

The continual flow of orders from the U.S. military has added nicely to GD's revenues, and it's this well-balanced revenue base that makes it stand out from the other top defense contractors. Along with the demand for MRAP vehicles, its recent contracts include large orders for maintenance and support work or production of submarines, surface ships, military vehicles and information-technology systems. And these prime contracts are set to keep rolling in regardless of and throughout the looming potential recession, while the company's products and IT support will remain in high-demand globally. So no irony is intended when I call GD a defensive pick.

General Dynamics has been a steady performer over the years, and 2007 should come in as another good year on the books. Fourth-quarter results are expected to be posted on January 23, and analysts are expecting earnings per share to increase about 25% over last year, to $1.41 a share from $1.13 a share. I wouldn't be surprised to see results blow past the consensus though, as they did when third-quarter results were announced in November, beating the Street's earnings per share guidance by 10 cents. Over the past three years GD's average earnings growth rate has been around 19%, and it is projecting its profits to grow another 12.6% in 2008. Its returns on invested capital hover close to 16%, covering its cost of capital by more than 7%, and analysts praise management's decisions on asset allocation and project focus. Unless the world financial markets really go into breakdown mode, watch for its big revenue drivers to keep churning out growth, with the Gulfstream business jet division as well as Land Systems division on track to help the most.

Action over the past couple weeks following the Fed's rate cut is beginning to make the sovereign wealth funds in Abu Dhabi and Singapore look prescient for buying into the likes of Citigroup (C) and UBS (UBS) earlier this month at lower prices that were not too far from their 2002 bottoms.

Yes, I did say 2002. Not April or August of last year -- but their levels at the bottom of the millennial bear market, the area from which they went on to triple over the next five years.

Though Citigroup's recent fourth-quarter results are ugly enough to send most investors for the hills, there are some positive things happening at the bank. Let me give you the good, before the bad and the ugly, and explain why analysts believe that Citi might well be a bargain at its current levels. In 2006 it was ranked as the most profitable bank in the world, with its $22.13 billion net barely beating the U.K.'s HSBC. Adjusted for purchasing-power parity, that amount equates to more money than the gross domestic product of 115 countries.

And despite the bank's massive size, international consumer activities were at record profits as new branches were able to consistently increase their deposits. Net interest income increased by 3.6% globally and non-interest income was up by 8.6%, with the gains shared close to equally between domestic and global operations. Domestic credit card revenues have also shown strength, posting a 1.8% organic increase in open accounts. The gain is unusual and should be looked at differently than the seasonal increases that also look healthy.

Management's recent decisions to boost targeted capital ratios have also brightened the short-term horizon. Citigroup's recent capital raising activities have brought in almost $30 billion and have boosted its Tier One capital -- which is a core measure of financial strength on a regulatory basis -- to be on par with the industry's current leaders. Other than the investment by the Abu Dhabi Investment Authority, Citi has raised $15.4 billion from two private placements of convertible preferred securities and $3.25 billion from a public offering of straight preferred equity. Though it has cut its dividend by approximately 40%, it has also used the last two quarters to nearly double its loan-loss reserves, which have increased by $7.2 billion to $16.2 billion, or 2.1% of total loans outstanding.

Fourth-quarter results bring the bad and ugly into the light, as the net loss of $9.83 billion can't be justified by anything but poor risk controls during the U.S. sub-prime debacle. The $18.2 billion markdown that Citigroup took on its portfolio of sub-prime securities and the $3.6 billion in capital that it pumped into its loan-loss reserves accounted for the gash in results compared with last year's earnings. But remember that the markdown in its sub-prime portfolios implies that virtually every loan defaults and projects that the bank will only recover about 50% of the principal that it's owed. This scenario is appearing less and less likely, and the actual value of many of its sub-prime holdings has seen very little deterioration so far.

Aside from its fourth-quarter results, Punk Ziegel analyst are expecting healthy profits to bounce back by the end of the year as an unhealthy yield-curve changes its shape to boost margins and sub-prime security markdowns result in less defaults than projections allow for. The fourth-quarter loss of $1.99 per share is expected to turn around to see gains in the range of $3.38 to $3.74 a share for 2008 and $4.09 to $4.84 per share for the following two years, respectively. If you have the risk tolerance and are looking at a five-year time horizon, Citigroup may be one of the stronger financial companies to emerge from the current credit crisis.