Archive for the ‘News’ Category

CNN Republican debated, 10/18/2011

“We’ve all taken some big hits, but this is America.  With more energy from coal, the fuel that supplies over 1/2 of our energy affordably, we’ll keep energy costs in check, jobs in America, and together we will power the next great comeback!”  – American Coalition for Clean Coal Electricity.

Now, in December of 2012,  you would think they were talking about shale gas.

Environmental activist Robert F. Kennedy Jr. one liners at “greenwise Sacramento”, 11/19/2010 aimed at the anti-clean energy forces:

  • trogledytes on Capital Hill
  • sock puppets of polluters
  • toadies on Fox Radio
  • treating the planet like a liquidation
  • phony think tanks on Capital Hill
  • monopolistic kleptocracy
  • biostitues who will say anything
  • carbon cronies
  • dirty fuels from hell !
  • green clean energy from heaven !

I was on my feet, pumping my fist and looking for a demonstration.  Very entertaining if nothing else.

 

 

 

 

 

 

Further highlighting the high risk nature of investing in OTC BB companies, four firm’s listings have migrated to the Pink Sheets.  CCGY, SESI, GMTI, and GGRN are now on the first (or last) rung of public listing in the United States.

TIPS yields plunged to new record lows today.  The 5 year closed at -1.14% real return and the 10 year closed at -0.24%.  Just think, with virtually no risk you can lose 0.24% real for a full ten years.

Today’s records were set due to a small uptick in inflation expectations, not decreases in Treasury yields.   In an effort to stimulate the economy US policy makers continue to operate fixed income markets at an historic low yield point.  If the theory is that low cost money will stimulate borrowing and hence economic expansion, the evidence of the last few years is, IMO, weak.  If the theory is that low yields will make equities look more attractive leading to higher equity markets this seems to have happened post 2008 crash.   Does this cause me to change my key FI/Equity allocation? No.

The Crude / Natural Gas energy price ratio hit a new all time high yesterday of 6.3 driven by the continued decline in the front month contract for natural gas at the Henry Hub (which closed today at $2.72/mmBtu for February delivery).  When you review the chart of the ratio from 1994 to the present it’s hard to miss the structural change in the market that started in the 2008 – 2009 time frame when shale gas has started to flow in quantity.

 

 

It’s officially winter and Henry hub gas futures are below $3.20/mmBtu.  With WTI oil near $100 / bbl the oil/gas ratio hit an all time high today of 5.43.

The clean energy sector continues to be treacherous for investors.  In my last update I had four coverage termination, one on the NASDAQ (Beacon) and 3 on OTC/venture exchanges.   As I have previously commented, the OTC/venture exchanges remain very risky.   There are more terminations to come in my next update as well as some new IPOs I’ll be following.

company_name post
Clean Energy Combustion Systems, Inc. Last traded 4/17/2011, web site gone.
IdaTech plc Company is no longer listed.
AE Biofuels, Inc. Trading stopped and turned into a shell.
Beacon Power Corp Filed Chapter 11 Bankruptcy on 10/20/2011

…the 5 year TIPS traded at an all time low real yield today of -1.047%.   The 10 year didn’t quite hit a record but it traded at a real yield of -0.64% .  The last time the TIPS yields hit a record low was on August 10, the day the DOW dropped 508 points.    In contrast, today the DOW fell a modest 61 points and is over 1000 points higher than it was August 10.   In August money was moving into the safety of US Treasuries driving down their yields and carrying the TIPS down with them.  Today, it looks like the ECB rate cut put pressure on Treasuries with a similar effect.   The TIPS may have lower to go still.   If inflation expectations click upward, and the central banks constrain nominal rates, then TIPS will go lower.  Amazing, a very safe way to lose money in real terms.

The chance of the US defaulting on its obligations is still hanging on the balance of tough, dug in negotiations in Washington.   But the yields on US Treasury bonds have continued to fall.  Apparently these bonds are still considered a safe haven.  With falling nominal bond yields, and with 5 year inflation expectations still in the 2% range, the real yield on 5 year TIPS hit another record low today at -.72%
Time for a quick 5 year TIPS issuance.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I like the idea of solar PV.  It works, it fits in.  But for investors it’s like riding a bull in an arena because solar is still highly dependent on governmental support.  When the support weakens watch out.   Here are some examples.

First  March  10, 2011 Energy Conversion’s CEO  [ENER] reported that a dramatic and abrupt shift in the French and Italian solar incentive structures has impacted our business and that the changes may impact as much as 50% of this quarter’s forecasted revenue”.   The next day ENER promptly lost 21.5% of its market value.

Next, Renewable Energy Corporation [REC.OL] succumbed to the chill blowing through the solar energy market on May 24, 2011 with a plan to cut output and lay off 500 workers, sending its shares tumbling.  The maker of wafers, cells and modules for the solar industry also warned second-quarter results would be much weaker than the first three months.  The solar industry — which depends on government incentives — has been hit by changes in subsidy legislation in Germany and Italy, the world’s No. 1 and No. 2 markets.  Its shares were down 14 percent at 8:19 a.m. EDT while Oslo’s main index was up 1.0 percent.

Most recently, PV Crystalox Solar [PVCS.L] announced on June 28, 2011  that, as a result of the widely reported adverse PV market conditions experienced in recent weeks, shipment volumes in the first half of the year will be slightly below the guidance of 210-225 MW given in their Interim Management Statement on 19 May 2011.   Of more concern were their statements about strong downward pressure on prices the hint  the Group may incur an operating loss in the second half.   The company concluded its announcement with a warning that it may not pay a dividend in 2011.   The market promptly rewarded these announcements with a 41% decline in its stock price.

Sacramento is working hard to become a recognized leader in cleantech. For years the region has had a Clean Energy Showcase which has attracted upwards of 800 attendees in the last two years.  Not bad for a regional event!  Our new mayor, Kevin Johnson, is also a clean energy proponent through his “Greenwise” initiative.

Today the mayor sponsored a meeting where Lisa Jackson, Administrator of the U.S. EPA was the speaker. Ms. Jackson is a refreshing speaker and in response to a question from the audience she made two very important comments regarding shale gas. First, she is now being advised there is a 200 year supply of gas from shale oil. This is very significant because it will fundamentally change energy economics in the electric sector and potentially in other areas. Her second key comment was there are no known cases of drinking water contamination from the fracking operations. Other than what I consider to be normal requirements to manage the water used in fracking , if there isn’t really a problem with the fracking operation itself then the potential for shale can be realized.

Why is this important? Gas competes with the variety of wholesale renewable electricity technologies. And with cheap combined cycle plants (super efficient, super reliable, super low emission, much lower carbon output vs coal, reasonable cost) natural gas is a formidable competitor.  This will benefit the turbine suppliers (like GE, Siemans), the independent generators (like Calpine, Dynergy), and other firms like Clean Energy Fuels [CLNE] and GreenMan [GMTI.OB].  Coal producers (including all the companies in the Van Eck’s coal ETF KOL), on the other hand, obviously recognize the threat and are advertizing extensively touting the benefits coal.