Friday, February 29, 2008
We'll end the day with AltRock instead of AltEnergy.
But they're green. Get it? Irish?
(hey, if the NYMEX can roll out their green futures on
St. Patrick's Day...)
I know, you did.
Because CI visitors are smart, successful, good-looking.
In addition to owning See's Candies, Berkshire Hathaway owns MidAmerican Energy Holdings:
...Berkshire has an 87.4% (diluted) interest in MidAmerican Energy Holdings, which owns a wide variety of utility operations. The largest of these are (1) Yorkshire Electricity and Northern Electric, whose 3.8 million electric customers make it the third largest distributor of electricity in the U.K.; (2) MidAmerican Energy, which serves 720,000 electric customers, primarily in Iowa; (3) Pacific Power and Rocky Mountain Power, serving about 1.7 million electric customers in six western states; and (4) Kern River and Northern Natural pipelines, which carry about 8% of the natural gas consumed in the U.S.They've also got an insurance operation.
World's largest reinsurers
Ranked by 2006 net premiums written
|Rank||Company||2006 net premiums written|
|1||Munich Re Group||$24,218,951,400|
|2||Swiss Re Group||$23,202,134,100|
|3||Berkshire Hathaway/Gen Re Group3||$11,577,000,000|
|4||Hannover Re Group||$8,907,121,773|
|5||Lloyd's of London||$7,950,584,200|
From Business Insurance.
From BI last month:
The news that Omaha, Nebraska-based financial giant Berkshire Hathaway Inc. acquired a 3% stake in Zurich, Switzerland-based Swiss Reinsurance Co. and agreed a 20% quota share deal over five years with the reinsurance giant was greeted with enthusiasm by investors and analysts, and arguably augers......
Mr. Buffett is known in the popular media for his personal net worth. Just as mind-boggling is his company's position in both energy and insurance, at first glance on opposite sides of the green fence but actually a self contained hedge.
MidAmerican produces power with coal, natural gas and wind. The natural gas pipes* are National Critical Infrastructure.
The highest possible ratings the agencies give to the reinsurance operations (and Warren's disinclination toward silly pricing) allow them to pick and choose when they will make available their monstrous capacity. At a price. Remember why Allstate was going to raise Florida premiums 42% last month? Global Warming.
What Warren hath wrought: Heads I win, tails I win, if it lands on its edge I win, if gravity is momentarily suspended I win. Genius.
*Plus, he brought Northern Natural gas back to Omaha.
Here's the '07 annual report.
Here's the rest of Mr. Buffett's Letters to Shareholders.
Here's a bunch of our posts on Mr. Buffet.
(and a few on Charlie)
Uodate: I got an email asking "Well, what did Mr. Buffett say about global warming?"
Answer: nothing, in the 2007 annual report.
I screwed up when I put up the link to our prior Buffet posts. I should have pointed out two in particular. His comments in the 2006 letter:
SEC Pressed on Climate-Change Disclosures and When will Warren Buffett get on Board the Love Train?*
and comments at last years annual meeting:
Warren Buffet on Global Warming
Mr. Buffett did not mention climate change in his letter to shareholders.
Mr. Buffett did not use the word anthropogenic.
The 2007 Berkshire Hathaway Annual Report, including Mr. Buffett's letter, is here.
...For example, in 2001 and 2002 we purchased €310 million Amazon.com, Inc. 6 7/8 of 2010 at 57% of par. At the time, Amazon bonds were priced as “junk” credits, though they were anything but.
(Yes, Virginia, you can occasionally find markets that are ridiculously inefficient – or at least you can find them anywhere except at the finance departments of some leading business schools.)
I'm at page 8 of the annual report. Mr. Buffett is still the best writer on finance and cocoa. He mentions the Rockwood deal:
...The seeds of this transaction were planted in 1954. That fall, only three months into a new job, I was sent by my employers, Ben Graham and Jerry Newman, to a shareholders’ meeting of Rockwood Chocolate in Brooklyn. A young fellow had recently taken control of this company, a manufacturer of assorted cocoa-based items. He had then initiated a one-of-a-kind tender, offering 80 pounds of cocoa beans for each share of Rockwood stock. I described this transaction in a section of the 1988 annual report that explained arbitrage. I also told you that Jay Pritzker – the young fellow mentioned above – was the business genius behind this tax-efficient idea, the possibilities for which had escaped all the other experts who had thought about buying Rockwood, including my bosses, Ben and Jerry. [sweet -ed.]and further mines the chocolate vein:
...Let’s look at the prototype of a dream business, our own See’s Candy. The boxed-chocolates industry in which it operates is unexciting: Per-capita consumption in the U.S. is extremely low and doesn’t grow. Many once-important brands have disappeared, and only three companies have earned more than token profits over the last forty years. Indeed, I believe that See’s, though it obtains the bulk of its revenues from only a few states, accounts for nearly half of the entire industry’s earnings.For Climateer Investing readers the comments on the insurance operations and Mid-American Energy will provide especial insight. More to come.
(blogrolled at left)
|The S&P 500's Five Worst Bear Markets Since 1871 |
|Rank||Peak Date||Trough Date||Peak||Trough||Drop|
|1||September 1929||June 1932||31.3||4.77||-84.8%|
|2||August 2000||February 2003||1485.46||837.03||-43.7%|
|3||April 1973||December 1974||118.4||67.07||-43.4%|
|4||August 1937||April 1938||16.74||9.89||-40.9%|
|5||February 1876||June 1877||4.52||2.73||-39.6%|
India unveils populist budget, stocks hit by tax
Indian Finance Minister Palaniappan Chidambaram Friday unveiled a populist budget with an eye on general elections due next year, increasing expenditure targets on rural development and education, canceling loans made to farmers and offering tax relief to low-income groups....
This is going to be fun
From the press release:
The New York Mercantile Exchange, Inc., a subsidiary of NYMEX Holdings, Inc. (NYSE: NMX), today announced that it will introduce the first slate of futures and options contracts as part of its Green Exchange initiative on March 16 for trade date March 17. The initial contracts will be European Union Allowance (EUA) futures and options; Certified Emission Reduction (CER) futures; seasonal nitrogen oxide emission allowance contracts; annual nitrogen oxide allowance futures; and sulfur dioxide emission allowance options contracts.
The futures contracts will be available for trading on the CME Globex® electronic trading platform; the options contracts will be available for trading on the NYMEX trading floor; and all contracts will be available for clearing on NYMEX ClearPort®.
The EUA futures contract (commodity code RC) and CER futures contract (commodity code VA) will be physically delivered at the UK Emissions Trading Registry (UK Registry). The contract size will be 1,000 metric tons of CO2, the equivalent of 1,000 EUA units, and the minimum price fluctuation will be €0.01 per unit.
The EUA options contract (commodity code AV) will be a European-style option that will exercise into the underlying EUA futures contract. It will expire three business days prior to the EUA futures contract and will have 10 strike prices in increments of €0.50 above and below the at-the-money strike price. The EUA options will be traded on the NYMEX trading floor and cleared on NYMEX ClearPort....
DealBreaker (HT) comments:
Meant to link to this earlier, but Alex Kirtland offers up a surprising chart of carbon offset prices. Check it out. Let's just say, if there were anything like a true market price, it sure as hell isn't showing up. The price to offset a metric ton are all over the place. It also means that there's probably a way to make money on this, although liquidity and fungibility would both probably be an issue. But if you could.From UsableMarkets:
For those of you for whom the guilt of producing emissions is just too much to bear, and would like to offset your “carbon footprint” by buying carbon offsets, there is no other place to begin but the Carbon Offset Survey at EcoBusinessLinks.com.
Of course, if you’re feeling guilty, you may want to pay more rather than less, but regardless, here are the prices offered for the “retail” crowd from our various carbon (emissions) brokers.
The chart shows prices ranging from $3.95 to $39.60; $4.60 at the Chicago Climate Exchange (voluntary) and European Union Allowances at €21.63.
For grins and giggles they could have included the UNFCCC's CDM CERs LMNOP.
From Cattle Network:
After traveling to China in late January, Smithfield Foods President and CEO C. Larry Pope is optimistic about the processor's prospects there, promising to send a team to the country over the next two quarters to continue exploring opportunities.
"We are just starting the process there," Pope said during Smithfield's third-quarter earnings conference call Thursday. "This is a market we need to pay attention to going forward."
Smithfield made headlines last summer after inking a deal to sell 60 million pounds of pork to a Chinese trading company. (See Smithfield to sell pork to Chinese trading company on Meatingplace.com, Aug. 27, 2007.)
Pope noted the size of the Chinese pork market, stating that China consumes half the world's pork, and that two-thirds of the country's protein diet consists of pork....
Pick your spin on the 3rd quarter earnings
(all these stories are based on the same numbers!)
Smithfield Foods Beats Forecasts
Smithfield beats estimates, helped by pork exports
Cost to Feed Hogs Drags Smithfield 3Q
Smithfield profit down 10% on higher hog costs
UPDATE: Smithfield 3Q Net Drops 9.6% On Lower Hog Prices
Smithfield Profit Falls 9.6% on Surging Feed Costs (Update1)
The buzz among traders on the floor of Chicago Board of Trade this week was the pending battle for U.S. acres — poised to be one of the messiest in history. It will be a price fight as global demand targets the country’s three top crops — corn, soybeans, wheat.
One flash point was USDA’s preliminary U.S. acreage estimates released during its annual outlook conference held this week, Feb 21-22, in Washington, DC. The other is the start of the planting season which is just six weeks away in the heart of the Corn Belt.
One prominent Midwest agronomist at Iowa State University, Palle Pedersen, said this week “it’s going to be an interesting spring.” Pedersen, who works with farmers from the top crop state of Iowa, said they are in quandary on how many corn and bean acres to plant. Lately, he’s been getting a sense that Iowans are looking more seriously at soybeans — as the price for new-crop CBOT November soybeans has rallied more than 20 percent since Jan. 1, hovering near $14 a bushel, and input costs to plant corn, like anhydrous ammonia, are skyrocketing....MORE
Stocks closed generally mournful and reflective.
Currency devaluation reflects silently on still and glassy water.
Invest in Kirin
Credit (blame) The Onion for most of the above.
UPDATE: Okay, not auspicious-the Yen is trading at a 3 year high vs. the dollar. 104.06:$1. More Kirin.
And from the IHT:
Most Asian markets fell Friday after overnight U.S. jobs data and pessimistic comments by Federal Reserve Chairman Ben Bernanke's reinforced the view that the world's largest economy may be headed into a recession.
The largest fall came on the Tokyo Stock Exchange, where the Nikkei 225 average fell 2.3 percent to 13,603.0. In Hong Kong, the blue-chip Hang Seng fell 1.1 percent to 24,331.7. Major indices fell in Australia, India, Indonesia, Malaysia, Singapore and South Korea.
In Tokyo, exporters were the big losers as the yen climbed to its highest level against the dollar in nearly three year after Bernanke said large U.S. banks will likely recover from the recent credit crisis, while other banks are at risk of failing....
Thursday, February 28, 2008
Unless you're Chinese, you're listing in Shenzen and your name is Shenzen Topraysolar.Here's the story of the first day's trading, from Reuters:
Shares in Shenzhen Topraysolar Co 002218.SZ, a maker of solar power cells, jumped nearly fivefold when they began trading on Thursday, riding a wave of investor interest in China's clean energy companies.
Topraysolar, the country's first specialist maker of solar cells to list domestically, closed at 51.62 yuan on the Shenzhen Stock Exchange, up 378 percent from their initial public offer price of 10.79 yuan, after hitting a high of 57.00 yuan.
That comfortably beat analysts' expectations of a price of around 45 yuan on the stock's first day of trade....MORE
When costumers at MGM put together the Wizard’s wardrobe for ‘The Wizard of Oz’, the shopped at thrift stores to find clothes that projected “shabby gentility”. In an incredible coincidence, the costume coat’s previous owner was L. Frank Baum, writer of ‘The Wizard of Oz’!submitted by: Greg Steinmayer Dearborn, MI
(89 votes, average: 4.43 out of 5)
Here's Biopact's headline and story, the FAO had better be right:
FAO: global fertilizer supply expected to outstrip demand
World fertilizer production is expected to outstrip demand over the next five years and will support higher levels of food and biofuel production, FAO said in a new report entitled “Current world fertilizer trends and outlook to 2011/12” published today. The outlook shows the basic laws of supply and demand are doing their work.
High commodity prices experienced over recent years led to increased production and correspondingly to greater fertilizer use. This has led to tight markets and higher fertilizer prices. While it is expected that the demand for basic food crops, fruits and vegetables, for animal products and for biofuel crops is likely to remain strong, we expect fertilizer supply to grow sufficiently to meet higher consumption. - Jan Poulisse, FAO fertilizer expertThe FAO report estimates that world fertilizer supply (nitrogen, phosphate and potash nutrient) will increase by some 34 million tonnes representing an annual growth rate of 3 percent between 2007/08 and 2011/12, comfortably sufficient to cover demand growth of 1.9 percent annually (table, click to enlarge)....MORE
From Canadian Business:
Some people think they know Brian Hunter, the Canadian trader blamed for the world’s largest hedge fund failure. They consider him an overconfident Street punk, a capitalist flash-in-the-pan who imploded Amaranth Advisors LLC in September 2006 simply because greedy fund managers allowed him to bet billions that bad weather would drive up energy prices. They applaud Lady Luck for inflating Hunter’s ego to the point where he believed he could “model God,” then unleashing the mild hurricane season that reportedly destroyed his reputation along with the Connecticut-based hedge fund. These folks claim to understand Hunter’s values. They point to his winter car as if it says something bad about his DNA. The vehicle in question is rumoured to be a Bentley Arnage, which apparently handles slush better than the Calgary native’s summer ride, a Ferrari F430 Spider.
But nice cars don’t say a thing about what makes anyone tick. Hunter’s critics are wrong on the other counts, too.At best, the Bentley shows Hunter likes options, which is not noteworthy. Trading financial ones, after all, is how he used to make a respectable living. And while the employment options of Canada’s highest-profile commodities speculator are now limited...MORE
Jim Cramer Interviews Hillary Clinton. And: Clinton’s Efforts on Ethanol Overlap Her Husband’s Interests
...Cramer then asked about inflation and "burning food" at the expense of food prices, part of his ag-flation theme. He said if we scrapped ethanol it would bring those prices down.
- Hillary said it is a little more complicated, but rising corn and soybeans have contributed. She said we are in a transition period that requires all forms of alternative energy and she then noted cellulosic, wind, solar, and new forms of energy for cars. She wants more hybrids and more plug-in cars. She did NOT note anything about nuclear power plants, and Cramer didn't go there even on a sidebar comment....MORE
Oops, sorry, channeling the Post's headline writers.
Here's the Times story:
...Several months earlier, Mrs. Clinton had sponsored legislation to provide billions in new federal incentives for ethanol, and, especially in her home state of New York, she has worked to foster a business climate that favors the sort of ethanol investments pursued by her husband’s friends and her political supporters.
One potential beneficiary is the Yucaipa Companies, a private equity firm where Mr. Clinton has been a senior adviser and whose founder, Mr. Burkle, has raised hundreds of thousands of dollars for Mrs. Clinton’s campaigns. Yucaipa has invested millions in Cilion Inc. — a start-up venture also backed by Mr. Branson, the British entrepreneur, and Mr. Khosla, a Silicon Valley venture capitalist — that is building seven ethanol plants around the country. Two are in upstate New York....
...Yucaipa’s partnership with the rulers of Dubai and its investment in a Chinese media company drew attention to Mr. Clinton’s connection to the fund when his wife was preparing her presidential run last year. In December, aides to Mr. Clinton said he was taking steps to end his relationship with Yucaipa to avoid potential conflicts of interest or political imbroglios for his wife, should she become the Democratic nominee....More
From Cassandra Does Tokyo:
Is speculation in commodities socially "useful"? Do classical economic arguments in favor of unfettered speculation retain their validity?
I have been ruminating upon these related questions questions for a while, composing several aborted missives over the past half-year, but I keep returning to it and would like to throw it out to the crowd for discussion.
I know the classical arguments in favor - as utilitarian risk-transfer devices, as important market-signaling mechanisms, and hence re-direction of risk-capital for investment etc. But my fears linger, essentially wondering whether classical arguments may have significant and meaningful flaws in a modernity where behemoths now-dominate global resource exploitation; where the financial economy is bloated in relation to the real economy; where funds available for speculative activities pose structural hazards as they dwarf the size of the underlying market liquidity, or exchange-traded derivatives markets that often set the prices thereof; where such speculative flows are increasing employing the same techniques (momentum, trend-following etc.) thereby increasing position correlation amongst investors (and thus volatility) resulting in something resembling de facto collusion; where technology opens the Pandora's box for anyone and everyone to join the electronic herd in the [temporary?] stampede for this or that. What, for example, would be market-clearing price of wheat in a world where physical traders (i.e. real buyers and sellers) dominated?...MORE
Yesterday in the Wall Street Journal, MF Global director of commodity research Rich Feltes was quoted as saying “we’re up here doing things in the wheat market we’ve never done before.”
He wasn’t just whistling Dixie.
The brokerage earlier today acknowledged $141 million in losses (72 cents a share) due to positions taken by one of its registered representatives, Evan Dooley, (who has been fired) in the wheat market, which has been subject to massive volatility and startling price increases. Mr. Dooley told the Wall Street Journal that the “computer system failed.”>>>MORE
Feb. 8 Doom and Gloom: What Can the Federal Reserve Do?
Feb. 8 Doom and Gloom: What Can the Federal Reserve Do? Part II
Feb. 14 Depression risk might force U.S. to buy assets
Today via CNBC, Bank Failures:
Federal Reserve Chairman Ben Bernanke said that some small U.S. banks might go under during the current stress prompted by housing market problems, but the U.S. bank system overall remained solid."I expect there will be some failures,'' Bernanke told the Senate Banking Committee, referring to smaller regional banks who became heavily invested in real estate.
His comments caused a selloff in the stock market and a rally in the bond market.
"Among the largest banks, the capital ratios remain good and I don't anticipate any serious problems of that sort among the large, internationally active banks that make up a very
substantial part of our banking system,'' he said in response to a question during semi-annual congressional testimony....MORE
As we get into structured carbon finance (carbon notes, carbon backed securities) really slicing and dicing the cash flows, there will be room for all kinds of shenanigans. The key difference is that whereas Mortgage Backed Securities had real estate (even if overvalued) backing them, CBS's will be built on the absence of an invisible gas. Is it any wonder that GS is interested?
APX, a Silicon Valley company that certifies carbon and emissions offset certificates, and which is well-placed to support carbon-trading markets when they emerge, has gotten backing from Goldman Sachs in a $14 million investment, VentureBeat has learned.
Carbon trading is a growing business that could someday come to resemble the world’s largest financial markets.
Today’s emissions markets are generally small and fragmented. In regional U.S. energy markets, utilities are already required to buy electricity from alternative energy sources like geothermal, solar or wind. To prove their use of alternative energy, they’re required to file a certificate tracking their acquisition of the energy units. So this is the beginning of a “transfer” regime that could grow into more....MORE
The Wind Beneath Biofuels’ Wings
The press goes giddy over Virgin’s “nutty” test flight
As we’ve noted before, “green” business articles are tempting for journalists right now. That is doubly so when the story involves a Boeing 747 and a rogue billionaire who wants to save the world. So it was no wonder that the press went wild when Richard Branson’s Virgin Airways made the first commercial airplane flight powered partly by biofuels. But some reporters had trouble untangling publicity from progress.
Some of the earliest headlines made it seem like Branson had solved the riddle of fossil-fuel dependence for flight: “Virgin Flies Biofuel Jet From London” (AP), “Biofuel Takes Flight with Virgin Atlantic” (CNet), “Historic biofuel flight in Britain” (UPI). Many of the earliest reports sounded like rewritten PR babble, which glossed over the details what the airline actually accomplished. The AP article was the vaguest vignette of boosterism...MORE
We couldn't agree more. In DARPA Scramjet hits ludicrous speed
we give you facts and pithy, farm country, quotes:
"When you get above 2 percent of biodiesel in the jet fuel, the freezing point rose.”
”It’s one thing if you stall a tractor in 44 below zero weather. You haul the tractor into a heated garage and wait for nature to take its course. But if you are at 33,000 feet (where it is equally cold) and suddenly your fuel line begins to freeze, that’s more than just annoying,” said Seames.Climateer Investing will continue to share the stories that grab our interest, avoiding boosterism and heartstrings journalism.
Nuremberg zoo is embroiled in a dispute with a Bavarian confectionary firm over who owns the right to the "Snowflake" trademark. If Knut is anything to go by, the marketing rights for the little polar bear could be worth millions.
Nuremberg zoo's most famous resident, Snowflake the polar bear cub, is going from strength to strength, packing away a liter of milk a day and romping around in her new enclosure
But Nuremberg city officials are feeling less relaxed these days: They're embroiled in a dispute with a Bavarian confectionary firm over who owns the rights to the trademark "Flocke," as the cute little furball is known in German....MORE
From the Financial Times:
Vestas Wind Systems, the world’s largest producer of wind turbines, more than doubled its net profits last year on growing demand for clean energy but it ceded market share to Chinese competitors.
Vestas increased net profits by 160 per cent to €291m ($440m) on revenues up 26 per cent to €4.86bn. It reaffirmed that it expected to increase revenues to €5.7bn this year.
However, its shares fell 5.1 per cent to DKr519 amid disappointment over its market share and profit-taking.
The Danish turbine producer has benefited from increased concern for the environment and higher oil prices, which make wind power more competitive. Vestas expects wind power capacity to grow by up to 25 per cent over the next 10 years and says it will take several years for turbine supply to match demand....MORE*Once again I am thinking of changing the blog descriptor from the current "Money Matters".
Any votes for "Climateer Investing: it's not just a blog, it's a lifestyle"?
If so, you read it first at CI.
Here's the LEH/Japan story from Reuters:
Lehman Brothers (LEH.N: Quote) said on Tuesday it would start trading U.N.-approved carbon credits in Japan, the first global investment bank to do so amid growing demand for companies to cut greenhouse gas emissions.
Japanese companies, including trading houses and utility firms, have been buying such credits for some time in return for funding clean-energy projects in developing countries under the Kyoto Protocol's Clean Development Mechanism.
Lehman Brothers is one of nearly 100 companies that have opened accounts at Japan's national registry for the United Nations' emission-trading system.
Lehman Brothers' global carbon trading operations are now based in London. In Europe a cap-and-trade system with mandatory emissions limits has encouraged trading of emission permits under the European Union's Emissions Trading Scheme....MORE
From the Los Angeles Times:
Appellate judges say the state needs federal approval for the regulation, which was designed to cut pollution generated by ports.
A federal appeals court Wednesday rejected a state regulation that reduced emissions from ships, dealing a blow to
The ruling means that the state must seek federal approval before imposing pollution limits on the thousands of cargo ships, cruise ships and other marine vessels that visit its ports.
The U.S. 9th Circuit Court of Appeals in San Francisco ruled that California's new regulation is preempted by federal law. The Clean Air Act allows California to set its own standards for various vehicles and engines if it receives waivers from the U.S. Environmental Protection Agency. The state argued that in this case it didn't technically need a waiver, but the judges disagreed....MORE
HT: Environmental Capital
Grid: American Superconductor Receives Orders for Wind Turbine Electrical Systems from Customers in Canada and China (AMSC)
#8 Quanta Services, Inc. (PWR)
#2 National Grid (NGG)
Another name in the sector, American Superconductor is not cheap (infinite P/E) but has been getting a lot of exposure, Piper Jaffrey conference this month, Raymond James next week. I prefer Venture Capital size return potential when buying companies without earnings, I'm not sure AMSC has it but obviously a lot of folks do.
AMSC at Yahoo Finance:
From the press release:
Jan. 29, 2008--American Superconductor Corporation (NASDAQ: AMSC), a leading energy technologies company, today announced that it has received more than $3 million in orders for its wind turbine core electrical components and systems from two AMSC Windtec customers: China's CSR Zhuzhou Electric Locomotive Research Institute ("CSR-ZELRI") and Canada's AAER, Inc. AMSC's electrical systems include the company's proprietary PowerModule(TM) power converter and enable reliable, high-performance wind turbine operation by controlling power flows, regulating voltage, monitoring system performance and controlling the pitch of wind turbine blades to maximize efficiency.
"These most recent orders demonstrate AMSC Windtec's unique ability to get new wind turbine manufacturers up and running quickly in a dynamic marketplace," said Greg Yurek, founder and chief executive officer of AMSC. "With ZELRI placing repeat orders for electrical systems and AAER making its first purchases, our customers are signaling the commencement of their production ramp ups to meet the growing demand for zero-emission wind turbines worldwide."
From the Times of India:
Punters on carbon credits have a new reason to worry: the rapid increase in global coal prices. For carbon credit sellers such as India, life is good when companies in Europe burn dirty fuel and buy carbon credits from them to clean up the mess. However, that could well change if coal becomes too expensive.
The use of coal in Europe is important to maintain the head of steam under carbon credit prices. Power utilities in Europe, for instance, are major buyers of certified emission reduction (CER) because they use coal, which was till now the cheapest fuel.
The emission factor for coal-fired generation in Europe is about 0.9 tonnes of CO2 per MWh, nearly double the factor for gas-fired generation. So, utilities wanting to burn coal need about twice as many European Union Allowances (EUA) as they do for natural gas under the 27-nation bloc’s plan to limit carbon-dioxide emissions....MORE
Tuesday, February 26, 2008
At the age of 40, King Gillette was a frustrated inventor, a bitter anticapitalist, and a salesman of cork-lined bottle caps. It was 1895, and despite ideas, energy, and wealthy parents, he had little to show for his work.
He blamed the evils of market competition.
Indeed, the previous year he had published a book, The Human Drift, which argued that all industry should be taken over by a single corporation owned by the public and that millions of Americans should live in a giant city called Metropolis powered by Niagara Falls. His boss at the bottle cap company, meanwhile, had just one piece of advice: Invent something people use and throw away.
One day, while he was shaving with a straight razor that was so worn it could no longer be sharpened, the idea came to him. What if the blade could be made of a thin metal strip? Rather than spending time maintaining the blades, men could simply discard them when they became dull. A few years of metallurgy experimentation later, the disposable-blade safety razor was born. But it didn't take off immediately.
In its first year, 1903, Gillette sold a total of 51 razors and 168 blades. Over the next two decades, he tried every marketing gimmick he could think of. He put his own face on the package, making him both legendary and, some people believed, fictional. He sold millions of razors to the Army at a steep discount, hoping the habits soldiers developed at war would carry over to peacetime. He sold razors in bulk to banks so they could give them away with new deposits ("shave and save" campaigns). Razors were bundled with everything from Wrigley's gum to packets of coffee, tea, spices, and marshmallows....MORE
Enough with the history lesson. If you go to Wired for the rest of the story, you'll see where this is going.
LDK Solar Co. (NYSE:LDK) stock fell 7% to $30.05 in the last hour of trading today after yesterday's earnings, but it was mainly a lackluster guidance. This was actually up in after-hours trading yesterday. This solar player had already warned us about the same issues back in January, so this shouldn't have been that big of a surprise.
Capstone Turbine (NASDAQ: CPST) scored another small gain of 2% or 3% before coming off at the end of the day, after a huge run yesterday. This remains our own top pick of the small emerging alternative energy players, and this now represents a 50% gain for our "10 Stocks Under $10" weekly newsletter sent out every Monday.
FPL Group Inc. (NYSE: FPL) had a power outage today in much of South Florida for what was being reported as "a loss of off-site power" without the cause being elaborated on besides workers taking the nuclear reactor down....MORE
Shares of Verenium Inc. tumbled more than 10% on Tuesday, the day after the cellulosic ethanol developer reported a wider fourth-quarter loss and announced it planned to sell $54 million in convertible notes....
Global trades in carbon-dioxide emission rights will be worth about $92 billion in 2008, up from approximately $60 billion in 2007, says Point Carbon, a carbon market analyst and advisor. All the figures are based on current carbon prices, or roughly $30 per ton of carbon dioxide.
The group’s new “Outlook for 2008” (available to paid subscribers) says the centerpiece of the global carbon market will continue to be the European emissions trading scheme, which could jump to as much as $68 billion in transactions this year.
U.S. policy-makers take note: The growth in 2008 will come from tighter allocations of emissions permits for Europe’s second phase of carbon trading, as well as an even tougher proposal unveiled last month that will see many of the pollution permits sold (”auctioned” in the lingo) to utilities and industries rather than given out free, as they were in the past, Point Carbon says....MORE
(but the CBOT trades an awful lot more)
Wheat climbed above $12 a bushel for the first time in Chicago, as investors poured money into agricultural commodities on signs that crop production isn't keeping pace with demand.
Global wheat stockpiles probably will fall to a 30-year low this year, while corn inventories are headed for the lowest since 1984, the U.S. Department of Agriculture said Feb. 8. Almost $1.5 billion flowed into farm commodities in the week to Feb. 19, investment bank UBS AG said yesterday. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials has jumped 15 percent this year.
...``We came in after the weekend and had a bunch of perceived demand news on wheat,'' said Clark Neighbors, a commodities broker at Bump Investor Services in Cedar Rapids, Iowa. ``Minneapolis wheat still continues to be the main player.''
From The New Republic:
As a young economics professor in the late 1970s, Richard Thaler began noticing small but nagging ways in which ordinary people defied the predictions of economic theory. A friend confided that he mowed his lawn to save $10, but winced at the suggestion that he mow someone else's to make $10. A colleague confessed that he'd never go out and buy a $50 bottle of wine for a family meal, but that he'd recently opened up a $50 bottle at dinner because it happened to be lying around. The textbooks assumed people would behave identically when equal amounts of money were at stake. But here they were doing completely different things depending on the context.
By the late '80s, Thaler had begun recording these observations in a column for a leading academic journal. The column laid the groundwork for a book, called The Winner's Curse, published in 1994. And the book widely signaled the arrival of a previously obscure sub-field known as behavioral economics. Behaviorists like Thaler believed that the perfectly rational, utterly selfinterested maximizers of economists' imaginations had little in common with actual human beings, who frequently err when making simple calculations, who have trouble with self-control, who often act out of altruism or spite....MORE
Would you like maple or blueberry with that waffle?
Here's Def Leppard's cover of Rock On.
Gaz de France said on Tuesday it had acquired wind power firm Nass and Wind Technologies for an undisclosed amount and that it had created a subsidiary for its green energy assets....MORE
Giving prisoners their own showers has forced up the government's carbon dioxide emissions, official statistics have shown.
Carbon emissions within former Home Office bodies, including the prison service, rose from 28,237 tonnes in 2005-06 to 28,925 tonnes in 2006-07.
The rise has been attributed to the increase in the prison population and the provision of in-cell showers....MOREFrom FINAlternatives:
A California hedge fund scam artists has been sentenced to five years in prison for his “dastardly fraud.”>>>MORE
Norilsk, the world's biggest producer of nickel, is building its own shipping fleet to capitalize on the melting of the polar ice caps.
The company ordered five reinforced cargo vessels that can plow through the waters north of Siberia as new sea routes open. Norilsk is spending at least 320 million euros ($467 million) to buy reinforced vessels rather than rent both freighters and icebreaker escorts.
The thawing sea ``has enormous economic implications, and commerce is going to push this ecological zone to the limit,'' says Rear Admiral Timothy McGee, head of the U.S. Navy's Meteorology and Oceanography Command....MORE
High prices will result in record hgh revenues for much of the energy industry this year. Companies will face looming challenges, though, and how they respond to them will shape the industry for years to come, according to a new report by Deloitte.
The trend towards resource nationalism is perhaps the single greatest threat to the profits of the oil and gas industry, though looming legislative and regulatory changes may also curtail the record profits the industry has enjoyed recently.
Unfortunately for Integrated Oil & Gas Companies (IOCs) and
independents, access to oil reserves is becoming increasingly constrained as major suppliers such as in Russia, Venezuela, and countries in the Middle East nationalize their industries, Deloitte says.
IOCs must improve the way they partner with foreign governments and National Oil Companies
Emphasis, according to the report, should be put on operational efficiency.Utility companies will experience a more challenging year in 2008...MORE
ETF Securities, one of the lead traders in exchange traded commodities (ETCs), soft launched today (February 22) the first short ETC. A leveraged ETC will start trading next week.
The introduction of 33 short and 33 leveraged ETCs complements the existing 51 classic and forward ETCs already offered by EFT Securities. These products provide long exposure to different parts of the futures curve.
The short and leveraged products joining the existing group will be listed only on the London Stock Exchange. The classic and forward ETCs are traded on London as well as Paris, Milan, Frankfurt and Amsterdam.
The short and leveraged ETCs are priced off the Dow Jones-AIG Excess Return Indices. The returns match the daily percentage change in the indices and the interest component is added daily to give a total return....MORE
Monday, February 25, 2008
Kick-start it in 2008? Or is it a long secular bear?
Remember that hot 1973 Stealer's Wheel song marking the end of the Nixon era? "'Cause I don't think that I can take anymore. Clowns to the left of me, jokers to the right, here I am stuck in the middle with you!"
It's still a perfect metaphor. Testifying before Congress: Fed Chairman Ben Bernanke on the left. Treasury Secretary Henry Paulson on the right. The American public stuck in the middle.
1. Stagflation: Bernanke's no-win Achilles heel...
2. Housing-credit meltdown: We've got a long way to go!...
3. Commodities: World's new reserve 'currency,' not dollars...MORE
A royal rendezvous for Cunard queens in Sydney
Spectacular Historic Cunard Royal Rendezvous Between Queen Victoria and QE2 Marks Queen Victoria's Maiden Call and QE2's Final Visit to Sydney
Subdued farewell for grand dame
Photos: The QE2 marked her last visit to Sydney with a spectacular passing with younger sister, the Queen Victoria.The Queen Elizabeth 2 and the Queen Victoria pass each other. Photo: Ben Rushton
...Queen Victoria, also on a world cruise, arrived in Sydney on 23 February. The two ocean liners met for an historic sail past on Sunday evening in Sydney. QE2 left her berth at Garden Island while Queen Victoria left hers at Circular Quay at 1800 hours local time.
Following the sail past QE2 docked at Circular Quay before her final departure from Sydney this morning. The historic ship will now make her last calls in Australia in Hobart on 27 February, Melbourne on 29 February, Adelaide on 2 March, Albany on 4 March and Fremantle on 5 March....Source
Live from the Bridge Cam of the Queen Elizabeth 2
Prices of top-quality wheat jumped 25 per cent to a record high on Monday in their largest one-day increase as Kazakhstan, one of the largest grain exporters, said it would impose export tariffs to curb sales.
The move, which follows similar export restrictions in Russia and Argentina, is likely to put further pressure on already tight global wheat supplies, analysts said.
...Spring wheat at the Minneapolis Grain Exchange surged an unprecedented $4.75 to a record high of $24 a bushel as consumers scrambled to secure supplies and speculators poured fresh money into the agriculture market.
The price of spring wheat, used to bake bread, has more than doubled since January and has risen fourfold in the last year, contributing to a rise in global food inflation.
Gavin Maguire, of Iowa Grain in Chicago, said consumers such as mills and bakers, who needed wheat, were “panicking”.
He said: “Historical references are useless. We are breaking all the rules.”>>>MORE
...Josette Sheeran, WFP Executive Director, told the FT that the agency would look at "cutting the food rations or even the number or people reached" if donors did not provide more money.
...The US Department of Agriculture, which in January said that US wheat stocks are at a 60-year low, last week said that the 2008/09 outlook reflects "record current year prices for wheat, corn, and soybeans, and continued expansion in biofuels production. Record prices are forecast again in 2008/09 for wheat, corn, and soybeans, boosting expected producer returns and driving prospects for combined acreage for the three major field crops to the highest level since the mid 1980s.">>>MORE
...So what are analysts expecting for these same commodities going forward? Bloomberg tracks the consensus price forecasts of commodity analysts, and below we highlight the difference between current prices and year-end 2008 price expectations. While only two commodities are down over the past year, only two are expected to be higher than they are now by the end of 2008. The two commodities that are up the most over the past year are expected to go down the most going forward. Oil is expected to decline 19% to $80/barrel, and Gold is expected to decline 15% to $807/ounce....
(more accurately, who gets the loot?)
We'll be seeing this in the U.S. shortly. It's already a topic of conversation from Montana to Ohio and points south.
The Rudd Governments plans to meet its commitments under the recently ratified Kyoto protocol have been dealt a potentially lethal financial blow.
The Federal and ultimately the High Court of Australia is now to rule on whether the Commonwealth can use the 80 million tonnes of Carbon Credits accumulated from land clearing bans.
It had been the previous coalition governments intention and by default the Rudd governments plan to meet it’s commitments to limit the nation’s Greenhouse gas (GHG) emissions in 2008-2012 to the Kyoto Target of an 8% increase above the levels achieved in 1990, by using these accumulated credits without paying farmers for them.
The Federal Court in Sydney in December last year agreed that farmers have an arguable case against the Commonwealth over ownership of the 80 million Tonnes of carbon created from land clearing bans.
The credits will single handedly enabled the Commonwealth to meet its Kyoto commitments. The value of those credits has been estimated by leading authorities at $10.8 billion dollars.
The legal right of the Commonwealth to use those credits is now in question and is to be decided by the courts....MORE
LDK Solar Co.'s fourth-quarter net income grew 18% from the previous quarter amid increasing demand for sources of clean energy, such as solar.
The company didn't provide its net income figure for the fourth quarter of 2006.
Shares rose 2.4% to $33.24 in after-hours trading as LDK raised its guidance for first-quarter earnings....MORE
From the BBC (more versions below):
The US is ready to accept "binding international obligations" on reducing greenhouse gas emissions, officials say, if other nations do the same.
The comments came in a news conference in Paris given by James Connaughton and Daniel Price, environmental and economics advisers to President Bush.
The US hopes the world's major economies will conclude a "leaders' declaration" before the July G8 summit.
There was no indication of how much the US might be prepared to cut emissions.
But the Bush administration is clearly looking for some kind of binding commitment from major developing countries such as China, India and Brazil.
"The US is prepared to enter into binding international obligations to reduce greenhouse gases as part of a global agreement in which all major economies similarly undertake binding international obligations," said Mr Price, the president's deputy national security adviser for international economic affairs....MORE
US ready for 'binding' reductions of greenhouse gases: official
FromAFP via Forbes
From Woody Allen:
"What if he's masturbating? I'll end up on the wall!!!"
(The sperm scene in Woody Allen's Everything you always wanted to know about sex )
Via: Apert's Syndrome and Selfish Sperm at
From Der Spiegel:
To compete with big utilities, Spain's eco-energy darling is going public to grab as many small and midsize wind power outfits as it can.
Don't accuse Spanish entrepreneur Miguel Salis of tilting at windmills. He co-founded Jazztel, a telecom startup that had the audacity to take on home market champion Telefónica. Now he is tackling Spain's national utility giants with an ambitious, independent, wind and solar power company that's scheduled to go public on the Madrid exchange this year with a $1 billion (€680 million) valuation.
Eolia Renovables de Inversiones, which Salis co-founded with Spanish investment bank N+1 in 2003, is pursuing a novel business model. Over the past two years, it has gobbled up more than 20 small wind and solar companies around Spain, creating in the process a kind of renewable energy mini-major. It has also bought two companies in Mexico and recently added wind farms in France and Germany.
Taking on the Goliaths of the IndustryThe next step for the holding company -- which was originally code-named "David," as in David and Goliath -- is to kick up international expansion....MORE
"Which one of the following do you think is the leading economic power in the world today?"
China: 40 percent
The United States: 33 percent
Japan: 13 percent
The European Union: 7 percent
India: 2 percent
Russia: 2 percent
(psst...here's the answer key)
Natural gas shares lead sector higher on bullish comment
Natural gas firms led the way higher on bullish comments from Goldman Sachs Monday as crude prices held steady near the $99 a barrel mark and the overall market provided a lift...More
Many members of Parliament are saying the U.K. and European governments should not have pursued targets to increase the use of biofuels without putting in place measures to prevent environmental damage, the Guardian reported.
The House of Commons Environmental Audit Committee said while it recognized that some biofuels are sustainable and could be used to reduce emissions from transport, the absence of sustainability standards could lead to environmental damage....
The challenge: To generate renewable energy. The plan: Get primary wind farm sites up and running. The payoff: Cash in on the need for renewable energy
When Mike Magnus talks about the future, you can almost see the windmills turning in his mind. He has big plans for Shear Wind Inc., the Bedford, N.S.-based renewable-energy company he founded in 2005.
According to the Canadian Wind Energy Association (CanWEA), a not-for-profit group that represents more than 300 industry members, wind energy generation is increasing by an average of 25 to 30 per cent each year. Since 1994, it has jumped from 4,800 megawatts to more than 94,000 globally, and from a little more than 100 MW to more than 1,800 in Canada.
"How many industries in Canada can talk to those types of growth rates?" asks Mr. Magnus, a former Clearwater Seafoods executive, who conceived the idea for Shear Wind while gazing at the many windmills in Europe....MORE
I know Yergin raises some folks hackles...Here's Environmental Capital on the CERA report:
...What CERA is saying is that this new-energy market, while small, should get more government help to grow. Traditionally, oil companies have often argued that the fact that renewable energy depends on government mandates and subsidies means it’s little more than an expensive dalliance. The CERA report also notes these technologies wouldn’t be around without government fiats and handouts. But then it argues for more of both.
“Putting a price on CO2 emissions, setting mandates, and providing subsidies all work to kick-start and sustain many clean energy technologies,” CERA says in its report, the findings of which CERA released publicly this month. The goal, CERA says, should be to structure subsidies so they ensure “that these technologies get off the drawing board and are able to wean themselves from the support” as they grow.
How to do that will be big debate. But it’s a different debate than the traditional one: whether the government should push clean-energy technologies in the first place.
Here's the first comment on the EC post:
Comment by Jeffrey J. Brown - February 25, 2008 at 1:46 pm
We promise, no more self-reverential posting today.
"We've turned into quite the little braggart, eh Mr. Analyst?"
"I know, I know, em-phasis on the first two syl-lables"
Bespoke has more traffic than we do, so hats off for pointing up Greenspan's 2004 pitch on ARM's.
And Hat Tip to MarketBeat for spreading the word.
And braggadocio from Climateer Investing. Last year, before sub-prime and ARMS got to be page 1 stuff, we thanked Worth Civils of the WSJ for blogrolling us in our post "Allen Greenspan, Worth Civils and the Wall Street Journal.com Energy Roundup" and said:
If I could ask Mr. Civils one question, with his sources, resources and insight, it would be: what does he make of Allen Greenspan's Feb. 23, 2004 speech at the National Credit Union Association in which, as Chairman of the Fed., Greenspan said:We've mentioned our perplexity a quite a few times, the last one being "Alan Greenspan: Competent Criminal or Criminally Incompetant? "
"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. "
"Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages..."
This one has stumped me for three years.
Thanks for the blogroll Worth.
...Regarding interest rates, in February 2004, Greenspan highlighted the evolving trends in the mortgage industry and said "there are lots of innovative programs, especially targeting low-income and first time buyers." He went on to suggest that homeowners could save thousands of dollars by switching from fixed-rate to adjustable rate mortgages (We won't even go into how those comments were basically an endorsement about what is going on in the sub-prime mortgage industry)....Go for the dénouement and chart.
From Wang's Happy Trading:
Yes the commodity boom and how to profit from it. In some ways we can see a little Mr. Plainview in all of us can’t we? Now we have computers to mine for our profits and UNG could be the next big thing as it has been lagging the other commodities. I really like this article from Seeking Alpha recently, nicely conveying on a bar chart a one year price change of the major commodities. What is of note when I look at it, is not how much the others have gone but how much the others have lagged. Nickel, zinc, aluminum and natural gas have been diverging from the other hot performers in its space and I do expect this divergence to converge which is already happening as we speak. Natural gas is cheap when compared to the others based on price and price appreciation (time to play catch up). Sometimes you don’t look for answers but you look for new questions to answer. Here is a recent article on Seeking Alpha on the NG space itself and its bullish thoughts on the fundamental basis for NG going forward.
Here are my favorite NG stocks to keep an eye on going forward.
XTO has got some good quarterly revenue growth at 32.9%. On Feb. 12th, XTO reported earnings of $0.96 vs. consensus of $0.92 and revenues of $1.59 billion vs. consensus of $1.54 billion. It also reported acquiring more than 35 million cubic feet of natural gas per day to the company’s already growing production base for $1 billion. Cramer like XTO and Fast Money likes XTO....MORE
The New York Times leads its front page with an interesting report that inflation is causing (um, more) turmoil in the Middle East. We’ve read all the stories about how our gas money is paying for a new wave of opulence in the region—as well as the purchasing of big stakes of our Wall Street titans—the Times says the downside is considerable.
Oil price increases have hurt the poor and middle class. Jordan eliminated its gas-price subsidies this month, sending the cost of fuel—along with staples like eggs and potatoes—up nearly double or more.
Many of the region’s economies peg their currencies to the dollar, which has tumbled, spurring inflation for economies that depend on imports for much of their good and services.
In Bahrain and the United Arab Emirates, inflation is in the double digits, and foreign workers, who constitute a vast majority of the work force, have gone on strike in recent months because of the declining purchasing power of the money they send home. The workers are paid in currencies that are pegged to the dollar, and the value of their salaries—translated into Indian rupees and other currencies&mdsah;has dropped significantly.
The Times says rich countries are making up for the increased inflation by jacking up salaries—which in turn worsens the inflation. The United Arab Emirates gave its government workers 70 percent raises this month, while Omanis had to settle for 43 percent. Poor, Omanis!
All this is causing some messy social consequences. Yemen, Morocco, and Lebanon have seen riots over food prices, while Jordan has seen demonstrations....