Tuesday Morning Reads
- Not Unless They Get Cheaper.
- China’s New Oil Giants
- Why Xi Jinping Waited Years
- Outgunned Crypto Lobbyists
- Biden’s Expansive Economic Agenda
- Consumers Are On the Lookout
- Millions of Americans Are Unemploye
- U.S. Small Business Optimism Drops
- SoftBank Posts Lower Profit
- One of Its Worst Debtors
- Canadian Pacific Sweetens Offer
- AMC Reaches Deal
- AMC Theaters to Accept Bitcoin
- Why A Secretive Chinese Billionaire...
Some changes are already locked in, with Greenland's land-ice sheet expected to keep melting, leading to rising sea levels. Heat waves that occurred once in 50 years are now happening every 10 years. Currently, the Dixie Fire in California is now the second-largest wildfire in the state's history and could take weeks to contain. And the harshest heat wave in 30 years is leading to damaging wildfires across Greece and Italy.
There's a general acknowledgment on Wall Street that moving away from fossil fuels, the biggest cause of carbon emissions, will happen. Just look at the performance of Tesla and the EV sector, but environmentally friendly investing hasn't paid off so far in 2021.
Green stocks in the red: Bloomberg's Cormac Mullen notes today the weak performance of the S&P Global Clean Energy Index (NASDAQ:ICLN), which is down nearly 18% year to date and more than 30% since its peak in early January as President Joe Biden's inauguration approached. The MSCI World Index is up nearly 16% year to date and up more than 13% from ICLN's peak.
Among other clean energy ETFs, the Invesco MSCI Sustainable Future ETF (NYSEARCA:ERTH) is down more than 10% year to date and nearly 20% off from the post-Biden election peak. The VanEck Vectors Low Carbon Energy ETF (NYSEARCA:SMOG) and First Trust NASDAQ Clean Edge Green Energy Index ETF (NASDAQ:QCLN) are down more than 2% year to date and about 16% off January highs.
Wall Street opportunities: Biden's recent executive order for 50% of cars to be EV by 2030 has received the support of Detroit. And UBS notes that more than 50 large investors with $14T in investments have come together to call on companies to outline "net zero" commitments for 2050.
"The U.S. SEC may propose by year-end that listed firms report climate data and will also look at the criteria for investment funds claiming the sustainability or ESG label," UBS says. UBS says it sees carbon-neutral opportunities in autos, auto parts, batteries, electric and electronic components and green tech.
"With the global race to win the EV market well underway, we expect growth to be exponential rather than linear," it adds. "By 2025, we think around 25% of new cars may be electrified. By 2030, the share may reach 60–70%."
Morgan Stanley says the bipartisan infrastructure bill "could set the stage for a potentially more substantive reconciliation bill - the Administration's first opportunity for meaningful climate legislation."
Yesterday it refreshed its "Decarbonization Playbook" of stocks rated Overweight or Equal Weight with "more direct exposure to legislative support," analyst Devin McDermott writes. Those stocks and themes include: "Air Products (NYSE:APD) (OW; hydrogen & carbon capture), Archer Daniels Midland (NYSE:ADM) (EW; carbon capture), Bloom Energy (NYSE:BE) (EW; hydrogen and potentially carbon capture), CF Industries (NYSE:CF) (EW; green/blue ammonia/hydrogen & carbon capture), Exelon (NASDAQ:EXC) (OW; nuclear), Exxon (NYSE:XOM) & Chevron (NYSE:CVX) (OW; carbon capture, renewable fuels and/or hydrogen), Linde (NYSE:LIN) (OW; hydrogen & carbon capture), New Fortress Energy (NASDAQ:NFE) (OW; hydrogen), NextDecade (NASDAQ:NEXT) (OW; carbon capture), Nutrien (NYSE:NTR) (EW; green/blue ammonia/hydrogen & carbon capture), Occidental Petroleum (NYSE:OXY) (OW; carbon capture), Plug Power (NASDAQ:PLUG) (EW; hydrogen), Sunrun (NASDAQ:RUN) (OW; solar), and Tesla (NASDAQ:TSLA)(OW; EVs)."
CEO Adam Aron broke a bit of news on the earnings call by disclosing that after the ArcLight and Pacific shutdowns, AMC is executing leases to add two of Los Angeles' highest-grossing theaters to its stable. "It's high time for AMC to start playing on offense again," Aron said. And it's not just two new theaters, it might be 10, he says. There are six new pickups under lease or letter of intent, and they're in advanced talks to add four more.
Aron had started by paying tribute and playing to the "AMC Army" of retail holders, offering a "warm welcome" to the thousands of stockholders listening, and the many more who would listen to replays. And citing all the ideas he's gotten from the retail investor army, Aron says by year-end AMC will have the information technology systems in place to accept bitcoin as payment for tickets and concessions (if bought online) at all U.S. theaters. And since they're doing that, he says they're adding the ability to accept Apple Pay and Google Pay. (86 comments)
Victoria's Secret (NYSE:VSCO) jumped 20% after catching another bull rating from Wall Street. J.P. Morgan is constructive on the new standalone retail stock with an Overweight rating and December 2022 price target of $100.
The firm points to a compelling entry point on what it notes is the top market share player in U.S. lingerie with +25% share across ~65% of its revenue base (women’s mass fragrance, nightwear, and underwear). J.P. Morgan also points to a +$300M category recapture opportunity in women’s swimwear. (4 comments)
As the FDA evaluates the option of introducing COVID-19 booster shots, Moderna (NASDAQ:MRNA) is continuing its upward trend, with a 17% gain yesterday, its biggest one-day gain since November 2020.
In late November, Moderna shares climbed in reaction to the company’s announcement of filing for the Emergency Use Authorization (EUA) for the COVID-19 vaccine in the U.S.
Highlighting the investor interest in COVID-19 vaccine makers, CNBC contributor Stephen Weiss noted the support for booster shots extended by the White House chief medical adviser, Dr. Anthony Fauci. (58 comments)
Bayer (OTCPK:BAYRY) has lost another appeal of a jury verdict finding its Roundup weedkiller causes cancer, its third-straight appeals court defeat among the cases that have gone to trial.
A California state court of appeals today refused to overturn the 2019 jury verdict that awarded more than $2B to a couple who claimed they were sick after using Roundup for more than 30 years; the court also left intact the trial judge's decision to reduce the award to $86.7M.
Bayer recently said it set aside an additional $4.5B to handle Roundup lawsuits, bringing its reserves for the cases to more than $16B. (37 comments)
Charlie Bell, a 23-year veteran of Amazon Web Services (NASDAQ:AMZN), is said to be leaving the company, according to a report from The Information. Bell's departure was confirmed by Amazon, the report said, though the company declined to comment further.
Bell oversaw the development of AWS services, from computing to storage to databases, The Information said. Bell, a senior vice president, reported directly to AWS CEO Adam Selipsky. (9 comments)
In Asia, Japan +0.24%. Hong Kong +1.23%. China +1.01%. India +0.1%.
In Europe, at midday, London -0.1%. Paris +0.03%. Frankfurt +0.06%.
Futures at 6:20, Dow -0.03%. S&P -0.01%. Nasdaq +0.07%. Crude +2.1% to $67.88. Gold +0.3% to $1731.85. Bitcoin +2.6% to $46031.
Ten-year Treasury Yield +2 bps 1.319%
Today's Economic Calendar