The End Is Near!

A "Temporary" Century

Milton Friedman once correctly said that there is "nothing so permanent as a temporary government program."

The phrase defines the American energy sector.

Friedman uttered those words with the nation's agriculture sector in mind. And he's been proven right. It was, after all, nearly a century ago that the government passed the Agricultural Adjustment Act. It was to be a short-term move to help balance supply and demand during the Great Depression.

Today, the sector relies on more subsidies than ever... and much of the free money is aimed at turning our food into energy.

Our beloved contributor and the world's most famous farmer, Joel Salatin, has made a career (and movies) out of fighting such horrendous ideas.

By almost all measures, America's food would be cheaper and her citizens' tax burdens lighter without this market-disrupting welfare. But as Friedman and so many others have proven, once a subsidy starts, it never stops.

That's why we're warning folks about cheering the headlines in the green energy space this week.

First Solar (FSLR) hit the news with word that it is spending $1.2 billion to boost its U.S. solar panel manufacturing capacity. Within 36 months, it says, it will be able to build a new solar array every 1.6 seconds.

"This expansion is an important step towards achieving self-sufficiency and solar technology which in turn supports America's clean energy security ambitions, its deployment of solar at scale, and its ability to lead with innovation," CEO Mark Widmar told the press.

It's a farce.

Waste

Never mind the obvious inflationary implications of subsidizing this spending (at the exact time the Fed is working overtime to slow precisely this sort of growth). It's the fact that this free-money manipulation will be permanent that should have us concerned.

Few folks realize that oil - as hated and picked-apart by Washington's vote-addicted mongrels as any sector - is one of the most heavily subsidized industries on the planet.

A recent study by the Environmental and Energy Study Institute found that fossil fuels (despite efforts to eradicate the sector) still get $20 billion worth of subsidies each year. Worse... it found the number continues to grow.

Around the globe, some half a trillion dollars is spent propping up oh-so-evil fossil fuels each year.

And yet, folks scratch their heads in disbelief when the system melts down every few years and huge regions of the world go cold or can't afford to fuel up.

One study we found this morning shows that Americans would be paying more than $12.50 for a gallon of gas if it weren't for Uncle Sam's deep pockets.

Oy.

To be paying a fraction of that is not healthy. And surely the government would love to stop promoting the use of artificially cheap fuel. But it can't. The nation would fall flat on its face without it.

And yet... we're doing the same dumb thing with our latest "fuel" of choice.

Think about this...

The End Is Near!

How often have you heard talks about ending solar panel incentives? Going all the way back to the George W. Bush administration, we can remember the energy industry trying to rush us into panels. "Buy now," it said, "before the tax credits go away."

Guess what... they haven't gone away yet.

In fact, they're bigger and fiercer than ever.

The "Inflation Reduction Act" (we can't type it with a straight face) sets aside $40 billion for the sector.

In all... it's set to add a whopping $3 billion in cash to First Solar's balance sheet over the next 36 months.

That's $3 billion of taxpayer money going straight to propping up an industry that could just as easily stand on its own... if the government let it.

It's no wonder shares of the company have gone up an inflation-stirring 60% in the last month.

Savvy investors who know how the game is played are about to have some very good times with all of this.

Washington is handing out a lot of free money.

And as history shows... it won't be going away anytime soon.

Be well,

Andy Synder

California Is Destroying Its Own Economy. Now It Wants To Destroy Yours

California has a long history of bad policies that have contributed to destroying its economy. California's mismanagement of forests has led to dense growth of the underbrush, which turns small fires into infernos that cost lives and destroy billions of dollars of property. Their decision not to enforce criminal laws in Los Angeles and San Francisco has led to out-of-control crime waves that are forcing the richest and most talented residents to leave. Their over-regulation and sky-high tax rates have punished small and medium-sized businesses with job losses as business owners also headed for Texas, Florida, Arizona or somewhere else with more reasonable policies. Now California has outdone itself. As reported in this article, California is putting in place its plan to ban sales of new gasoline-powered cars by 2035. Of course, there's no good reason for such a law. There is no climate change emergency. There is no existential climate crisis as the alarmists claim. There may have been very slight warming from 1995 to 2005 (which is perfectly normal) and there is no evidence either that CO₂ is the principal cause, or that human activity is a material factor. Climate change itself happens all the time and had happened long before the invention of the automobile. The Medieval Warm Period from about 950 AD to 1250 AD featured unusually warm temperatures in the North Atlantic region. This was the period when the Vikings roamed as far as Canada and farms were thriving in Greenland in areas now covered in ice. The Little Ice Age, which reached an intense phase from 1650 to 1725, featured frozen canals in Holland; one reason the Dutch are such competitive speed skaters today. In London, you could cross the frozen Thames River on ice, and winter carnivals were held on the frozen river. Both of these episodes occurred centuries before the invention of the automobile. If California forces all new car sales to be electric vehicles (EVs), you can expect permanent energy shortages there as the power grid attempts to deal with increased electricity demand to charge batteries on the EVs. You can also expect hours-long waits at the charging stations as is already the case today in China. The California ban on internal combustion engines will cause chaos and is best understood as a political stunt by Governor Gavin Newsome as he prepares to run for President in 2024 against the mentally impaired Joe Biden. Newsome's ideological blindness and quest for power will ruin our largest and most beautiful state and probably ruin the entire country in the process. Let's hope that the myths and fallacies of the climate alarmists are revealed and understood by Americans before this law comes into force. Let's also hope that Gavin Newsome hits a brick wall of voter rejection once he does try to run for office outside of La La Land.

Jim Richards

Biden’s Student Loan Giveaway Will Fuel Inflation Across The Board

You know by now that Joe Biden has made the decision to forgive $10,000 or $20,000 of student loan debt per individual borrower, depending on the particular type of student loan involved. The total costs of this loan forgiveness have been lied about by the White House. Officially, the White House says the cost would be $240 billion spread over ten years. But independent estimates by experts put the cost between $400 billion and $700 billion, depending on the analysis. If we take the middle of that range, a total cost of $550 billion seems like a reasonable estimate. This article contains many more details on this half-trillion-dollar giveaway. There has been a blizzard of commentary about the student loan giveaway. Most of it has asked about people who took out student loans and repaid them in full (that group includes me). Other questions arose about those who paid full tuition without taking out any student loans and obviously made financial sacrifices to do so. Others did not go to college and went straight to work and paid taxes. What about their sacrifices? Still others paid for college by serving in the military for four-year enlistments (or longer) and were able to get tuition assistance because of their military services. All those groups and others made sacrifices either by paying off loans, saving so they didn't need loans, going straight to work and paying taxes or serving in the military. What about them? Why are they now being asked to pay even more taxes to cover the costs of loan forgiveness for doctors, lawyers, and politicians who took out student loans, make good money, and now don't want to pay it back? But there's something far worse in this hare-brained student loan scheme that is simple unfairness to most Americans. The forgiveness itself is like a dollar-for-dollar wealth transfer to those whose loans are being forgiven. Some of them are already planning vacations or big-ticket purchases with their savings. The Biden student loan plan is like another $550 billion of helicopter money dumped into an economy after Biden's $1.9 trillion in COVID relief, $900 billion in new infrastructure spending, and $800 billion in his Green New Scam legislation just passed. That adds up to over $4.1 trillion in new spending on top of $1 trillion baseline budget deficits in just two years. We already know what happened from the earlier spending. We got a recession and the highest inflation in over 40 years. Expect even weaker growth and more inflation as a result of this student loan fiasco.

Jim Richards

Baron’s Says Brace for a Bad September

The opening paragraph in September is Usually a Bad Month for Stocks. This One Could be Ugly is as follows:

The stock market's worst month—September—is approaching. This one could be particularly bad.

Despite the fearful headline, the following paragraph states that the S&P has only averaged a 1% loss in September going back to 1928. The graph below also shows that September tends to be challenging but not "ugly." To help justify using the word "ugly," the author offers the following reasons to be concerned:

• "The stock market has already ripped higher recently, with both indexes up double digits in percentage terms since their lowest levels of the year in mid-June."
• The probably of the Fed hiking by .75% at its September meeting
• Bond yields moving higher
• Oil prices perking back up

Despite the author's concerns, the chart below shows that the market's behavior in midterm election years is very different than in non-midterm election years. Based on the average for midterm years, we should expect a weak start to September and a strong run higher for the remainder of the year.

Lance Roberts

Powell has ruined the party!

 The market was hit hard by the Hole, the mouth of Powell today! Powell is notorious to drive down the market when he speaks and he is not disappointing those who know him well like me. Actually I talked about this before:

Powell did it again!

Well, as I said, Powell did what he does best again: spooking investors!

The market had been in a good mood all the time since the opening today, setting a stage for "Sell the rumor, buy the news". until Powell started to talk in the afternoon. Apparently investors loved what they saw in the meeting announcement but hated Powell's badmouth. Anyway, Powell is famous for that: not good at communications

Of course for trading purposes, Powell's badmouth induced market crash is not a bad thing at all as it has created a great trading opportunity for those savvy traders. I'm anxiously looking for another leg down next Monday to shake out more FOMOs who chased the market in the past few days before I strike for a trade to the upside. 

See below some notes I sent to my Family this week!