- EPA proposes unprecedented power-plant revamp
- Wait, there is a precedent! (And it’s dreadful)
- Team Biden’s strong signal to energy companies
- NVDA approaches ultra-unicorn status
- Zach Scheidt: Dividend stocks play catch-up… The IRS gives Taibbi a lump of coal… Readers on China, Victory at Sea and more!
“Efforts to slash greenhouse gas emissions from power plants used to be overwhelmingly about coal. Now, regulators are turning a lot more attention to natural gas,” says an article at Politico.
Earlier this month, in fact, the EPA — with Team Biden’s backing — issued a proposal requiring natural gas and coal-burning power plants to eliminate an estimated 617 million metric tons of carbon dioxide by 2042.
Citing the EPA’s proposal, the impact of improved air quality would, theoretically, eradicate 300,000 cases of asthma, eliminate 66,000 employee sick days and prevent 1,300 premature deaths. In 2030 alone.
“Through 2042, EPA estimates the net climate and health benefits of the standards on new gas and existing coal-fired power plants are up to $85 billion,” says the EPA press release. As for consumers, the supposed impact on electric bills would be “negligible.”
(And if you detected the word “new” in the press release above… good eye. At the last minute, the EPA changed its proposal to include existing gas power plants, too.)
How does the EPA propose to pull off this lifesaving, money-generating marvel that will revolutionize U.S. power plants?
“These new standards would require power plants to fundamentally change operations either by installing carbon capture and storage technology [CCS], which takes carbon dioxide produced by the burning of fossil fuels out of the air and places it back into the earth, or by abandoning fossil fuels in favor of renewable energy sources,” says CBS News.
There’s just one minor detail: “I just think the biggest… problem they have is there is not a commercial-scale gas plant anywhere in the world that uses CCS,” says former EPA “air chief” Jeff Holmstead. (Emphasis ours)
Like I said, pfft, minor.
Instead, there’s a really dire precedent…
In 2020, “the first and only commercial power plant in the U.S.to utilize carbon capture technologies” — the Petra Nova CCS facility — “shut down outside of Houston,” CBS says.
The $1 billion project was dogged by mechanical problems, resulting in 367 days of power outages since it started in 2017 — imagine, more than one year of outages! Adding insult to injury, the plant even failed to hit its emissions-reducing target.
But the Houston-area plant was coal-powered… Perhaps CCS technology is better suited for natural gas?
“Natural gas combustion produces a less concentrated stream of CO2 than coal combustion,” E&E News says. “Some experts say that raises technological challenges… in retrofitting gas.”
Nevertheless, this entire discussion really puts the cart before the horse…
“President Biden’s two predecessors both had power industry regulations struck down by the courts,” CBS notes.
“Former President Donald Trump’s proposal to slightly cut plant emissions was overruled by a federal appellate court in 2021, and in 2016, the Supreme Court granted a stay on Barack Obama’s Clean Power Plan.”
More recently? “The Supreme Court ruled in 2022 that the [EPA] lacked the authority to regulate the entire energy industry at once, but the Biden administration is taking another swing at it anyway,” says Reason.
Now, attorney Matt Leopold, who served as EPA general counsel in the Trump administration, “expressed skepticism that a standard based on CCS would pass legal muster,” E&E News reports.
“I think an important goal of EPA here is to try to send a market signal,” says Mr. Leopold — and this is key.
“Because utilities, in particular, do long-range planning, and they make investments for decades at a time,” he continues…
“And EPA is probably attempting to drive those investments toward renewables and away from fossil fuels altogether with this rule.”
To summarize, then, even though carbon-capturing technology is unproven at best… and a “colossal failure” at worst… and even though courts will probably strike down new EPA rules… Team Biden is sending a strong signal to energy companies. Conform to ESG standards — or else.
If you want to learn more about the forces at play, stay tuned tomorrow for a major energy exposé from Jim Rickards… that will have everyone talking.
Chipmaker Nvidia’s quarterly numbers plus an AI halo are powering the Nasdaq higher today — the tech-loving index is up 1.7% to 12,690.
In terms of NVDA’s market cap, the company is now in exclusive territory, approaching ultra-unicorn status alongside companies including Apple, Microsoft, Google and Amazon.
“NVDA is milking AI for all its worth,” remarks Paradigm’s market analyst Greg Guenthner, “projecting huge sales of chips to meet demand for the coming boom.
“As for NVDA… let’s just say I’ve never seen an after-hours move this big from such a prominent stock. Sure, you’ll sometimes see microcaps pop double digits on news or earnings. But NVDA opened up approximately 30% this morning after reporting earnings last night.
“Keep in mind, NVDA has already doubled this year,” Greg notes. “Now, we’re seeing new highs and the company’s market cap nearing the $1 trillion mark. Incredible stuff.”
As for the rest of the market, the Dow’s treading water at 32,800 while the S&P 500 is up 0.80% to 4,145.
The commodities complex? Oil is getting crushed today — down 3.5% — to $71.73 for a barrel of WTI. The same is true for gold, down 1% to $1,944.90 per ounce. Silver, meanwhile, has been cut down to size, stuck under $22.
Proving what’s good for the Nasdaq is (generally) good for the crypto market, both Bitcoin and Ethereum are in the green at $26,285 and $1,800 respectively.
And for more on the stock market’s breadth and large-cap stocks (like NVDA), read on…
“Technically speaking, the stock market is up so far this year… But it doesn’t feel that way to most investors,” says Paradigm’s income-investing ace Zach Scheidt.
“Almost all of the market’s gains have come from a handful of the largest companies on Wall Street. I’m talking about names you’ll certainly recognize like Apple, Microsoft, Alphabet and Meta.
“These mega-tech companies have a huge influence on market indexes like the S&P 500 or Nasdaq-100,” says Zach. “But smaller companies barely move the needle for large-cap indexes.
“The good news is that as these stocks play catch-up to the rest of the market, you have an opportunity to lock in some huge profits.
“Take a look at the chart below,” he continues. “It shows the broad S&P 500’s performance this year (purple line) and the performance of a basket of dividend stocks (orange line).
Source: Rich Retirement Letter
“Unfortunately, dividend stocks are trailing the broad market by more than 16 percentage points so far in 2023. And we’re not even halfway through the year!
“While this is certainly disappointing, the chart also has a silver lining…
“That doesn’t mean there is anything wrong with the companies that pay dividends,” Zach emphasizes.
“Many of these companies are healthier than they were at the beginning of the year, thanks to growing profits and higher cash balances.
“Even though stock prices have been pulling back,” he says, “you’re getting more for your money in the long run. So as we head into the summer, I’m expecting these dividend stocks to rebound and turn in a better performance than the rest of the market.”
Back to that orange line on the chart above: “It shows the total return of the iShares Select Dividend ETF (DVY).” says Zach. This is a fund that invests in many of the best American dividend-paying companies.
“I recently pulled a list of the top stocks included in this fund and started researching which stocks make the most sense for you.
“First, here’s a screenshot of the top holdings in DVY…
Source: RadarScreen, Rich Retirement Letter
Zach cites a few standouts on this list…
- “Chevron Corp. (CVX) pays a 3.9% yield. The stock pulled back alongside weak crude oil prices this year. But oil is finding support and CVX has plenty of cash and profits to continue growing its dividend over time
- Philip Morris Intl. (PM) pays a 5.5% yield. The company is diversifying away from its traditional cigarette business and is a natural beneficiary of the falling U.S. dollar
- Newmont Mining (NEM) pays a 3.7% yield. The gold miner will book larger profits thanks to higher gold prices, leaving plenty of room for larger dividends in the future,” Zach says.
“Many other stocks on this list also look very attractive, especially in today’s market where dividend stocks have been left behind,” he adds. “And I’m looking forward to a very profitable period as these stocks play catch-up to the rest of the market.”
“When the IRS checks to see if you have a carry permit and visits your home, at a time when they owe you money, it’s time to worry,” says independent journalist Matt Taibbi.
We’ve been providing updates on the “Twitter Files” saga since the fall of 2022 when Elon Musk entrusted a cache of Twitter’s secret documents to Mr. Taibbi and other journalists.
In early December, Taibbi published the first report, exposing Twitter’s incestuous relationship with the federal government, particularly U.S. intelligence. For his trouble, he was branded a conspiracy theorist and, if I recall correctly, a hack journalist.
Appropriately enough, Taibbi testified before a newly formed House Select Subcommittee on the Weaponization of the Federal Government on March 9 this year.
Part and parcel with Taibbi’s public tar-and-feathering, he arrived at his New Jersey home — this happened before Taibbi testified — to find a note on his door. From the IRS. “The initial note… instructed me not to call for four days, a tactic I later heard was sometimes used by field agents to rattle taxpayers,” Taibbi says.
When he did reach the IRS agent, Taibbi was told there was a discrepancy with his 2018 tax return, but his reputable New York accountant had the receipts, of course. No discrepancies.
“The committee” — under the leadership of U.S. Congressman Jim Jordan (R-OH) — “was good enough to send a letter to the IRS on March 27 asking what was going on,” says Taibbi, “and answers that came back were not reassuring.”
The highlighted portion reveals that the IRS opened an investigation on Taibbi’s tax return on Christmas Eve 2022.
“What possible legitimate explanation could there be for someone at the IRS logging on, on the afternoon of Christmas Eve, on a Saturday, to assign a case over a three-year-old matter, involving a taxpayer owed a substantial return? Was the state in a hurry to square its books with me? What supervisor was overcome with that itch on that particular day, and why?”
Mr. Taibbi remembers exactly what he was doing Christmas Eve last year: Hitting send on what he calls the “most explosive” episode of the “Twitter Files.”
Coincidence? For a reporter who spent six years in Russia, Taibbi’s cognitive dissonance must be shattering.
“I remember in the late 1950s watching Victory at Sea, Prudential’s The Twentieth Century and even the occasional Army training film (presumably inserted on slow Saturday afternoons to fill space),” says a longtime reader, referencing Dave’s masterful issue on Tuesday.
“Back then there were also commercial messages for Radio Free Europe and CARE. The latter featured scenes of bombed out Europeans, which made me think that Europe was some exotic third-world region.”
Another reader says: “These same a**holes who pushed all the ‘China good’ crap around are doing their about-face now because they need a scapegoat, and they hope everyone is stupid enough to think China is to blame for our troubles. Sadly, I’m sure many will fall for it.”
Probably because “legacy media keeps churning out the self-congratulatory propaganda while squelching truth and transparency as best they can — 100% to blame for the decaying state we’ve been in for some time.
“Sorry for the rant; gotta get it out from time to time. As always, thank you all for fighting the good fight and being one of few lights in the darkness.”
Finally, a longtime friend of The 5 writes: “If I knew how, I would nominate [Tuesday’s] edition for a Pulitzer. Well done, Dave!”
Thank you, readers, and take care!
The 5 Min. Forecast