Laughing Down the Road to Climate Change Hell

How to pad your portfolio in the age of climate hysteria [Morning Reckoning] February 06, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Laughing Down the Road to Climate Change Hell Baltimore, Maryland February 06, 2024 [Greg Guenthner] GREG GUENTHNER Good Morning Reader, I didn’t find out about my county’s new plastic bag ban until I was left standing dumbfounded with an arm full of groceries at a crowded (and bagless) self checkout station. An annoyed clerk finally walked by and handed me a paper bag, charged me five cents, and sent me on my way. Thanks to the bag ban, I have a new grocery store routine. Every last-minute trip to pick up bread, milk, and bananas now involves me forgetting to return my reusable bags back in my car. I won’t remember this detail until I’m halfway through my shopping, leaving me digging into the pile of brown paper bags at checkout, paying a few extra cents, and swearing I’ll remember those pesky bags on the next trip. For the record, I don’t mind paying an extra dime every time I go to the store. A bag of chips that used to cost a buck goes for $4.99 these days, so a couple of brown paper bags aren’t going to bust my grocery budget. But I did have the distinct feeling that the plastic bag ban wasn’t actually saving anything – not the planet, not sea turtles, and certainly not me. And I didn’t have to dig very deep to confirm my suspicions. A quick search led me to a report from the Freedonia Group examining the effects of a similar single-use plastic bag ban enacted in New Jersey in 2022. The report cites that the ban worked as intended, curbing the use of plastic grocery bags 60% statewide. Of course, this doesn’t tell the full story. The issue is consumers instead started using those thick, reusable polypropylene bags. And – you guessed it – these bags require a lot more plastic (and energy) to make and aren’t even recyclable. Even worse, the report finds most of these reusable bags are only used two to three times on average before they end up in a landfill or lost somewhere in your house. I can relate. My family owns a polypropylene bag that we’ve stuffed with at least two dozen other reusable bags we’ve accumulated over the years. It sits in a closet, and occasionally gets rifled through to find “the big bag” used to gather overdue library books. In the end, unused piles of those non-recyclable bags and forgetful consumers like me are negating any intended positive effects of the plastic bag ban. The final tally for post-ban New Jersey: greenhouse gas emissions increased 500%. Mission accomplished! [Attention! Before You Read Any Further…]( Hey, it’s James. Before you read any further in today’s issue, an urgent situation needs your immediate attention. If you don’t plan on claiming this upgrade to your Altucher’s Investment Network subscription, you’re missing out on a huge opportunity. Right now is your chance to grab one of the biggest (and most valuable) upgrades our company has ever made to a newsletter. I’m taking Altucher’s Investment Network to an entirely new level and I’d hate to see you left behind. [To see how to claim your upgrade, just click here now.]( Once you’re done with that, read on to see today’s issue… [LEARN MORE]( Cruising for the Climate Even if ban-happy jurisdictions ran the numbers (which they won’t), I doubt the powers-that-be would reverse course. Sucking on soggy paper straws, cutting up six-pack rings, and toting around reusable sacks are the perfect low-effort “solutions” for the social media scrambled minds of the performative climate change generation. Carry your reusable bags at all times. Throw paint at an office building. Sit in the middle of the street. The road to climate change hell is paved with good intentions. The last decade has also brought about a profound shift in the way the media reports on climate issues, which has also managed to leak into the finance world. I won’t even bother to dive into ESG today – that’s a whole other can of worms. But we do need to discuss how the media is reframing every topic as a climate change concern. Don’t like a product or service? Just complain about how it’s a threat to the environment. You can find a perfect example of this phenomenon in the criticisms of Royal Caribbean's new mega cruise ship, Icon of the Seas. The world’s largest cruise ship cost $2 billion and just launched its maiden voyage packed with 7,600 passengers who are currently tearing across the big boat’s six waterslides, seven pools, and (I assume) more than a few seafood buffets. But the launch “sparked renewed concerns about the environmental impact of cruise tourism,” frets a CNBC piece. The boat runs on liquified natural gas, which burns more cleanly than conventional marine fuels. The issue with LNG is it contains high levels of methane, which is what has the climate alarmists up in arms. I’m not sure what anyone can do to please these people. Do they want folks cruising in older boats? No boats at all? Perhaps we could fly all 7,600 passengers to Hawaii instead? Would that produce a smaller carbon footprint? I’m not even going to attempt to crunch those numbers. Thankfully, I’ve found a hidden benefit to the hysteria… Building a “Green” Portfolio Charts don’t lie: The climate complainers are becoming extremely proficient at spotting strong investment candidates. The louder they scream about a company’s environmental issues, the stronger the trend. Just look at Royal Caribbean (RCL) stock: RCL shares have gained more than 200% off the October 2022 lows, compared to a gain of 37% in the S&P 500. That’s some serious climate change alpha. This little trick doesn’t just work on party boats. If we mosey on over the energy space, you’ll see the dirty coal stocks are beginning to firm up as they approach breakout levels. Arch Resources (ARCH) has posted a nice little run, gaining almost 30% over the last six months. I doubt the clean energy folks are too happy about that! But what about some of the alternative energy names? Will the climate complaint trick work in reverse? Let’s check in on solar. Most of these stocks remain well off their 2021 highs. In fact, the Invesco Solar ETF (TAN) has dropped almost 50% over the past 12 months. Score another point for “team dirty”. If you’re looking to find strong trends in this market, just follow the loudest climate change gripes. It’s the best way to help your portfolio go green. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [Urgent Publisher Warning]( Hi, I’m Matt Insley. I’m the Publisher at Paradigm Press. Today, I have [bad news to share]( regarding the future of Jim Rickard’s newsletter. [>> Click here now for my announcement.]( [LEARN MORE]( In Case You Missed It… Europe’s Submerging Economies Sean Ring, Editor [Sean Ring] SEAN RING Good Morning Reader, “India may be an emerging economy, but the UK is a submerging economy!” shrieked my friend’s father. Only a few years ago, my friend G brought his parents to the UK from his native Chennai. His objective was to ensure they had the best medical care money could buy. They could live in an exciting city like London, stay healthy, and live a long life close to family. A few weeks ago, G sent them back to India because England’s medical service appalled them! Yes, G’s parents would rather have doctors in India look after them than stare in awe at the wonders of European socialized medicine. (Do mention that the next time your idiot lefty buddies say how excellent Europe’s healthcare is.) How It Started G and I graduated from London Business School in 2002. He was immediately offered a role at Goldman Sachs, eventually leading to partnership, pay, and perks. And my goodness, did he succeed! I regret to report that you may be much richer if G were writing this column. I met G’s father in Cape Town when G got us tickets to the 2010 World Cup. Ah, the perks of being friends with a Goldman partner! Germany beat Messi and Argentina at Green Point Stadium (now renamed Cape Town Stadium). But the trip's highlight was a helicopter ride over the Twelve Apostles to where the Atlantic and Indian Oceans meet. I also recall a fantastic meal at an Ethiopian restaurant, and I wondered, “What kind of cuisine could the benefactors of the ‘We Are The World’ fundraiser possibly have?” G’s father was as charming and intelligent as G, and I immensely enjoyed their company. To this day, it’s the only time I’ve been to southern Africa. I can’t recall if G gave me the idea of importing my parents to Italy, following his example. But I’m sure hearing his intention made an impact. Part of me laughed when I heard the news of G’s parents’ departure, as my father, philosopher-truck driver John Ring, is having a hell of a time adjusting to Italy. For a man who constantly railed against government stupidity, the old truck driver sounds more like Lee Iacocca than Ron Paul. But I didn’t bring my parents here for the healthcare. I got them here to spend time with their grandson, eat the best red meat, and drink the best red wine Gaia’s green earth offers. Oh, and to remove them far from the dreaded Tex-Mex border (not that it’s much of a border). The Land of Lack But let’s face it: Europe is in big trouble. It self-strangulates economically through excessive regulation. Resource-wise, European dirt is practically worthless. And with friends like Joke Biden, who needs enemies? Didn’t you hear? Thanks to Biden trying to punish Texas for its unabashedly disobedient razor wire laying, the muddleheaded POTUS announced a temporary pause on pending decisions on exports of Liquefied Natural Gas (LNG) to non-FTA [Free Trade Agreement] countries until the Department of Energy can update the underlying analyses for authorizations. Quoi? In plain English, President Potatohead used the green lobby to shield himself from looking petty and spiteful in his treatment of Texans… but he really screwed Europe. Yup, Victoria Nuland finally got her chance to “F*ck the EU.” That’s because Europe has depended on US LNG since “parties unknown” (wink, wink) blew up the Nordstream pipelines. This act of terrorism on civilian infrastructure deprived Europeans of cheap, plentiful Russian pipelined gas in the name of solidarity with Ukraine. Getting into a brawl over Ukraine was stupid for the US. Backing the US is economic suicide for Europe. As Henry Kissinger said before he entered Inferno Eternal, “To be an enemy of the US can be dangerous. But to be a friend is fatal.” Hence, we do not have emerging economies in Europe. As G’s father said, we have “submerging” economies. Eurotrash is Green “America innovates. China replicates. Europe regulates.” It’s not just the US’s fault, but the US has accelerated Europe's economic seppuku. Instead of talking Europeans off the ledge, the US told them to jump. Let’s look at a few examples. Germany Germany, once a global manufacturing powerhouse, has been experiencing a gradual deindustrialization trend in recent years. This decline is attributed to a confluence of factors. Rising energy costs: Germany's reliance on fossil fuels, particularly Russian gas, makes it vulnerable to energy price fluctuations. However, that reliance was not harmful as long as the US didn’t antagonize Russia. The war in Ukraine and the subsequent sanctions have led to higher energy costs for businesses. Competitive pressures: Global manufacturing has become increasingly competitive, with emerging economies like China offering lower labor costs and attractive investment incentives. German companies have faced pressure to relocate production to these lower-cost regions. They’ve also started moving to the US to escape Europe’s insane energy costs and taxes. Digitization and automation: The rise of automation and technological advancements have transformed many industries, leading to job losses in traditional manufacturing sectors. Changing consumer preferences: The demand for goods has shifted towards services and experiences, reducing the need for some traditional manufacturing products. United Kingdom I’d pull the lever for Brexit a thousand times over again. But I’ll never vote for the Tory morons who are running the UK into the ground. Globalization: The rise of globalization has made it easier for businesses to source goods from cheaper locations, further putting pressure on UK manufacturers. Financialization: The UK's financial sector has grown significantly in recent decades, drawing investment away from manufacturing. The City of London (financial center) is between 8% and 16% of the UK’s economy. Changing consumer preferences: As in France, the demand for goods has shifted towards services and experiences. France France is an unbelievably productive country when it feels like working, but it hasn’t fared well in modernity. Global economic shifts: The rise of new manufacturing powerhouses in Asia, particularly China, has pressured French manufacturers to compete on price and quality. Labor costs: France's relatively high labor costs compared to other European countries make it less attractive for businesses to invest in manufacturing. Government policies: Some government policies, such as high taxes and strict regulations, have been seen as hindering the growth of French manufacturing. Changing consumer preferences: The demand for goods has shifted towards services and experiences, reducing the need for some traditional manufacturing products. Wrap Up All three of these countries are also run by green loonies who’ve made it their mission to drive their countries back into the stone age. They’ve attacked their farmers, who’ve literally covered them in merde in return. And they also have large numbers of immigrants who utterly refuse to assimilate. Like Russia, don’t be surprised if these countries start looking eastward. They won’t get help from anywhere else. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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