Postcards: Get Your Share of this Dirty Money

In a sad day for Washington grifters, John Kerry is stepping down as Climate Czar. Now he can fly around in his private jet and lecture everyone about flying in private jets. Plus... buy coal stocks.                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: Get Your Share of this Dirty Money]( In a sad day for Washington grifters, John Kerry is stepping down as Climate Czar. Now he can fly around in his private jet and lecture everyone about flying in private jets. Plus... buy coal stocks. [Garrett {NAME}]( Feb 7   [READ IN APP](   Dear Fellow Expat: Last year, John Kerry put his expensive shoe in his mouth. Kerry defended all the hypocrites flying private jets to climate conferences. Why? Because they all have money to buy carbon offsets. “Well, they actually – I’ve talked to them about it. They offset,” the former Secretary of State and Climate Czar told Yahoo! News. “[The rich] buy offsets, they offset. And they are working harder than most people I know to be able to try to effect this transition.” Climate lockdowns and travel limitations in the future will be for the little people.  The rich can buy “carbon offsets” on exchanges. Then, guilt-free, they can travel anywhere in the world. This is especially true for climate events [with a small island nation's carbon footprint]( And who is behind these carbon offset finance programs?  Grifters like Kerry, Al Gore, and Goldman Sachs, of course.  These guys find ways to sell humans their own guilt back to them. It’s like Fight Club’s Tyler Durden stealing “fat” from a liposuction clinic. Durdan made soap from the fat and sold it back to rich women at department stores. I think Kerry’s the most hypocritical person in American politics in decades.  Dall-E I’m sure you’re as sad as I am that John Kerry is stepping down as Climate Czar. His replacement is a lifelong Clinton-Obama-Biden pipeline politician who founded the Center for American Progress. John Podesta is even more radical on energy policy, all at a time when[Boston’s lights will likely shut off]( In America, [power plants are being shuttered](. Liquified natural gas imports could [soon go the way of the dodo](. Eco-[lawyers are trying to shut down pipelines]( over a lizard. All in the name of Gaia. But there's a dirty little secret that the pontificating elites won't admit.  One you won't hear while they're busy patting themselves on the back. Or when they're claiming to wage a noble war against carbon emissions. Or even when they're promising a grand shift to so-called clean energy. So, what’s happening?  The U.S. is outsourcing its carbon pollution.  We hand it off to countries like China and India, then look the other way.  It’s a classic case of “NIMBY” - not in my backyard.   There’s dirty money to be had - now’s the time.  Markets have beaten down some of these "dirty money" stocks. If there’s a change in policies or politicians in the year ahead, they could surge.  At worst, though, our dirty status quo remains. We still expect billions in buybacks and dividend spikes for these stocks in the next five years. [Upgrade to paid]( Pat Yourself on the Back, John American politicians and think tank leaders strut around global summits. They grandstand about the strides we're making to reduce scary carbon dioxide.  And they’re half right. America has led the world in emissions reductions since 2005 - but not because of the political class. Two decades ago, the shale revolution unleashed natural gas. Natural gas burns half as clean as coal. It's an ideal bridge fuel until we can figure out how to scale up intermittent sources like solar and wind.  Yet, the U.S. doesn't produce as much as it could. We own the world's largest natural gas field - the rich Marcellus Shale- but we can’t send it north from Pennsylvania to energy-starved New England. New York won’t allow pipeline construction. There’s an ugly side to this story. We shutter our natural gas and coal plants to protect Gaia. But, we ignore our role in China and India’s "dirty" coal boom. In 2016, the Obama Administration supported 70 fossil fuel projects through our Import-Export Bank. This Federal agency facilitates U.S. exports. It offers financing and insurance to support sales of American goods abroad. The Obama administration spent $34 billion on coal, natural gas, and oil plants. They built them in places like India and South Africa. The agency also supported fracking in Australia. What gives? This administration expanded policy reviews on anything we build in America. They did so in the name of saving the planet. That policy shift is now why it takes forever to build even green infrastructure in America. American leaders are great at talking—loudly—at the nations not pulling their weight in our environmental crusade. But our leaders are hypocrites. The big beneficiary is China. The globe became dependent on China as the “world's factory floor.” We're all too eager to point fingers at them for producing and shipping the goods we consume.  "We’re not the problem. We've reduced our emissions. Blame China," [guys like Kerry]( and Gore profess.  They act as if we’re cleaning our house, but all we do is sweep our mess under someone else's rug. And this game will continue for decades to come.  Coal demand is declining in the United States and might decrease in the European Union. But, global coal consumption is still on the rise worldwide.  You’ll be able to read about it by candlelight [when the rolling blackouts start]( in America. China’s Coal Boom According to a new report, China permitted more coal power plants last year than in the previous seven years. The figure is equal to about two new coal power plants per week. Coal power makes up about 70% of emissions in China, which has committed to being carbon neutral by 2060. I likely won’t be around to see if that happens, but I’m willing to take the over on that year. That’s a good bet my daughter can make against John Kerry’s grandchildren. He brokered the terrible deal. After 2025, it is unclear whether China will approve new coal plants (they will). However, according to Greenpeace, in the third quarter of 2023, China permitted more new coal plants than in all of 2021. Most countries have stopped building new coal-fired power and are phasing out plants. According to Reuters analysis of census data, China's coal imports increased by 61% in 2023, resulting in a record total of 474.42 million metric tons. In 2023, China accounted for 96% of new global coal power construction. They accounted for 81% of newly announced projects. And they accounted for 68% of generators coming online. This data was released Tuesday by Global Energy Monitor. The COP28 summit last December resulted in climate pledges. However, global coal demand has yet to peak. [Geopolitical Intelligence Services (GIS) says]( in a report today that U.S. coal demand is falling. It’s dipping in Europe this year as well. But, they note: “Global coal consumption still rose by 1.4 percent in 2023, reaching a record 8.5 billion metric tons. Capacity for coal power plants currently in development increased by 16 percent.” Reuters notes that in 2023, China's coal output reached a record high. It mined 4.66 billion metric tons of fuel, up 2.9% from the previous year. This increase in coal output and the construction of new coal-fired plants reflect China's ongoing focus on energy security.  It's Not Only China And then… there’s India, the world’s fastest-growing economy. The nation built 5 gigawatts of new coal-based electricity facilities in the last five years. Yes, India is turning to renewable sources. But Reuters says government officials admit there’s no way to meet future demand by relying on the sun and wind.  If the nation falls short of expected power demand, it could face blackouts and other challenges.  Over the next four months alone, India will add another 3GW of coal power. In April 2025, according to Reuters, India will add another 14GW. Then, there are the global figures. [GIS offers a stunning reality](. Today, they noted that "more than 107 countries and 2,000 entities worldwide are using coal." They tracked this demand across 13,800 coal units. The report also states: "Some 204 new coal power plants are currently under construction, another 93 such projects have been announced, and 260 new ones are in the pre-construction stage. Worldwide coal use still generates 36 percent of global electricity production, reaching a new record of 10,440 terawatt hours (TWh) in 2022." GIS writes that, combined with the ten members of the Association of Southeast Asian Nations (America's fourth-largest trading partners), China and India represent 76% of global coal demand. Do we think we'll wean China off coal, let alone Vietnam and Laos? Or... will China build its influence across the ASEAN region by assisting in developing new coal power? My bet is on the latter... Coal Is an Opportunity Now In 2023, the United States saw another significant upturn in thermal coal exports. Coal export figures hit a five-year high, and ship-tracking firm Kpler reported earnings that surpassed $5 billion. Shipments totaled over 32.5 million metric tons. By my estimates, that’s enough coal to generate more than 75 million megawatt hours (MWh) of power. Based on the average power consumption per household, that amount of coal would generate enough electricity for 7.12 million U.S. homes in a year. But power consumption is much lower in other nations on a per-capita basis. U.S. coal companies are now looking at global markets instead of in America for obvious reasons. And there could be a nice floor forming for these names after a great rally in 2023.   The coal sector has many stocks that look like bargains at the moment. Names like Peabody Energy Corporation (BTU), Alliance Resource Partners (ARLP), and CONSOL Energy (CEIX) all have strong Piotroski scores. They also have low Price-to-Graham numbers and strong return on invested capital (ROIC). Tomorrow, we’ll discuss which looks the most intriguing out of our list in the [Republic Risk Letter]( [Upgrade to paid]( But I want to highlight this sector's trading and timing with Consol Energy (CEIX).  Consol has been on a solid run since last year. Recently, it has turned lower. The recent dip is due to the stronger U.S. dollar, questions about China’s economy, cyclical commodity cycles, and a sharp move under key resistance levels.  Today, we saw shares slump under their 200-day moving average for the first time since last June. As we know, they didn’t last under those levels for very long. We also see shares falling into oversold territory on the Relative Strength Index (RSI) and the Money Flow Index (MFI). Most people would look at this chart and think buying Consol would be bad. But I want to point out why I love Consol, and with my price target, there will be a chance to buy shares soon.  Consol operates mines in Pennsylvania and West Virginia. Then, it ships the coal by rail to its Baltimore terminal. The company generates about $15 million a year in EBITDA shipping out of that terminal, which has a capacity of 20 million tons. I wouldn’t be shocked to see that capacity expand in the years ahead. CONSOL will likely continue its shift to foreign shipments. Consol shares doubled in 2023. But there’s a reason for this. Companies in the coal space are trading as if they are going out of business - or what we’d say an industry in sharp decline. CONSOL is trading at an insanely low EV-EBITDA of just 2.39 - and EV-EBIT of 3.00. Those are extremely low multiples. But, we suspect that no private equity firm plans to buy out these names because of the political risk. There’s good reason to think this because of ongoing energy policies from the Biden Administration.  But we know that the Biden Administration isn’t serious about stopping coal shipments. [They’re trying to stop natural gas shipments]( Here’s the catch, though. Shareholders realize that this isn’t a growth industry. So, they’re putting pressure on coal companies to use as much free cash flow as possible to pay down debt, hike dividends, or buy back stock.  And Consol has been doing this in spades. With net margins of 28% and an ROIC of 29%, their debt-to-equity ratio is now the best it’s ever been. Over the last few years, it’s paid off about $500 million in debt. In addition, the company aims to use 75% of its free cash flow to buy stock.  And that’s on top of a dividend north of 5.2%.  There may be more pain in the coming weeks for Consol stock, and I anticipate troubles in the U.S. regional banking sector. But I also expect plenty of more money to be pumped into the global financial system, with a laser focus on China.  U.S. banks and tech companies do well when the Federal Reserve eases. When China's central bank eases, we see larger boosts to commodities like copper, steel, and coal. And there’s plenty of reason to anticipate that easing to try to jumpstart its economy from a significant downturn in recent months. Finally, remember one last thing… the U.S. manufacturing sector has effectively been in a recession for a year. With the Fed now looking to cut rates in the back half of the year, manufacturing may finally get moving again, which is good for all things power-related.  I wouldn’t say I like CEIX at this $84 level. But I’d target the stock if it drops between $75 to $78. That’d be a steep decline from the 52-week high in December.  Besides, we’re fast approaching those oversold levels where short sellers start to cover. I’d love for you to learn how to trade a name like this,  so watch for my piece tomorrow in the Republic Risk Letter.  America might be leading the world in carbon emissions - all while people like John Kerry fly around in private jets to climate conferences.  But their hypocrisy isn’t worth deep exploration. Let’s profit from it… laugh about it… and move on. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()