Notes on the Real Economy

The stock market today opened down sharply—the Dow was off 900 points early in the day—before staging a late rally to close in the green. Still, the last week has been ugly. Strap in for a lot more volatility until the Fed is done finding its rear end with both hands—likely many many months from now.

It is not news that traditional energy stocks—coal, natural gas, and oil—were the stock market’s big winners last year, and so far are holding up well in the current market swoon. This, despite the push of the Biden Administration to destroy the sector, and the successful pressure on the finance community to cut off access to capital for the sector, which has already raised the cost of capital for fossil energy companies. And yet their stocks have thrived anyway, for the simple reason that when nations need energy that works, is scalable, affordable, and available on demand, they are turning back to fossil sources. Pretty fast in fact. (News item: U.S. Coal Stockpiles Near Historic Lows. News item: Oil Bulls Encouraged by Low Inventory.)

I love this chart comparing the electricity sectors in France and Germany yesterday (especially for their all-important “carbon-intensity):

What’s clear here is that Germany’s energiewende has failed.

Meanwhile, guess which energy stocks are not doing so well right now? Barron’s tells us:

Alternative-Energy Stocks Fall as Analyst Cuts Price Targets

. . . Analyst Tristan Richardson said the performance of [alternative] energy stocks in the past few months has been hurt by issues such as a holdup on a vote by California’s Public Utilities Commission on proposed changes to how customers with rooftop solar panels get paid when their systems produce more electricity than they use. The derailing of the Build Back Better legislation, which includes tax-credit extensions for the overall alternative-energy group, is an additional problem, he said.

This paragraph makes clear that the prosperity of “green” energy is largely dependent on government subsidies, mandates, and favorable tax treatment. In other words, without government to prop it up, green energy withers quickly, while energy that actually works prospers in the face of government hostility.

Slowly people are going to figure this out.

Meanwhile, I’ve found the very weakest spot in the whole supply chain problem: refrigerated dough. No, really, here’s the chart:

Thank God I’ve hoarded lots of dough in my freezer.

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