Authored by Michael Lebowitz via RealInvestmentAdvice.com,

We continue with our discussion of investment ideas that could benefit from upgrading and expanding the power grid to accommodate surging demand from AI data centers and EVs.

This third and final part of this series focuses on alternative energy sources, utility companies, and other companies related to the power grid infrastructure.

If you haven’t read Parts ONE or TWO we recommend reading them before continuing.

Alternative/Renewable Energy Sources

In 2022, the Department of Energy calculated that renewable energy from solar, wind, hydro, geothermal, and biomass accounted for a fifth of all electricity generation. By 2028, the IEA thinks the percentage will double to 42%. Solar and wind power are expected to be the primary alternative energy sources.

Investments in solar, wind, and other alternative energy sources, along with natural gas, coal, and nuclear, will be increasingly vital to power our utility plants. Furthermore, suppose the US and other nations continue to strive for net zero emissions by 2050 and other environmental goals. The demand for existing and new alternative energy sources will surge in that case.   

Renewable energy has benefits and flaws compared to natural gas. The significant advantage of renewable energy is it produces minimal greenhouse gas emissions, as shown below. Second, and equally important, according to the IEA World Energy Outlook, solar and wind energy are the cheapest renewable energy sources and cost much less than carbon-based ones.

However, they have considerable flaws that need to be overcome. Consider the following from Green Solutions.

Relies heavily on weather conditions. When adverse weather conditions occur, renewable energy technologies like solar cells may not be as effective. For example, during periods of rain, PV panels cannot generate electricity, necessitating a shift back to traditional power sources.

Lower efficiency. Regrettably, renewable technologies generally exhibit lower efficiency compared to traditional energy conversion devices. For example, commercially available solar panels have an efficiency of about 15% to 20%. In contrast, traditional technologies utilizing coal or natural gas can achieve efficiency levels of up to 40% and 60%, respectively.

High upfront cost. The manufacturing and installation processes for renewable energy devices, such as PV panels, can be relatively expensive. Only for installation, solar panels cost about $17,430 to $23,870 on average.

Limited geographical region. The availability of high-quality land is limited, leading developers to urgently search for new sites. For example, in Germany, regulatory, environmental, and technical limitations significantly reduce the potentially suitable for onshore wind farms to just 2%.

Shortages of key raw materials. This includes essential metals like nickel, copper, and rare earth metals, such as neodymium and praseodymium, which are vital for the creation of magnets used in wind turbine generators.

Renewable Stocks Are Not Following the Narrative

With time, we believe renewable energy will become much more efficient and hopefully be in a better position to help meet the surging needs of the nation’s utility plants. Investors do not seem as hopeful. 

The recent narrative pushing investors to power grid-related investments has skipped past renewable stocks. The graph below shows two popular alternative energy ETFs, Invesco’s Solar ETF (TAN) and iShares Global Clean Energy ETF (ICLN). Both ETFs are well off their 2008 highs and recent peaks in late 2020. 

Alternative energy stocks and diversified ETFs may be excellent investments for longer-term investors as renewable energy will be relied upon heavily. Furthermore, their stocks have not benefited from the power grid expansion narrative.

Batteries Technology Is Vital To Renewable Energy

Solar and wind energy are not dependable due to weather conditions. For example, the following quote from OilPrice.com:

But while solar power has made the U.S. power-generating system greener, it has also made it more volatile, especially in the top solar market, California. 

There, peak solar power generation coincides with the lowest residential electricity demand during the midday. When power demand begins to surge after 6 p.m., solar output begins to fade.  

In California, for example, “on sunny spring days when there is not as much demand, electricity prices go negative and solar generation must be ‘curtailed’ or essentially, thrown away,” says the Institute for Energy Research (IER).

Accordingly, utilities need more efficient batteries to store excess renewable energy for use during peak demand periods and when the weather isn’t conducive for electricity generation. Without more efficient batteries, undependable alternative energy sources cannot be relied upon as much as the environmental goals demand.

Companies involved in energy storage, especially those at the forefront of producing more efficient batteries, may have significant upside. But, with unproven technology come substantial risks for investors. For instance, many new types of battery technology are in development.

• Solid-state batteries

• Lithium-sulfur batteries

• Cobalt-free lithium-ion batteries

• Sodium-ion batteries

• Iron-air batteries

• Zinc-based batteries

• Graphene batteries

Battery Diversification May Be Critical

Even if you know which type of battery will be the winner, so to speak, you also have the arduous task of figuring out which company will be a primary producer of the battery. Unless you believe you have good insight into battery technology and the key players in the industry, we think a diversified battery ETF may provide the best investment results. Further, the large battery ETFs are also diversified, with investments in lithium and other metal producers. Unfortunately, ETFs in this space are limited.

Global X Lithium & Battery Tech (LIT) is far and away the largest, with nearly $1.5 billion AUM. While it invests in companies with new battery technology, it also “invests in the full lithium cycle, from mining and refining the metal, through battery production.” Its top three holdings are lithium producers.

Amplify Lithium and Battery Technology (BATT) is the second largest ETF with a mere $89 million in AUM. Like LIT, they invest in lithium producers like BHP and Albemarle.

If you want to make investments in individual companies, Tesla (battery technologies), LG Chem, and Samsung SDI are well-positioned in the industry.

Lithium Miners

Assuming lithium remains a crucial component in electricity storage batteries, its miners should do well, especially given the recent decline in lithium prices and the related stocks.

North Carolina-based Albemarle (ALB) is the world’s top lithium producer and the largest producer by market cap. It is the only lithium producer of size based in the US. Like the rest of the alternative energy sector, its stock has traded poorly recently. However, with a forward P/E of 16, there is value if its revenues continue upward at their recent pace.

We caution you that lithium deposits are being actively explored. Assuming success, the lithium supply may limit the price appreciation of lithium. As an example from The Hill- Researchers make massive lithium discovery in Pennsylvania.

Utility and Grid Operators

Utilities will generate more power, thus increasing their revenue. However, they must invest significant capital to modernize, expand, and reduce greenhouse emissions.

AI data center locations are partially chosen based on their ability to source cheap electricity. Thus, utility companies in the Southeast and Midwest, with access to cheaper natural gas and more reliable alternative energy generation, will be the most cost-effective locations for data centers. The map below shows that Virginia hosts the greatest number of data centers, followed by California and Texas.

Dominion Energy (D) in Virginia and Entergy (ETR) in Texas are the two utility companies that may be the biggest beneficiaries of the growth of AI data centers. Both stocks have relatively low forward P/E’s of approximately 14 and dividend yields of 4.25% for D and 5.50% for ETR. It will be crucial to follow their margins to see how effectively they offset the expansion costs with rising revenue.

Constellation Energy (CEG) and NextEra Energy (NEE) are also worth tracking as they invest heavily in renewable energy infrastructure and will benefit from increased demand. We would add Duke (DUK) and Southern Company (SO) to the list of companies to follow.

Additional Investment Ideas

We now present an assortment of industries and firms that can benefit.

Technology and AI Firms

Companies specializing in AI software for energy efficiency and management will find opportunities in this evolving landscape. Some of the more prominent names in this sector include IBM, Google, Microsoft, Oracle, and GE Vernova.

Physical Plant Expansion

Companies that supply utility plants with generators, transformers, circuit breakers, and switchboards, among many other parts, will undoubtedly benefit from power grid expansion.

GE Vernova, Eaton, Quanta Services, Emerson Electric, and Siemens

Water/Cooling

The average data center uses 300,000 gallons of water a day to cool its equipment. That is the equivalent of the water used by 100,000 homes. Therefore, companies that can develop cheap cooling solutions for data centers will be in high demand.

Vertiv Holdings (VRT) is a leader in this segment. Its shares have risen tenfold since it went public in 2019 and now trades at a P/E of 100. It’s a high-risk, high-reward stock, not for the faint of heart.

Infrastructure ETFs

There are many other businesses set to profit from the coming infrastructure boom.

Those looking for a diversified investment approach in the power grid may want to explore thematic ETFs.

For example, the First Trust Clean Edge Smart Grid Infrastructure Fund (GRID) holds 103 positions. Beyond diversification and portfolio manager expertise, the fund can buy stocks in foreign markets, which many US investors do not have access to or are uncomfortable with.

iShares (IFRA) is a similar fund with a different basket of stocks and approach toward investing in the industry.

The bottom line is we are confident the expansion and modernization of the power grid will be highly profitable for some companies. However, many companies involved, especially smaller companies with limited product offerings, offer massive rewards but substantial risks. Diversification will prove to be essential for investors.   

Summary

The more we researched the power grid expansion, the more industries, and companies we exposed that could benefit from it. While this article stops here, we will continue investigating the topic and share any exciting findings in the future. The number of rabbit holes is seemingly endless. We encourage you to explore the topic and share any findings you may uncover with us.

Like the birth of the internet, some companies like AOL, Yahoo, and Sun Microsystem, which were the supposed internet leaders, fell by the waist side. Other companies, some already large, others virtually unknown, become leaders. The key to investing in this expansion is to remain vigilant for new companies and technologies that can blossom. Do not assume that the companies in charge today will be so tomorrow. Keep your head on a swivel.

For those unable to invest the time and effort to understand industry trends and identify companies likely to profit, a fund(s) with professionals highly focused on the industry may prove an excellent way to take advantage of the potential infrastructure boom.

French President Emmanuel Macron used the occasion of D-Day memorial events in France on Thursday to make some big announcements on Ukraine. This after President Biden focused much of his speech on ‘defeating Russia’ – as opposed to remembrance of WWII and those who perished on the beaches of Normandy.

For the first time Macron said that there’s been a specific request from the Zelensky government to send French troops to Ukrainian soil in order to train forces there, amid a growing manpower shortage and severe lag in adequate training.

“There is a challenge in capacity. That is why the Ukrainian president and his minister of defence asked all the allies — 48 hours ago in an official letter — saying ‘we need you to train us quicker and that you do this on our soil’,” Macron said in a live interview on French television, translated by AFP.

While stopping short of committing to sending troops (given there’s been no consensus reached by NATO allies yet), Macron did indicate the French military will equip and train an entire brigade of 4,500 Ukrainian soldiers – but crucially this training is being conducted outside Ukraine.

Macron also announced readiness to transfer Mirage-2000 fighter jets to Ukraine, and to train their pilots on the aircraft, while not specifying the number of jets to be sent.

“Tomorrow we will launch a new cooperation and announce the transfer of Mirage 2000-5,” Macron indicated in the interview, referencing the fighter made by French manufacturer Dassault.

The pilot training program will kick off this summer, and the details will reportedly be hashed out when Macron meets Ukrainian President Volodymyr Zelensky at the Elysee Palace in Paris on Friday.

“You need normally between five-six months. So by the end of the year there will be pilots. The pilots will be trained in France,” he continued.

As for sending Western troops directly into Ukraine, Macron cautioned, “We are working with our partners and we will act on the basis of a collective decision.”

But at this point in the conflict this is a losing proposition and the West knows it, even if officials don’t admit it openly. There’s huge risk and only downside. President Putin and top Kremlin officials have repeatedly vowed they will attack any foreign troops found on Ukraine soil.

Journalist and national security commentator Andrew Cockburn summed up the situation as follows: “As Russian forces steadily advance in the Kharkiv region, it is becoming ever more clear that the Ukraine war has been a disaster for the U.S. defense machine, and not just because our aid has failed to save Ukraine from retreat and possible defeat. More importantly, the war has pitilessly exposed our defense system’s deep, underlying, faults.”

By Alex Kimani of OilPrice.com

OPEC+ agreed on Sunday to extend most of its oil output cuts well into 2025 amid tepid demand growth, rising U.S. production and high interest rates. OPEC+ is currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand, including 3.66 million bpd of cuts previously set to expire at the end of 2024, and voluntary cuts by eight members of 2.2 million bpd, expiring at the end of June 2024. The announcement led to an oil price selloff, with front-month Brent falling to a four-month low below $77 per barrel (bbl), good for a hefty $8/bbl decline from last week’s high and over $15/bbl lower from April’s YTD high.

Commodity analysts at Standard Chartered have pointed out that the price undershooting was the consequence of markets being dominated by a combination of extreme macroeconomic pessimism; speculative shorts and over-enthusiastic algorithmic trading that crowded out more fundamentally-based traders. According to data from Bridgeton Research Group via Bloomberg, oil futures markets have now flipped to a net short position in Brent, compared with a net long position at the end of last week.

StanChart says the oil price rout has been triggered by market expectations for a significant volume of OPEC+ oil returning to the global markets 2024; however, the analysts have argued that this explanation does not hold much water. According to StanChart, assuming market conditions are such that the increases can commence, the increase in Q4 relative to Q2 is likely to clock in at a relatively modest 360 kb/d, with the analysts saying that OPEC+ has room to increase production by 1 million b/d without upsetting market balance. Further, StanChart points out that the phase-out will be conditional depending on the state of global markets at the time with most general asset markets not expecting FOMC to follow all its current forward guidance to the letter regardless of future data and events. However, the reaction by oil markets seems to suggest that the forward guidance given by the eight OPEC+ countries concerned constitutes a determination to produce, regardless of whatever happens.

StanChart has pointed out a number of other bullish factors that the markets have overlooked:

•  The 1.65mb/d of voluntary cuts agreed in April 2023 have been extended to the end of 2025.
• The required production level for all OPEC+ countries across 2025 was reaffirmed. 
• The agreement was finally reached in the long-running discussion with the UAE, resulting in a 300kb/d increase in the UAE’s required production level, spread out over nine months starting in January 2025.
• Russia, Iraq and Kazakhstan have agreed to produce a compensation schedule for H1 overproduction by the end of June
• The discussion of targets in light of third-party consultant assessments of capacity was postponed until late-2025 when it may be a basis for discussion of 2026 required production.
• The Joint Ministerial Monitoring Committee (JMMC) was given authority to request an OPEC+ ministerial meeting at any time or hold additional meetings should it choose to.

Overall, the analysts say that OPEC+ decisions will ultimately prove positive for oil prices. More importantly, the OPEC+ report has increased transparency with the likelihood of bearish tail-risk events materializing minimized. 

Meanwhile, StanChart has reported that there has been no change in the dominant dynamics of the European gas market, with inventories building slower than usual and the markets still proving highly sensitive to supply issues. According to Gas Infrastructure Europe (GIE) data, EU gas inventories stood at 81.75 billion cubic meters (bcm) on 2 June, good for a 1.1 bcm Y/Y increase and 14.9 bcm above the five-year average. Inventory build over the past week was 1.9 bcm, considerably lower than the five-year average for the same period of 2.8 bcm and last year’s 2.4 bcm. The experts also note that the surplus above the five-year average has fallen on 45 of the past 48 days. 

The natural gas supply-side continues to be plagued with challenges. The latest supply disruption that triggered a rally was a fault in Norway’s Sleipner gas field. StanChart has predicted that whereas the outage is likely to be short-lived (current estimates are that repairs should be over by the coming weekend), prices are likely to remain elevated bolstered by slower-than-average inventory builds. Dutch Title Transfer Facility (TTF) gas for January 2025 delivery reached a high of EUR 43.30 per megawatt hour (MWh) on 3 June while the front-month contract reached a five-month high of EUR 38.70/MWh on the same day before falling back to settle at EUR 36.014/MWh.

In a show of force perhaps prompted by President Biden’s authorization of Ukrainian strikes inside Russia using US weapons, a group of Russian warships is en route to the Caribbean, a senior US official has told McClatchy and the Miami Herald. White House officials alerted members of Congress to the Russian move on Wednesday. 

The deployment signals Russia’s capacity to operate globally while still fully engaged its third year of war in Ukraine. “This is about Russia showing they are still capable of some level of naval power projection,” the official said. “We should expect more of this activity going forward.” In March, Ukraine claimed it had either sunk or disabled a full third of Russia’s ships in the Black Sea.

CBS News reports that long-range Russian bombers will rendezvous with the ships for combined naval and air maneuvers. Such exercises are not without precedent: Russia conducted similar combined-arms Caribbean maneuvers in 2019, and had a streak of sending ships into the Western Hemisphere at least annually from 2013 to 2020. Following the summer exercises, Russia is expected to engage in a worldwide naval exercise this fall, sources tell CBS. 

The Pentagon is tracking a “handful” of ships and support craft that are expected to reach Caribbean waters in the upcoming weeks. US analysts speculate that the flotilla will make port calls in both Cuba and Venezuela. Cuba’s likely relishes the opportunity to host the Russian warships: Last year’s docking of a US nuclear submarine at Guantanamo Bay Naval Base ruffled feathers in Havana, with the Cuban government calling it a “provocative escalation.”

“Clearly, [the Russians] are unhappy — needless to say — with our support for Ukraine and support for our NATO allies,” the official said. Last week, the Biden administration quietly gave Ukraine the green light to use US weapons to strike targets inside Russia. That marked a major policy reversal, as such strikes had previously been barred as too escalatory. 

Ukraine has apparently wasted little time in exercising its new freedom, as images circulated on social media that appeared to show burning S-300 and S-400 mobile surface-to-air missile systems inside Russian territory:

On Wednesday, Russian President Putin said he was considering some kind of retaliation-in-kind:

If they consider it possible to deliver such weapons to the combat zone to launch strikes on our territory and create problems for us, why don’t we have the right to supply weapons of the same type to some regions of the world where they can be used to launch strikes on sensitive facilities of the countries that do it to Russia?…We will think about it.”

Expect America’s warmongers to shriek at Russia’s upcoming Caribbean exercises — despite the fact that US military forces routinely buzz by the territorial waters and airspace of Russia, China and many other countries around the world. 

Watch Live:

Update (1019ET): 

“Despite loss of many tiles and a damaged flap, Starship made it all the way to a soft landing in the ocean!” Musk wrote in a post on X. 

Despite loss of many tiles and a damaged flap, Starship made it all the way to a soft landing in the ocean!

Congratulations @SpaceX team on an epic achievement!! https://t.co/UnXbnmZ2pE

— Elon Musk (@elonmusk) June 6, 2024

LoL. 

Many sad faces at the AP this morning pic.twitter.com/0LpPQjIQnt

— zerohedge (@zerohedge) June 6, 2024

*   *   *

Update (1000ET): 

Starship makes it through re-entry and completes the relanding burn. Huge milestones! 

Splashdown confirmed! Congratulations to the entire SpaceX team on an exciting fourth flight test of Starship!

— SpaceX (@SpaceX) June 6, 2024

SpaceX team celebrates. 

Here’s what folks on X are saying:

GO HUMANS

— Kevi 🍀 (@KeviSkillz) June 6, 2024

goosebumps! Congrats team!

— Zoe Alannah (@zoealannahbates) June 6, 2024

HISTORY HAS BEEN MADE!! 🚀🚀

— Tesla Model Ðoge (@TeslaModelDoge) June 6, 2024

*   *   * 

Update (0948ET): 

Starship’s flap is melting during re-entry. 

*   *   * 

Update (0940ET): 

Starship re-enters Earth’s atmosphere. 

*   *   * 

Update (0928ET): 

Starship’s cameras are back about 37 minutes into the flight. 

*   *   * 

Update (0915ET): 

External camera comes online in 11 mins

— Elon Musk (@elonmusk) June 6, 2024

*   *   * 

Update (0858ET): 

New milestone unlocked: Super Heavy booster landed in the Gulf of Mexico! 

*   *   * 

Update (0856ET): 

Updates from SpaceX:

Starship’s Raptor engines have ignited during hot-staging separation. Super Heavy is executing the flip maneuver and boostback burn pic.twitter.com/TsdIKpqLJH

— SpaceX (@SpaceX) June 6, 2024

Hot stage jettison pic.twitter.com/J48QtQD1Ae

— SpaceX (@SpaceX) June 6, 2024

*   *   * 

Update (0852ET): 

SpaceX’s Starship launches from Starbase in Boca Chica, Texas, on its fourth flight.

*   *   * 

One day after Boeing’s long-delayed crewed Starliner space capsule launched from the Cape Canaveral Space Force Station in Florida, SpaceX is preparing for the fourth test flight of the massive Starship rocket. 

Hours ago, SpaceX’s Elon Musk posted on X that the launch time of Starship is slated for 0720 Texas time (0820 ET) at Starbase in Boca Chica, Texas. 

Launch tmrw morning at 7:20 Texas time pic.twitter.com/CJJTyPvT8L

— Elon Musk (@elonmusk) June 6, 2024

Starship is the most giant rocket ever built, standing nearly 400 feet tall when stacked with its “Super Heavy” booster. It surpasses the height of the Saturn V rockets that transported Apollo astronauts to the moon. 

Targeting Thursday, June 6 for Starship’s fourth flight test.

A 120-minute launch window opens at 7:00 a.m. CT → https://t.co/bJFjLCiTbK pic.twitter.com/jWdhCAyk8I

— SpaceX (@SpaceX) June 4, 2024

Today’s fourth test flight will continue advancing Starship’s progress and heavily focus on a deeper re-entry into Earth’s atmosphere.

Musk recently wrote on X that Starship’s “main goal of this mission is to get much deeper into the atmosphere during re-entry, ideally through max heating.” 

Starship Flight 4, with many improvements, aiming to launch on Thursday!

The main goal of this mission is to get much deeper into the atmosphere during reentry, ideally through max heating. https://t.co/8cE1dTQ9nw

— Elon Musk (@elonmusk) June 2, 2024

Rocket blog Spaceflight Now provided more insight into the mishaps during test flight three and how systems were upgraded to ensure a deeper re-entry into Earth’s atmosphere for today’s test flight: 

During Flight 3, the upper stage began to roll uncontrollably, preventing the vehicle from performing a relight of one of its six Raptor engines. However, thanks to its ability to connect to the Starlink satellite internet network, another part of SpaceX’s business, the rocket was able to stream back high definition camera views showing its re-entry through a blanket of plasma.

“The lack of attitude control resulted in an off-nominal entry, with the ship seeing much larger than anticipated heating on both protected and unprotected areas,” SpaceX said in a post-launch blog. “The most likely root cause of the unplanned roll was determined to be clogging of the valves responsible for roll control. SpaceX has since added additional roll control thrusters on upcoming Starships to improve attitude control redundancy and upgraded hardware for improved resilience to blockage.”

Meanwhile, the Super Heavy Booster from the last flight also prematurely shut down six out of 13 Raptor engines used during the boostback burn, which remained offline when it attempted to perform a landing burn.

“The booster had lower than expected landing burn thrust when contact was lost at approximately 462 meters in altitude over the Gulf of Mexico and just under seven minutes into the mission,” SpaceX stated. “The most likely root cause for the early boostback burn shutdown was determined to be continued filter blockage where liquid oxygen is supplied to the engines, leading to a loss of inlet pressure in engine oxygen turbopumps.”

“Super Heavy boosters for Flight 4 and beyond will get additional hardware inside oxygen tanks to further improve propellant filtration capabilities.”

All of these test flights are part of Starship’s development process. The hope is to commission the world’s largest rocket for moon and Mars missions by the end of the decade or the early 2030s.

*   *   *  

Watch the launch event live here: 

By Tsvetana Paraskova of OilPrice.com

The energy ministers of heavyweight OPEC+ producers dismissed the bearish market reaction to the group’s latest oil production plan, saying that market participants and analysts will realize soon that the alliance did the right thing in communicating its intentions.

While OPEC+ extended this weekend most oil output reductions into 2025, it said it could begin unwinding some voluntary cuts after the end of the third quarter of 2024—subject to market conditions.

Most analysts see the OPEC+ alliance’s announcement as bearish for oil prices toward the end of the year because of the plan to begin unwinding some of the cuts. Most analysts don’t think there would be market conditions for the group to begin gradually adding supply in the fourth quarter of 2024.

Saudi Energy Minister, Prince Abdulaziz bin Salman, criticized some analyst comments on the deal and said at an event in Russia on Thursday that the market would soon realize that OPEC+ did “the right thing,” Bloomberg reported.

At the ongoing St Petersburg International Economic Forum, Russia’s Deputy Prime Minister Alexander Novak also said that OPEC+ did the right thing and aimed to quash doubts about the effectiveness of the deal.

“OPEC’s decision this weekend is positive for the oil market and helps stabilize it,” Novak said, as carried by Russia’s TASS news agency.

The decisions create certainty for energy markets for the coming quarter and the coming year, Novak added.

The Russian official reiterated the OPEC+ and Saudi statements that a potential easing of some of the cuts could always be paused or reversed and that the alliance has the opportunity to quickly respond to the market situation.  

“Sometimes the market doesn’t understand decisions. It takes time to analyze,” Suhail Al Mazrouei, Energy Minister of the United Arab Emirates (UAE), said at the forum, as quoted by Bloomberg and TASS.

Three weeks after Beijing announced “historic” measures, including the central bank providing 1 trillion yuan in extra funding, easing mortgage rules, and local governments planning to purchase apartments to clear excess supply, all in a bid to stabilize the worsening downturn in residential property markets, faith in the housing recovery has faltered yet again, as property stocks have tumbled into a bear market. 

Between mid-April and mid-May, investors hoped that more decisive government intervention in the world’s second-biggest economy to shore up the property market would slow the descent. New measures were announced on May 17, and since then, after a 73% surge in the Bloomberg Intelligence gauge of Chinese developers, the index has tumbled into a bear market. 

The property market downturn has been ongoing since 2021. A series of developers have defaulted on debt, a plethora of idled construction sites, sliding home sales, high inventory levels, and waning confidence in the Chinese population about an economic revival. 

In a recent note titled ‘China Unveils A Housing Market Bailout: Here’s What’s In It, And Why It Is Still Not Enough,’ we cited a Goldman note that underscores the need for more housing easing efforts. Judging by the index above, that’s potentially what investors are selling property stocks, emphasizing the urgency for further government intervention.

Here’s more from Goldman:

Expect more housing easing efforts down the road — especially on the demand side — with funding and implementation as key for the effectiveness of the property rescue plan. On the funding, a recent Goldman analysis suggests any game-changing housing easing measures (including those for housing destocking) would require significantly more funding than available thus far, while many inland local governments remain financially stretched after the three years of zero-Covid policy and amid the prolonged property downturn. This will require a larger top-down funding scheme from the central government, beyond the RMB300bn relending quota. Moreover, strengthened fiscal discipline and financial regulation may dampen some officials’ incentives for more concerted and forceful policy efforts. Upcoming policy events — such as the July Politburo meeting, the Third Plenum, and ad hoc meetings/announcements by major authorities (e.g., the State Council, NDRC, MOF, MOHURD, PBOC, SASAC) — will be worth monitoring closely, especially on solutions to address funding and implementation bottlenecks.

In a separate note, Jeff Zhang, an analyst at Morningstar, wrote that the latest economic data in the country shows “there’s not much improvement in property fundamentals,” adding, “We may need to wait until the end of year to see a narrowing of declines or a rise in monthly sales as a result of the government’s rescue package.”

However, in a note, Goldman’s Rich Privorotsky told clients Thursday morning, “China property has now dropped nearly 20% of its highs as stimulus/policy pivot hopes have faded (probably time to think about getting long again).” 

Authored by Eric Lundrum via American Greatness,

The far-left American Civil Liberties Union (ACLU) announced its intention to sue the White House after Joe Biden announced a new executive order that would ostensibly reduce access to the asylum system for illegal aliens.

According to Axios, the ACLU had made preparations for such a lawsuit even before Biden officially announced the executive order, which he signed on Tuesday. There had been leaks to the press in the days ahead of the order confirming many details of the plan.

“We intend to sue. A ban on asylum is illegal just as it was when Trump unsuccessfully tried it,” said Lee Gelernt, a civil rights lawyer at the ACLU, following the announcement of the executive order.

But the Biden White House, apparently having expected such challenges, has prepared to defend the executive order in court and with certain caveats in its implementation.

For example, the order’s parameters will only activate when there is a certain number of illegal border crossings; the order also includes “humanitarian exemptions.”

Biden’s order has also been criticized by conservatives, who say it does nothing to address the underlying problems that have led to a historic surge in illegals flooding across the border.

The order has also been accused of implementing a sort of soft amnesty on hundreds of thousands of illegals who had pending asylum cases, by simply dismissing the cases altogether without making a clear ruling one way or another, thus allowing the illegals to go free.

The border crisis and immigration as a whole has consistently remained the top concern for voters, according to exit polling throughout the presidential primaries this year.

Former President Donald Trump has vowed to carry out a massive deportation operation and finish building the southern border wall if he is returned to the White House this November.

Authored by Jonathan Turley,

Just the News is reporting that the January 6th Committee rebuffed repeated efforts from a Secret Service agent to refute the false story related by Cassidy Hutchinson alleging a violent episode with Trump in the presidential limousine during the Capitol riots. The J6 Committee staff repeatedly delayed the testimony of the agent to disprove the widely reported allegation.

Rep. Barry Loudermilk, the chairman of the House subcommittee that is investigating the Jan. 6 riot, has obtained a transcript of the driver’s interview that was conducted months after he first offered to testify.  However, it turns out that committee staff were asked repeatedly by counsel for the agent to let him present evidence debunking the claim. Despite being reported by virtually every news outlet, the Committee slow walked his appearance as the story went viral.

The transcript of the driver’s testimony contains express objections by the lawyer that his client had offered to testify in July, August and September of 2022, but was “rebuffed” by the committee.

The account reaffirms a major criticism of the committee. After Democrats refused to allow the GOP to pick its members (as a long-accepted practice in the House), the Democrats selected two anti-Trump Republicans who did little to push for a full and fair display of witnesses and facts. The Committee was chaired by Rep. Benny Thompson, a Democrat, with Rep. Liz Cheney, as Vice Chairwoman.

Cheney and the committee members clearly knew that Hutchinson’s account was debunked by the very driver who allegedly struggled with Trump. Yet, they allowed the media to report the incident for months while rebuffing the requests of the driver. Loudermilk is quoted as saying “We’re talking about the driver of the limousine, and the head of the entire protective detail. They were brought in by the select committee to testify, but they weren’t brought in until November.”

The false account was given by Hutchinson in June of that year.

The Secret Service driver testified Trump never tried to reach for or grab the wheel of the SUV.

Notably, the transcript shows Cheney trying to explain the delay as due to the need for the Secret Service to produce all documents in the January 6 investigation.

Yet, she had no problem with making the false story public through Hutchinson before such supporting material was supplied. She also did not suggest any countervailing testimony or witnesses on the issue as the media ran with the account. Instead, Cheney publicly teased the claim that they had much more evidence of crimes against Trump, which never materialized.  Cheney ended one hearing by calling for more officials to come forward and noting that Trump family members and former officials have now come forward with their own public “confessions.”

Many of us support the effort to bring greater transparency to what occurred on Jan. 6th and these hearings have offered a great deal of important new information. Indeed, it has proven gut-wrenching in the accounts of lawyers and staff trying to combat baseless theories and to protect the constitutional process.

Yet, the heavy-handed approach to framing the evidence by the Committee was both unnecessary and at times counterproductive. The strength of some of this evidence would not have been diminished by a more balanced committee or investigation.

We previously discussed the highly scripted and entirely one-sided presentation of evidence in the Committee. Indeed, witnesses were primarily used to present what Speaker Nancy Pelosi referred to as “the narrative” where their prior videotaped testimony was shown and they were given narrow follow-up questions. They at times seemed more like props than witnesses — called effectively to recite prior statements between well-crafted, impactful video clips. It had the feel of a news package, which may be the result of the decision to bring in a former ABC executive to produce the hearings.

That framing led to glaring omissions. The Committee routinely edited videotapes and crafted presentations to eliminate alternative explanations or opposing viewpoints like repeatedly editing out Trump telling his supporters to go to the Capitol peacefully.

What is striking was that offering a more balanced account, including allowing the Republicans to appoint their own members (in accordance with long-standing tradition), would not have lessened much of this stunning testimony. Yet, allowing Republicans to pick their members (yes, including Rep. Jim Jordan) would have prevented allegations of a highly choreographed show trial. It would have added credibility to the process.

If the Committee had a single member with a dissenting or even skeptical viewpoint, testimony on issues like the fight in the presidential limo could have been challenged before it was thrown before the world.

That was clearly not in the interests of the J6 Committee or the media, which eagerly spread this false account.