Molecules of U.S. Freedom
I’m sorry … I just can’t stop laughing…
“Freedom gas”! OK, breathe…
This week … ahem … the Department of Energy (DOE), in all seriousness, rebranded natural gas with a more patriotic spin. In most aspects, it was your standard report on the health of the U.S. natural gas market. The government agency touted the development of a liquified natural gas terminal on Quintana Island, Texas, and lauded another record-setting year for natural gas production.
Only, the DOE secretaries writing the report felt the need to add some hype. Assistant Secretary for Fossil Energy Steven Winberg dropped this gem:
With the U.S. in another year of record-setting natural gas production, I am pleased that the Department of Energy is doing what it can to promote an efficient regulatory system that allows for molecules of U.S. freedom to be exported to the world.
U.S. Under Secretary of Energy Mark W. Menezes doubled down on the patriotism:
Increasing export capacity from the Freeport LNG project is critical to spreading freedom gas throughout the world by giving America’s allies a diverse and affordable source of clean energy.
So, let’s recap. The U.S. is producing vast amounts of “freedom gas,” and we’re spreading these “molecules of U.S. freedom” throughout the world.
Apparently, Mr. Winberg and Mr. Menezes have met my 9-year-old. She’s been spreading freedom gas for nearly a decade. It’s nice to know what to do with all those molecules of U.S. freedom. Thanks, DOE! (Fart jokes are such low-hanging fruit.)
We can’t allow Winberg and Menezes to toot this horn too loudly. Global supplies of freedom gas surged by 114 billion cubic feet in the week that ended May 24, according to the Energy Information Administration. That’s far more molecules of freedom than analysts were expecting.
As a result, freedom gas futures contracts are falling sharply. The July contract was last down more than 2.6%. Analysts blame warm weather and slackening demand for rising freedom gas stockpiles.
The bottom line: Investors should hold their noses, light a candle and take a hard pass on freedom gas for now.
The Good, the Bad and the Ugly
The Good: Dollar General Makes It Rain!
While other retailers struggle to keep stores open, Dollar General Corp. (NYSE: DG) is swimming in cash like Scrooge McDuck.
The discount retailer reported an 8.8% rise in earnings, an 8.3% surge in sales and a 3.8% jump in same-store sales.
What’s more, DG is planning to open 975 new stores in 2019. The Mars location in the image is still pending galactic trade approval. I wonder if they have freedom gas on Mars? Hmm…
DG stock is up more than 25% in the past year and remains one of the best investments in brick-and-mortar retail outside of Walmart Inc. (NYSE: WMT).
The Bad: The Opioid Backlash
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) is the latest Big Pharma company to taste the whip of the nation’s opioid backlash. Over the weekend, Teva announced an $85 million settlement with Oklahoma for opioid litigation. And that’s just one of the roughly 1,500 pending lawsuits tied to Teva’s opioid sales.
While Teva admitted no wrongdoing, those 1,500 pending suits represent potentially billions in settlement and lawsuit costs. The sheer magnitude of the issue led Bank of America Merrill Lynch analysts to downgrade TEVA stock to “underperform” from “buy,” noting that the “potential damages/settlement are difficult, if not impossible, to quantify.”
For now, investors should “just say no” to Teva.
The Ugly: “Different This Time”
Those are the three most dangerous words in investing, according to Michael Darda at MKM Partners. Darda was referencing the market’s dismissal of the inverted yields on the 10-year and three-month Treasury notes.
It’s a warning that Ted Bauman, editor of The Bauman Letter [Note: link to SVC promo], first trumpeted back in March.
But, come on, what’s so dangerous about lines crossing on a chart?
The problem is that this inversion indicates that investors see more growth and opportunity over the short term (the three-month note) than they do over the long term (the 10-year note). In short, it signals expectations for a recession.
What’s more, the spread (or difference between the 10-year and three-month notes) hit its lowest point since August 2007 this week — just before the financial crisis of 2008.
If you aren’t already taking precautions with your portfolio and investments, it might be time to scramble Maverick on Alert Five — you’re going to need all the Tom Cruise mojo you can get.
If we had had confidence that the president clearly did not commit a crime, we would have said so. We did not, however, make a determination as to whether the president did commit a crime. — Special Counsel Robert Mueller
We typically try to stay politically neutral here on Great Stuff, but this quote was just too important and historic to pass up. Besides, the real best quotes of the week — from those DOE geniuses passing “freedom gas” and “molecules of U.S. freedom” — were already taken.
The End of Traditional Ride-Sharing
That’s quite a statement … but it’s true.
The reality is that the Ubers (NYSE: UBER) and Lyfts (Nasdaq: LYFT) of the world are operating on borrowed time. There’s a disrupter coming that will disrupt these disrupters … leaving them, well … really disrupted.
I’m talking about self-driving cars. Who needs to call a service to schedule a ride when your own vehicle can drive you to your destination, drop you off and then park itself or drive back home and pick you up again later?
The technology is already here; it just needs some fine-tuning. The 5G revolution will help with that, and a resurgence in semiconductors will make it even more of a reality.
Uber and Lyft have spent billions chasing the self-driving car market. They know where their futures lie.
As Chad Shoop, editor of Pure Income [Note: link to PUR promo] and Automatic Profits Alert [Note: link to ADP promo], puts it: “If you are investing in these stocks, you have to understand the extreme amount of risk you are taking.”
This week, Chad covers the risks Uber and Lyft face and gives you a profitable alternative to take full advantage of the coming disruption of the disruptors. See the video below for more:
Until next time, good trading!