Mass Transit Is Dead; Electric Golf Carts Are In -- August 14, 2020

Why I love to blog: about fifteen minutes after writing the note below, I stumble across this story from Barron's: buy utility stocks now; Goldman Sachs says they could be a great source of dividends. Well, duh!

The spread between the sector’s yield and that of the 10-Year U.S. Treasury note is near a 25-year high, according to Goldman Sachs—3.2% versus 0.6% recently.

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Original Post

Breaking: from SeekingAlpha --

• California utilities Edison International, PG&E, and Sempra Energy  all trade sharply lower amid warnings that a dangerous heat wave may cause power outages.
  
• The California Independent System Operator, which controls electricity flows on most of the state's grid, says there could be a shortfall in power supplies this afternoon and calls for more resources to help meet electricity demand.
• According to the National Weather Service, temperatures are forecast to hit 112 degrees Friday in the San Joaquin Valley, Los Angeles temps could hit 96, and Sacramento could reach 108.
• imagine if there were a gazillion EVs on the California highways today; yeah, this EV thing is going to work out just fine;
  
• and a reminder, that the governor wants the state to assume responsibility for day-to-day operations for the electric grid going forward
• first thing they would do in this "emergency" scenario: schedule a sub-committee to meet next week;
• wow, talk about crazy "investors"; SRE trading sharply lower on a one-day non-issue;
  

Market: earlier I mentioned that it looked like a "blah" day for the market. Wow, was I wrong. The major indices are essentially flat but on days like this one can take a breath and spend some time digesting (sorry about the mixed metaphor) what is happening on Wall Street.

• first, both the S&P and the Dow have turned green; the Dow was down over one hundred points before the open and it looked like there could have been a pretty significant sell-off;
• second, although the NASDAQ is red, it's barely red, and the NASDAQ has had such a huge run-up, it should not be surprising there will be some profit-taking;
• the bellwether stock for the NASDAQ, AAPL, has come off its lows for the day, and instead of being down $5/share is now down about $1; amazing;
• third, oil is down, but book at this: natural gas is up 8%
• ISO New England: electricity costs are moderate today, but renewable energy is simply not there, accounting for only 5% of total energy supplied; the combination of natural gas (71%) and nuclear (21%) is, I think, at a record high, on a percentage basis, accounting for 92% of energy supplied; when that percentage goes above 90%, it catches my eye:
• ISO New York, price-wise, is unremarkable; but again, renewable energy is simply not there, solar is not broken out, and wind accounts for 0.51% of total energy supplied; dueal fuel (53%), natural gas (25%), nuclear (19%), and hydro (17%) account for a combined total of 97.4% of total energy provided; wow;
• ONEOK is up over 3%;
• WMB is up almost 3%;
• SRE: down about 2.5%:
• going forward, the transition to electricity at the expense of natural gas (and gasoline) will continue regardless of who wins in November, but if Biden wins, the transition will accelerate; the winners -- 
• those who provide electricity from sun and wind;
• those who provide the infrastructure needed for the transition; and,
• utilities, in general
• companies who generate revenue from regulatory credits (cap and trade, Tesla) -- Tesla is up $17 today in a flat market;
  
• movers and shakers, and investors, perhaps are already taking notice:
  

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

To repeat: I think this is on the radar scope of very few investors, particularly the second and fourth sub-bullet below in bold red:

• going forward, the transition to electricity at the expense of natural gas (and gasoline) will continue regardless of who wins in November, but if Biden wins, the transition will accelerate; the winners -- 
• those who provide electricity from sun and wind;
• those who provide the infrastructure needed for the transition; and,
• utilities, in general
• companies who generate revenue from regulatory credits (cap and trade, Tesla)
  
• movers and shakers, and investors, perhaps are already taking notice:

Infrastructure to support the electrical grid: number one on my list -- power transformers. And number one in that sector in terms of size (not in terms of investment recommendations): GE --

• GE HV/MV equipment, power transformers:
• ABB;
• Siemens;
• Mitsubishi Electric:
  

It is interesting to note that power transformer manufacturers and power transformer supplies are two separate categories. See the link above.  

Mass transit is dead: electric golf carts are in.

• Tesla is up $17 today in a flat market;