TOKYO—President Trump said Japanese auto giant Toyota is poised to invest $10 billion in auto plants in the U.S., coming as Tokyo released some details about the over half a trillion dollars it has pledged to invest in America as part of a trade deal.
Trump made the remark while addressing U.S. military personnel in Japan, saying that Japanese Prime Minister Sanae Takaichi told him of the carmaker’s plan.
The Danish wind turbine maker last year unveiled plans to build a new blade factory in Szczecin, near the Baltic Sea coast, to support Europe’s build-out of offshore wind parks.
Firefighters extinguish a fire in Nanao, Ishikawa Prefecture, Japan, early on Tuesday, Jan. 2, 2024.
Soichiro Koriyama | Bloomberg | Getty Images
At least 30 people were killed after a powerful earthquake hit Japan on New Year’s Day, with rescue teams on Tuesday struggling to reach isolated areas where buildings had been toppled, roads wrecked and power cut to tens of thousands of homes.
The quake with a preliminary magnitude of 7.6 struck in the middle of the afternoon on Monday, prompting residents in some coastal areas to flee to higher ground as tsunami waves hit Japan’s west coast, sweeping some cars and houses into the sea.
Thousands of army personnel, firefighters and police officers from across the country have been dispatched to the worst-hit area in the Noto peninsula in Ishikawa prefecture.
However, rescue efforts have been hindered by badly damaged and blocked roads and authorities say they are finding it difficult to assess the full extent of the fallout.
Many rail services, ferries and flights into the area have been suspended. Noto airport has closed due to damage to its runway, terminal and access roads, with 500 people stranded inside cars in its parking lot, according to public broadcaster NHK.
“The search and rescue of those impacted by the quake is a battle against time,” Prime Minister Fumio Kishida said during an emergency disaster meeting on Tuesday.
Kishida said rescuers were finding it very difficult to reach the northern tip of the Noto peninsula due to wrecked roads, and that helicopter surveys had discovered many fires and widespread damage to buildings and infrastructure.
Authorities in Ishikawa said they had confirmed 30 deaths from the earthquake so far, with half of those fatalities in hard-hit Wajima city near the quake’s epicentre.
Firefighters have been battling blazes in several cities and trying to free more people trapped in collapsed buildings, Japan’s fire and disaster management agency said.
More than 140 tremors have been detected since the quake first hit on Monday, according to the Japan Meteorological Agency. The agency has warned more strong shocks could hit in the coming days.
Nobuko Sugimori, a 74-year-old resident of Nanao city in Ishikawa, told Reuters she had never experienced such a quake before.
“I tried to hold the TV set to keep it from toppling over, but I could not even keep myself from swaying violently from side to side,” Sugimori said from her home which had a large crack down its front wall and furniture scattered around the inside.
Across the street, a car was crushed under a collapsed building where residents had another close call.
Fujiko Ueno, 73, said nearly 20 people were in her house for a New Year celebration when the quake struck but miraculously all emerged uninjured.
“It all happened in the blink of an eye” she said, standing in the street among debris from the wreckage and mud that oozed out of the road’s cracked surface.
Several world leaders sent condolence messages with President Joe Biden saying in statement the United States was ready to provide any necessary help to Japan.
“Our thoughts are with the Japanese people during this difficult time,” he said.
The Japanese government ordered around 100,000 people to evacuate their homes on Monday night, sending them to sports halls and school gymnasiums, commonly used as evacuation centres in emergencies.
Many returned to their homes on Tuesday as authorities lifted tsunami warnings.
But around 33,000 households remained without power in Ishikawa prefecture early on Tuesday morning after a night where temperatures dropped below freezing, according to Hokuriku Electric Power’s 9505.T website. Most areas in the northern Noto peninsula also have no water supply, NHK reported.
The Imperial Household Agency said it would cancel Emperor Naruhito and Empress Masako’s slated New Year appearance on Tuesday following the disaster. Kishida postponed his New Year visit to Ise Shrine scheduled for Thursday.
Japan’s defence minister told reporters on Tuesday that 1,000 army personnel are currently involved in rescue efforts and that 10,000 could eventually be deployed.
The quake comes at a sensitive time for Japan’s nuclear industry, which has faced fierce opposition from some locals since the 2011 earthquake and tsunami that triggered nuclear meltdowns in Fukushima. Whole towns were devastated in that disaster.
Japan last week lifted an operational ban imposed on the world’s biggest nuclear plant, Kashiwazaki-Kariwa, which has been offline since the 2011 tsunami.
The Nuclear Regulation Authority said no irregularities were found at nuclear plants along the Sea of Japan, including five active reactors at Kansai Electric Power’s Ohi and Takahama plants in Fukui Prefecture.
Hokuriku Electric’s Shika plant, the closest to the epicentre, has also been idled since 2011. The company said there had been some power outages and oil leaks following Monday’s jolt but no radiation leakage.
The company had previously said it hoped to restart the reactor in 2026.
Chip equipment maker Kokusai Electric said it is investigating further after finding some damage at its factory in Toyama ahead of the planned resumption of operations on Thursday.
Companies including Sharp, Komatsu and Toshiba have been checking whether their factories in the area have been damaged. damage at its factory in Toyama ahead of the planned resumption of operations on Thursday.
A weak session is setting up for Tuesday, with oil under pressure after unexpectedly downbeat China export data. So the preference is for bonds this morning, as stock futures tilt south.
Onto our call of the day, which deals with another worry — a wall of government debt that will be with us for decades. It comes from Bridgewater’s highly regraded co-chief investment officer Bob Prince, who was speaking at the Global Financial Leaders’ Investment Summit on Tuesday, hosted by the Hong Kong Monetary Authority.
Prince touches on asset liability mismatches, such as what was seen during the banking crisis earlier this year. He explains that one big factor behind a crisis is when a certain economic regime exists for an extended period of time and “people extrapolate that into the future on the basis of leverage and asset liability mismatches. Then you get a shift in that regime.”
The events of March, which saw the collapse of SVB, Signature Bank and Silvergate, were a perfect example of that, Prince says. Then he turns to what he calls the “broader effects of a transition from 15 years of abundant free money,” that was first used to battle deleveraging pressures in the financial system in 2008 and then the pandemic.
One long-term effect of that gets particular attention by Prince, who points out how U.S. government Treasury debt to GDP was about 70% in 2008, around where it had been for decades.
“The after effects of offsetting deleveraging and pandemic, you’ve had a massive wealth shift from the public sector to the private sector and that’s left the government with debt to GDP up from 70% up to 120%. And the particular vulnerability of that is in the debt rollovers and the gross issuance that you’re going to see in the coming decades . You’re stuck with that debt until you pay it off and that means you have to roll it over like anybody else does,” said Prince.
“Gross debt issuance will be running at 25% for as far as the eye can see, that means every year you’re issuing 25% of GDP in debt. In 1960, the average amount of debt issuance was 12% of GDP,” he said.
Prince says most people really don’t pay attention to debt rollovers because they just assume those will get done, but notes that when countries have experienced balance of payments crisis in the past, mostly emerging markets, that is because they have been unable to roll over that debt.
In the U.S. case, it’s crucial to look at who is holding the debt, particularly the 27% held by foreign investors and 18% by central banks. “Foreign investors would normally be a reliable source of investment but it does heighten sensitivity to geopolitical risk, and so geopolitical risk converges with debt rollovers and gross issuance of the Treasury is an issue that you need to pay attention to in the coming years.
While not an “acute problem,” he says, it’s a lingering one, and when it comes to central banks it’s also unclear whether their holdings also present a “rollover risk.”
Prince also touches on the fact that that all that “abundant free money” has fueled a private-equity boom, but with interest rates now at 8% instead of 2% or 3%, “the pace and transaction cycle is bound to slow,” and they are starting to see that.
“When we talk to institutional investors around the world, many of them are experiencing liquidity issues right now and the liquidity issues result from the fact so much money was allocated to private assets and the transaction cycle is slowing,” he said.
A team of analysts at Citigroup led by Nathan Sheets have also weighed in on government debt, telling clients in a new note that “it’s unwise for policy makers to experiment or test” where the threshold for too much debt lies. Here’s their chart showing the bleak trajectory:
Dirk Willer, head of global asset allocation at Citigroup, said a debt crisis scenario in the U.S. would likely mean a selloff of risk assets globally. He notes that bonds in rival countries may not be the best bet as they don’t always benefit. And both gold and bitcoin underperformed during the U.K. gilt crisis, so those may be out.
UBSG, +2.79%
swung to a $785 million quarterly loss on lingering effects of its Credit Suisse takeover, but it pulled in $33 billion in new deposits and shares are up.
The U.S. trade deficit climbed 5% in September to $61.5 billion as imports rebounded. Still to come is consumer credit at 3 p.m. Fed Vice Chair for Supervision Michael Barr speaks at 9:15 a.m., followed by Fed Gov. Christopher Waller at 10 a.m.
According to this recent JPMorgan survey, two-thirds of investors are ready to start pumping more money into equities, while just 19% plan to increase bond exposure. Also, note that 67% also said they did not expect performance of the Magnificent 7 stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta — to “crack before the end of the year.”
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Orsted booked a 28.4 billion Danish kroner ($4.02 billion) impairment charge in the third quarter related to its U.S. offshore wind portfolio and said it will stop development of two wind farm projects off the coast of New Jersey amid spiraling costs and supplier delays.
The Danish renewable-energy company had previously warned of up to DKK16 billion of impairments after flagging increasing supply-chain risks at U.S. projects, while a lack of favorable progress on U.S. tax credits and higher interest rates were also sending project costs higher.
A customer inspects a Tesla Motors Inc. Powerwall unit inside a home.
Ian Thomas Jansen-Lonnquist | Bloomberg | Getty Images
After a summer of extreme weather and wildfires and now during the peak of hurricane season, the power going out again is becoming familiar to more Americans. That means it may be a good time to consider a home backup power storage system.
The pervasiveness of extreme weather and climate change, local utility reliability and cost may all factor into this financial decision.
“Backup power may be warranted depending on regional factors and geography as well as the state of the infrastructure there,” said Benjamin R. Dierker, executive director of the Alliance for Innovation and Infrastructure, a research and educational organization, in an email.
In coastal areas, for instance, considerations include the resilience of storm or sea walls, the quality and capacity of drainage infrastructure and the electrical grid’s hardiness, he said. In other areas, extreme weather conditions like high winds, tornados and ice may cause falling trees or downed lines — a risk that’s significantly mitigated if there are buried utility lines rather than overhead lines, Dierker said. Pre-emptive shutdowns, due to extreme weather or other factors, can also be a consideration.
As of Sept. 11, there have been 23 confirmed weather/climate disaster events with losses exceeding $1 billion each to affect United States, according to the National Centers for Environmental Information, which has a graphic that shows the locations of these disasters. These events included two flooding events, 18 severe storm events, one tropical cyclone event, one wildfire event, and one winter storm event.
Here’s what consumers need to consider about home back-up power options:
Appliance needs during power outages
A good first step is to think about the most important appliances you are running on electricity and how long you might realistically need them to run in the event of an outage, said Vikram Aggarwal, chief executive and founder of EnergySage, which helps consumers compare clean home energy solutions.
If you have minimal backup needs, a small portable fossil-fuel generator or battery could suffice, which can cost a few hundred dollars. But if you want your home to operate as normal, you’ll want to consider whole home options.
Location can be a factor since in some areas, the power goes out infrequently or for only short periods of time. In some states like California, Texas and Louisiana, however, it can be a whole different ball game. California consumers, for example, can get an up-to-date sense of outages in their area to get a sense of what their risk may be.
Fossil fuel vs. battery power
If you’re not opposed to fossil fuel-powered options, there are several categories to consider based on your power needs. For lower power needs, a portable generator, which often runs on gasoline or diesel can cost a few hundred dollars to several thousand dollars. There are also higher-priced portable versions that are usually quieter and more fuel-efficient and may be able to power multiple large appliances—and for longer. How long depends in part on the appliances you’re powering.
A whole home standby generator, meanwhile, is permanently installed and automatically kicks on when the power goes out. This generator type is often fueled by propane or natural gas and costs vary based on size, brand and fuel type. There are options in the $3,000 to $5,000 range, but with installation the total can be considerably higher. This could be a good option if you’re expecting outages for multiple days; theoretically, the generator can run for as long as fuel is supplied, but it can be advisable to shut it down for engine-cooling purposes.
For the environmentally-inclined, battery-powered backups can be a good option for their more environmentally friendly and quieter nature. For a few hundred dollars, give or take, there are lower-priced smaller to mid-size battery options that people can purchase and that will last for several hours.
There are also battery-powered options to back up the whole home that offer many of the same functions as conventional generators, but without the need for refueling, according to EnergySage. Consumers might expect to pay $10,000 to $20,000 to install a home battery backup system, EnergySage said. This can often last for eight to 12 hours, or even longer if you aren’t using it to power items such as air conditioning or electric heat.
Incentives that lower the cost of purchase and installation
When thinking about what type of backup to choose, incentives can factor into the equation. Thanks to the Inflation Reduction Act, households can receive a 30% tax credit for a battery storage installation, even if it’s not paired with a solar system, Aggarwal said.
Other state and local incentives may also be available. For instance, in some markets like California, Vermont, Massachusetts and New York, utilities pay consumers to tap into their batteries during peak periods like the summer, Aggarwal said. Consumers with larger batteries—10kWh or more—may be able to earn hundreds of dollars a year, he said.
EVs as a backup power option for the home
Some electrical vehicles can be used to back up essential items, or, in some cases, a whole home.
Ford’s F-150 Lightning, for example, can power a home for three days, or up to 10 days under certain circumstances, according to the company. With the required system installed, and the truck plugged in, stored power is transferred seamlessly to the home in the case of a power outage. For its part, GM recently said it would expand its vehicle-to-home bidirectional charging technology to its entire lineup of Ultium-based electric vehicles by model year 2026.
“If you’re contemplating spending $10,000 on a whole home gas generator system, why not think about an EV with this capability instead?” said Stephen Pantano, head of market transformation at Rewiring America, a nonprofit focused on electrifying homes, businesses and communities.
Consumers in the market for a new stove might also consider an induction model with an integrated battery to power it or other items such a fridge on an as-needed basis, Pantano said. “This opens up new possibilities for power backups that weren’t there before.”
Solar-plus-storage can lead to long-term savings
Home solar panels are becoming more popular, but most are connected to the grid, and you need some kind of battery storage in order to have backup power, said Sarah Delisle, vice president of government affairs and communications for Swell Energy, a home energy solutions provider.
That’s where a solar-plus-storage system can come in handy. It allows people to use electricity generated from their solar panels during the day at a later point, which can be particularly useful for people who live in areas where there are frequent power outages, said Ted Tiffany, senior technical lead at the Building Decarbonization Coalition, a group that promotes moving buildings off fossil fuels.
A solar-plus-storage system costs about $25,000 to $35,000, depending on the size of the battery and other factors, according to the U.S. Dept of Energy. It’s easier and more cost-effective to install panels and the battery at the same time, but it’s not required. Homeowners who have already installed solar panels and want to add storage, might expect to pay between $12,000 to $22,000 for a battery, according to the Energy Department. Consumers who purchase a battery on its own or with backup are eligible for federal tax credits. Some states provide additional solar battery incentives.
Also consider the long-term savings potential, Tiffany said. He has a family member who, with electrical upgrades, spent around $8,000 on a fossil fuel-powered whole home generator. Putting that money into solar instead might have been more economical because of the energy savings over time and tax incentives, he said.
Consumers can visit EnergySage to find contractors and get information about solar and incentives. They can also visit, Switch is On, which helps consumers find information on electrification and efficiency measures for home appliances that supports the renewable energy integration.
Two things investors can be sure about: Nothing lasts forever and the stock market always overreacts. The spiking of yields on long-term U.S. Treasury securities has been breathtaking, and it has led to remarkable declines for some sectors and possible bargains for contrarian investors who can commit for the long term.
First we will show how the sectors of the S&P 500
have performed. Then we will look at price-to-earnings valuations for the sectors and compare them to long-term averages. Then we will screen the entire index for companies trading below their long-term forward P/E valuation averages and narrow the list to companies most favored by analysts.
Here are total returns, with dividends reinvested, for the 11 sectors of the S&P 500, with broad indexes below. The sectors are sorted by ascending total returns this year through Monday.
Returns for 2022 are also included, along with those since the end of 2021. Last year’s weakest sector, communications services, has been this year’s strongest performer. This sector includes Alphabet Inc. GOOGL
and Meta Platforms Inc. META,
which have returned 52% and 155% this year, respectively, but are still down since the end of 2021. To the right are returns for the past week and month through Monday.
On Monday, the S&P 500 Utilities sector had its worst one-day performance since 2020, with a 4.7% decline. Investors were reacting to the jump in long-term interest rates.
Here is a link to the U.S. Treasury Department’s summary of the daily yield curve across maturities for Treasury securities.
The yield on 10-year U.S. Treasury notes
jumped 10 basis points in only one day to 4.69% on Monday. A month earlier the 10-year yield was only 4.27%. Also on Monday, the yield on 20-year Treasury bonds
rose to 5.00% from 4.92% on Friday. It was up from 4.56% a month earlier.
The Treasury yield curve is still inverted, with 3-month T-bills
yielding 5.62% on Monday, but that was up only slightly from a month earlier. An inverted yield curve has traditionally signaled that bond investors expect a recession within a year and a lowering of interest rates by the Federal Reserve. Demand for bonds pushes their prices down. But the reverse has happened over recent days, with the selling of longer-term Treasury securities pushing yields up rapidly.
Another way to illustrate the phenomenon is to look at how the Federal Reserve has shifted the U.S. money supply. Odeon Capital analyst Dick Bove wrote in a note to clients on Friday that “the Federal Reserve has not deviated from its policy to defeat inflation by tightening monetary policy,” as it has shrunk its balance sheet (mostly Treasury securities) to $8.1 trillion from $9 trillion in March 2022. He added: “The M2 money supply was $21.8 trillion in March 2022; today it is $20.8 trillion. You cannot get tighter than these numbers indicate.”
Then on Tuesday, Bove illustrated the Fed’s tightening and the movement of the 10-year yield with two charts:
Odeon Capital Group, Bloomberg
Bove said he believes the bond market has gotten it wrong, with the inverted yield curve reflecting expectations of rate cuts next year. If he is correct, investors can expect longer-term yields to keep shooting up and a normalization of the yield curve.
This has set up a brutal environment for utility stocks, which are typically desired by investors who are seeking dividend income. In a market in which you can receive a yield of 5.5% with little risk over the short term, and in which you can lock in a long-term yield of about 5%, why take a risk in the stock market? And if you believe that the core inflation rate of 3.7% makes a 5% yield seem paltry, keep in mind that not all investors think the same way. Many worry less about the inflation rate because large components of official inflation calculations, such as home prices and car prices, don’t affect everyone every year.
We cannot know when this current selloff of longer-term bonds will end, or how much of an effect it will have on the stock market. But sharp declines in the stock market can set up attractive price points for investors looking to go in for the long haul.
Screening for lower valuations and high ratings
A combination of rising earnings estimates and price declines could shed light on potential buying opportunities, based on forward price-to-earnings ratios.
Let’s look at the sectors again, in the same order, this time to show their forward P/E ratios, based on weighted rolling 12-month consensus estimates for earnings per share among analysts polled by FactSet:
Sector or index
Current P/E to 5-year average
Current P/E to 10-year average
Current P/E to 15-year average
Forward P/E
5-year average P/E
10-year average P/E
15-year average P/E
Utilities
82%
86%
95%
14.99
18.30
17.40
15.82
Real Estate
76%
80%
81%
15.19
19.86
18.89
18.72
Consumer Staples
93%
96%
105%
18.61
19.92
19.30
17.64
Healthcare
103%
104%
115%
16.99
16.46
16.34
14.72
Financials
88%
92%
97%
12.90
14.65
14.08
13.26
Materials
100%
103%
111%
16.91
16.98
16.42
15.27
Industrials
88%
96%
105%
17.38
19.84
18.16
16.56
Energy
106%
63%
73%
11.78
11.17
18.80
16.23
Consumer Discretionary
79%
95%
109%
24.09
30.41
25.39
22.10
Information Technology
109%
130%
146%
24.20
22.17
18.55
16.54
Communication Services
86%
86%
94%
16.41
19.09
19.00
17.43
S&P 500
94%
101%
112%
17.94
19.01
17.76
16.04
DJ Industrial Average
93%
98%
107%
16.25
17.49
16.54
15.17
Nasdaq Composite Index
92%
102%
102%
24.62
26.71
24.18
24.18
Nasdaq-100 Index
97%
110%
126%
24.40
25.23
22.14
19.43
There is a limit to how many columns we can show in the table. The S&P 500’s forward P/E ratio is now 17.94, compared with 16.79 at the end of 2022 and 21.53 at the end of 2021. The benchmark index’s P/E is above its 10- and 15-year average levels but below the five-year average.
If we compare the current sector P/E numbers to 5-, 10- and 15-year averages, we can see that the current levels are below all three averages for four sectors: utilities, real estate, financials and communications services. The first three face obvious difficulties as they adjust to the rising-rate environment, while the real-estate sector reels from continuing low usage rates for office buildings, from the change in behavior brought about by the COVID-19 pandemic.
Your own opinions, along with the pricing for some sectors, might drive some investment choices.
A broader screen of the S&P 500 might point to companies for you to research further.
We narrowed the S&P 500 as follows:
Current forward P/E below 5-, 10- and 15-year average valuations. For stocks with negative earnings-per-share estimates for the next 12 months, there is no forward P/E ratio so they were excluded. For stocks listed for less than 15 years, we required at least a 5-year average P/E for comparison. This brought the list down to 138 companies.
“Buy” or equivalent ratings from at least two-thirds of analysts: 41 companies.
Here are the 20 companies that passed the screen, for which analysts’ price targets imply the highest upside potential over the next 12 months.
There is too much data for one table, so first we will show the P/E information:
U.S. stocks ended higher Friday after Federal Reserve Chairman Jerome Powell warned the central bank may need to raise interest rates even higher to temper a strong U.S. economy and quell inflation, while assuring investors that monetary policy would proceed cautiously.
How stock indexes traded
For the week, the Dow fell 0.4%, the S&P 500 gained 0.8% and the Nasdaq climbed 2.3%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses, while the S&P 500 and technology-heavy Nasdaq Composite each…
Hawaiian Electric Industries Inc.’s stock added to losses Tuesday, tumbling 26% after S&P Global Ratings downgraded its rating on the utility company to junk.
S&P Global Ratings cut its rating on the company HE to BB- and placed it on CreditWatch negative, meaning the rating agency could downgrade it again in the near term.
WeWork Inc. disclosed Tuesday that there’s “substantial doubt” about its ability to continue operating, as the company seeks to improve its financial positioning.
Shares of the company, which provides co-working spaces, were down 33% in Tuesday’s after-hours trading.
WeWork WE, -5.50%
lost $397 million in the second quarter and has $680 million of liquidity. In light of its losses and expected cash needs, “substantial doubt exists about the company’s ability to continue as a going concern,” WeWork said in its second-quarter earnings release.
Its ability to continue “is contingent upon successful execution of management’s plan to improve liquidity and profitability over the next 12 months.”
As part of that liquidity planning, WeWork will aim to cut its rent and tenancy costs through restructuring as a renegotiation of lease terms. The company is also looking to boost revenue by lowering member churn, and it will try to rein in expenses and capital expenditures. Finally, WeWork is seeking additional capital through the issuance of debt or equity, or via asset divestitures.
The company was a hot technology player before the pandemic, enabling businesses to obtain flexible arrangements for workspaces, but it’s struggled to find its footing again now that companies and employees have become more comfortable with remote work.
WeWork’s losses narrowed in the latest quarter, though they were still sizable, as the company logged a net loss of $397 million, or 21 cents a share, compared with a loss of $635 million, or 76 cents a share, in the year-prior period. The FactSet consensus was for a 12-cent loss per share, based on three estimates.
The company also managed to grow revenue in its latest quarter, bringing in an $844 million haul on the top line, up from $815 million a year earlier, though analysts had been looking for $850 million.
“The company’s transformation continues at pace, with a laser focus on member retention and growth, doubling down on our real-estate portfolio optimization efforts, and maintaining a disciplined approach to reducing operating costs,” Interim Chief Executive David Tolley said in a release.
One of the hottest movies of the summer is the staggeringly good biopic “Oppenheimer,” about the man who oversaw the frantic race to develop the atomic bomb during World War II.
The atom bomb dropped on Hiroshima, Japan on Aug 6, 1945 was a fission-style device. This also happens to be the same basic physics behind nuclear reactors that are in use today. It’s a reminder that technology can be, at its essence, agnostic: Whether it is used for malevolent or benevolent purposes (in nuclear fission’s instance, an instrument of death or clean, carbon-free electricity) depends upon the intent of the user.
These percentages are likely to rise as global demand for electricity — and concerns about global warming and climate change — rise. This will present opportunities for long-term oriented investors. The lion’s share of this demand — about 70%, says the Paris-based International Energy Agency (IEA), will come from India, which the United Nations says is now the world’s most populous country, China, and Southeast Asia. Put another way, “the world’s growing demand for electricity is set to accelerate, adding more than double Japan’s current electricity consumption over the next three years,” says Fatih Birol, the IEA’s executive director.
While fossil fuels remain the dominant source of electricity generation worldwide — the Central Intelligence Agency estimates that it provides about 70% of America’s electricity, 71% of India’s and 62% of China’s, for example—the IEA report says future demand will be met almost exclusively from two sources: renewables and nuclear power. “We are close to a tipping point for power sector emissions,” the IEA says. “Governments now need to enable low-emissions sources to grow even faster and drive down emissions so that the world can ensure secure electricity supplies while reaching climate goals.”
“ The Biden administration is a big booster of nuclear energy. ”
It’s helpful that the Biden administration is a big booster of nuclear energy, which the White House sees as an integral part of its broader effort to move the U.S. economy away from fossil fuels. The Department of Energy says that the country’s 93 reactors generate more than half of America’s carbon-free electricity. But price pressures from wind, solar and natural gas (which the feds call “relatively clean” even though it emits about 60% of coal’s carbon levels) have putseveral reactors out of business in recent years.
The bipartisan infrastructure bill that Biden signed into law in November 2021 includes $6 billion, spread out over several years, for the so-called Civil Nuclear Credit Program, designed to keep reactors — and the high-paying jobs that come with them — running. If a plant were to close, it would “result in an increase in air pollutants because other types of power plants with higher air pollutants typically fill the void left by nuclear facilities,” the administration says. U.S. Energy Secretary Jennifer Granholm has said the Biden administration is “using every tool available” to get the country powered by clean energy by 2035.
The private sector is beginning to stir. Last week, Maryland-based X-Energy said it would build up to 12 reactors in Central Washington state, for Energy Northwest, a public utility. These wouldn’t be the behemoth-type reactors we’re used to seeing, but “advanced small, nuclear reactors.” X-Energy, which is privately held, has also been selected by Dow DOW, -1.40%
to construct a similar facility in Texas.
Other companies are also rolling out new technology to meet demand. Nuclear fusion — a breakthrough in that it creates more energy than the Oppenheimer-era fission model and at a lower cost — is likely to be the basis for reactors in the years ahead; the Washington, D.C.-based Fusion Industry Association thinks the first fusion power plant could come online by 2030. After seven rounds of funding, one fusion company, Seattle-based Helion Energy, is currently valued at around $3.6 billion, and appears headed for a public offering.
Here too, the Biden administration is getting involved. In May, the Department of Energy announced $46 million in funding for eight other fusion companies. “We have generated energy by drawing power from the sun above us. Fusion offers the potential to create the power of the sun right here on Earth,” says Granholm.
There are several opportunities here for long-term investors. You can pick your way through any number of publicly held companies, including more traditional utilities, or spread your bet across the industry through a handful of exchange-traded funds. The largest of these is the Global X Uranium Fund URA, +0.78%,
with about $1.6 billion in assets. It’s up about 9% year-to-date. The VanEck Uranium + Nuclear Energy Fund NLR, +0.41%
is up almost 10% and sports a 1.8% dividend yield. These are respectable year-t0-date returns, even though they lag the S&P 500 SPX, +0.32%
(up close to 19%) by a wide margin.
Volvo Cars CEO Jim Rowan photographed in Nov. 2022. The company wants every car it sells to be fully electric by the year 2030.
Anders Wiklund | AFP | Getty Images
Volvo Cars does not plan to use autonomous driving technology from Tesla and will instead focus on developing its own systems, according to the company’s CEO.
Back in June, the Gothenburg-headquartered carmaker said it had inked an agreement with Elon Musk’s firm that would give its electric vehicles access to 12,000 Tesla Superchargers in the U.S., Mexico and Canada.
Speaking to CNBC’s “Squawk Box Europe” on Thursday morning, Volvo Cars chief Jim Rowan was asked whether this meant the business would consider using Tesla’s autonomous driving tech in the future.
“We’ve already made that decision in terms of what we want to control internally, in terms of our technology stack,” Rowan said.
“And we’ve chosen that we want to be in full control of our ADAS [advanced driver assistance systems], all the way up to full AD [autonomous driving] software,” he added.
“So we will continue to write that, we will continue to invest in that, and we’ll continue to develop that.”
In a sign of how the company’s strategy is taking shape, Volvo Cars announced late last year that it had taken full ownership of Zenseact, a business specializing in AD software.
Read more about electric vehicles from CNBC Pro
Rowan was speaking to CNBC after Volvo Cars reported second-quarter results. The company said earnings before interest and taxes were 5 billion Swedish krona (around $487.5 million) compared to 10.8 billion Swedish krona in the second quarter of 2022.
“During the quarter, the company reported a continued strong sales performance in electric cars,” it said in a statement accompanying its earnings report. “Sales of fully electric Volvo car models increased by 178 per cent year-on-year during the quarter and accounted for 16 per cent of its total share.”
Volvo Cars’ longer-term electrification strategy is centered around every car it sells being fully electric by the year 2030. This would mean a phase-out of vehicles using internal combustion engines, a category that includes hybrids.
The past few years have seen the automotive industry suffer issues related to supply chains and the cost of materials crucial to the production of electric vehicles.
During his interview with CNBC, Rowan gave an overview of the current state of play. “Last year we saw lithium spike quite dramatically, that’s now come down substantially from its peak,” he said.
“It went from about 10 to about $110 per kilo and now it’s down … below, somewhere between 30 and 40 [dollars],” he added. “So we’re starting to see that normalize, and I think that will keep reducing through the course of this year.”
Rowan also described semiconductors as being “patchy” in 2022 but “much, much better this year.”
This had been shown in Volvo Cars own output, he said. “We manufactured over 50% more cars this quarter than we did in the same quarter last year.”
He added that 2022 had also been affected by Covid lockdowns. “If you remember, Shanghai was locked down for almost 60 days — we had a lot of the suppliers in Shanghai, and that was an effect there,” Rowan said.
“So we’re seeing that bounce back really quickly for us.”
U.S. stock index futures slipped lower Tuesday after a three-day break, with Chinese equities wilting on disappointment over the monetary stimulus efforts in the world’s number-two economy.
What’s happening
Dow Jones Industrial Average futures YM00, -0.31%
fell 109 points, or 0.3%, to 34,495.
S&P 500 futures ES00, -0.26%
dropped 11 points, or 0.2%, to 4,442.
Nasdaq 100 futures NQ00, -0.16%
decreased 28 points, or 0.1%, to 15,239.
On Friday, the Dow Jones Industrial Average DJIA, -0.32%
fell 109 points, or 0.32%, to 34299, the S&P 500 SPX, -0.37%
declined 16 points, or 0.37%, to 4410, and the Nasdaq Composite COMP, -0.68%
dropped 93 points, or 0.68%, to 13690.
What’s driving markets
Investors were in a cautious mood following the U.S. long weekend in honor of the Juneteenth federal holiday, but that’s after a strong run. The S&P 500 gained 2.6% last week, its fifth week in a row of gains, as the tech-heavy Nasdaq Composite took its winning run to eight weeks.
Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, said both retail and institutional investor sentiment are at their highest levels in over two years.
“We note that the consensus is right about 80% of the time, which means such shifts in sentiment and positioning can often be right as the collective intelligence of the market knows best,” he said. “However, given our fundamental view on growth, we find it hard to get on board with the current excitement and narrative supporting it. In other words, if second half growth re-accelerates as expected, then the bullish narrative being used to support equity prices will be proven correct.”
One event that investors have to weigh is the resumption this fall of student loan payments, and what that may mean for consumers’ disposable income. Student loan payments have been paused since the start of the pandemic in March 2020.
China cut its 1- and 5-year lending rates by 10 basis points, which investors viewed to be modest, particularly after a Friday state council meeting didn’t result in other concrete measures. According to Societe Generale, there were expectations the 5-year rate, the benchmark for mortgages, would be cut by 15 basis points.
Tuesday’s economic data include housing starts data, which showed a 21.7% rise in May after a revised 2.9% drop in April. Building permits also climbed 5.2% in May.
A panel later Tuesday will include both New York Federal Reserve President John Williams and Fed Vice Chair for Supervision Michael Barr. On Wednesday Fed Chair Jerome Powell is due to deliver semi-annual congressional testimony.
Cava Group, the Mediterranean-focused fast-casual restaurant chain that’s making its trading debut on Thursday, is confident it has access to enough funding to expand its business and make a profit, according to Chief Financial Officer Tricia Tolivar.
But Tolivar declined to provide a timeline to profitability in an interview with MarketWatch.
Solarcycle CTO Pablo Dias and COO Rob Vinje show a solar panel laminate after it’s been cleanly separated from the glass to investors and partners. The laminate is where most of the value is contained in a panel, like silver, silicon, and copper.
Solarcycle
The growing importance of wind and solar energy to the U.S. power grid, and the rise of electric vehicles, are all key to the nation’s growing need to reduce dependence on fossil fuels, lower carbon emissions and mitigate climate change.
But at the same time, these burgeoning renewable energy industries will soon generate tons of waste as millions of photovoltaic (PV) solar panels, wind turbines and lithium-ion EV batteries reach the end of their respective lifecycles.
As the saying goes, though, one man’s trash is another man’s treasure. Anticipating the pileup of exhausted clean-energy components — and wanting to proactively avoid past sins committed by not responsibly cleaning up after decommissioned coal mines, oil wells and power plants — a number of innovative startups are striving to create a sustainable, and lucrative, circular economy to recover, recycle and reuse the core components of climate tech innovation.
Wind and solar energy combined to generate 13.6% of utility-scale electricity last year, according to the U.S. Energy Information Administration (EIA), and those numbers will undoubtedly rise as renewable energy continues to scale up. Some leading utilities across the nation are far ahead of that pace already.
Meanwhile, sales of all-electric vehicles rose to 5.8% of the total 13.8 million vehicles Americans purchased in 2022, up from 3.2% in 2021. And with the Environmental Protection Agency’s newly proposed tailpipe emissions limits and power plant rules, EV sales could capture a 67% market share by 2032 and more utilities be forced to accelerate their power generation transition.
Solarcycle is a prime example of the companies looking to solve this climate tech waste problem of the future. Launched last year in Oakland, California, it has since constructed a recycling facility in Odessa, Texas, where it extracts 95% of the materials from end-of-life solar panels and reintroduces them into the supply chain. It sells recovered silver and copper on commodity markets and glass, silicon and aluminum to panel manufacturers and solar farm operators.
“Solar is becoming the dominant form of power generation,” Solarcycle CEO Suvi Sharma said, citing an EIA report stating that 54% of new utility-scale electric-generating capacity in the U.S. this year will come from solar. “But with that comes a new set of challenges and opportunities. We have done a phenomenal job making solar efficient and cost-effective, but really have not done anything yet on making it circular and dealing with the end-of-life [panels].”
The average lifespan of a solar panel is about 25 to 30 years, and there are more than 500 million already installed across the country, Sharma said, ranging from a dozen on a residential home’s rooftop to thousands in a commercial solar farm. With solar capacity now rising an average of 21% annually, tens of millions more panels will be going up — and coming down. Between 2030 and 2060, roughly 9.8 million metric tons of solar panel waste are expected to accumulate, according to a 2019 study published in Renewable Energy.
Currently, about 90% of end-of-life or defective solar panels end up in landfills, largely because it costs far less to dump them than to recycle them. “We see that gap closing over the next five to 10 years significantly,” Sharma said, “through a combination of recycling becoming more cost-effective and landfilling costs only increasing.”
Indeed, the market for recycled solar panel materials is expected to grow exponentially over the next several years. A report by research firm Rystad Energy stated they’ll be worth more than $2.7 billion in 2030, up from only $170 million last year, and accelerate to around $80 billion by 2050. The Department of Energy’s National Renewable Laboratory (NREL) found that with modest government support, recycled materials can meet 30%-50% of solar manufacturing needs in the U.S. by 2040.
Both the Bipartisan Infrastructure Law and the Inflation Reduction Act (IRA) provide tax credits and funding for domestic manufacturing of solar panels and components, as well as research into new solar technologies. Those provisions are intended to cut into China’s dominant position in the global solar panel supply chain, which exceeds 80% today, according to a recent report from the International Energy Agency.
One recipient of this federal funding is First Solar, the largest solar panel manufacturer in the U.S. Founded in 1999 in Tempe, Arizona, the company has production facilities in Ohio and another under construction in Alabama. It has been awarded $7.3 million in research funds to develop a new residential rooftop panel that is more efficient than current silicon or thin-film modules.
First Solar has maintained an in-house recycling program since 2005, according to an email from chief product officer Pat Buehler. “We recognized that integrating circularity into our operations was necessary to scale the business in a sustainable way,” he wrote. But rather than extracting metals and glass from retired panels and manufacturing scrap, “our recycling process provides closed-loop semiconductor recovery for use in new modules,” he added.
Retired wind turbines present another recycling challenge, as well as business opportunities. The U.S. wind energy industry started erecting turbines in the early 1980s and has been steadily growing since. The American Clean Power Association estimates that today there are nearly 72,000 utility-scale turbines installed nationwide — all but seven of them land-based — generating 10.2% of the country’s electricity.
Although the industry stalled over the past two years, due to supply chain snags, inflation and rising costs, turbine manufacturers and wind farm developers are optimistic that the tide has turned, especially given the subsidies and tax credits for green energy projects in the IRA and the Biden administration’s pledge to jumpstart the nascent offshore wind sector.
The lifespan of a wind turbine is around 20 years, and most decommissioned ones have joined retired solar panels in landfills. However, practically everything comprising a turbine is recyclable, from the steel tower to the composite blades, typically 170 feet long, though the latest models exceed 350 feet.
Between 3,000 and 9,000 blades will be retired each year for the next five years in the U.S., and then the number will increase to between 10,000 and 20,000 until 2040, according to a 2021 study by NREL. By 2050, 235,000 blades will be decommissioned, translating to a cumulative mass of 2.2 million metric tons — or more than 60,627 fully loaded tractor trailers.
Players in the circular economy are determined not to let all that waste go to waste.
Knoxville-based Carbon Rivers, founded in 2019, has developed technology to shred not only turbine blades but also discarded composite materials from the automotive, construction and marine industries and convert them through a pyrolysis process into reclaimed glass fiber. “It can be used for next-generation manufacturing of turbine blades, marine vessels, composite concrete and auto parts,” said chief strategy officer David Morgan, adding that the process also harvests renewable oil and synthetic gas for reuse.
While processing the shredded materials is fairly straightforward, transporting massive turbine blades and other composites over long distances by rail and truck is more complicated. “Logistics is far and away the most expensive part of this entire process,” Morgan said.
In addition to existing facilities in Tennessee and Texas, Carbon Rivers plans to build sites in Florida, Pennsylvania and Idaho over the next three years, strategically located near wind farms and other feedstock sources. “We want to build another five facilities in the U.K. and Europe, then get to the South American and Asian markets next,” he said.
In the spirit of corporate sustainability — specifically not wanting their blades piling up in landfills — wind turbine manufacturers themselves are contracting with recycling partners. In December 2020, General Electric’s Renewable Energy unit signed a multi-year agreement with Boston-based Veolia North America to recycle decommissioned blades from land-based GE turbines in the U.S.
Veolia North America opened up a recycling plant in Missouri in 2020, where it has processed about 2,600 blades to date, according to Julie Angulo, senior vice president, technical and performance. “We are seeing the first wave of blades that are 10 to 12 years old, but we know that number is going to go up year-on-year,” she said.
Using a process known as kiln co-processing, Veolia reconstitutes shredded blades and other composite materials into a fuel it then sells to cement manufacturers as a replacement for coal, sand and clay. The process reduces carbon dioxide emissions by 27% and consumption of water by 13% in cement production.
“Cement manufacturers want to walk away from coal for carbon emissions reasons,” Angulo said. “This is a good substitute, so they’re good partners for us.”
GE’s wind turbine competitors are devising ways to make the next generation of blades inherently more recyclable. Siemens Gamesa Renewable Energy has begun producing fully recyclable blades for both its land-based and offshore wind turbines and has said it plans to make all of its turbines fully recyclable by 2040. Vestas Wind Systems has committed to producing zero-waste wind turbines by 2040, though it has not yet introduced such a version. In February, Vestas introduced a new solution that renders epoxy-based turbine blades to be broken down and recycled.
Lithium-ion batteries have been in use since the early 1990s, at first powering laptops, cell phones and other consumer electronics, and for the past couple of decades EVs and energy storage systems. Recycling of their valuable innards — lithium, cobalt, nickel, copper — is focused on EVs, especially as automakers ramp up production, including building battery gigafactories. But today’s EV batteries have a lifespan of 10-20 years, or 100,000-200,000 miles, so for the time being, recyclers are primarily processing battery manufacturers’ scrap.
Toronto-based Li-Cycle, launched in 2016, has developed a two-step technology that breaks down batteries and scrap to inert materials and then shreds them, using a hydrometallurgy process, to produce minerals that are sold back into the general manufacturing supply chain. To avoid high transportation costs for shipping feedstock from various sites, Li-Cycle has geographically interspersed four facilities — in Alabama, Arizona, New York and Ontario — where it’s deconstructed. It is building a massive facility in Rochester, New York, where the materials will be processed.
“We’re on track to start commissioning the Rochester [facility] at the end of this year,” said Li-Cycle’s co-founder and CEO Ajay Kochhlar. Construction has been funded by a $375 loan from the Department of Energy (DOE), he said, adding that since the company went public, it’s also raised about $1 billion in private deals.
A different approach to battery recycling is underway at Redwood Materials, founded outside of Reno, Nevada, in 2017 by JB Straubel, the former chief technology officer and co-founder of Tesla. Redwood also uses hydrometallurgy to break down batteries and scrap, but produces anode copper foil and cathode-active materials for making new EV batteries. Because the feedstock is not yet plentiful enough, the nickel and lithium in its cathode products will only be about 30% from recycled sources, with the remainder coming from newly mined metals.
“We’re aiming to produce 100 GWh/year of cathode-active materials and anode foil for one million EVs by 2025,” Redwood said in an email statement. “By 2030, our goal is to scale to 500 GWh/year of materials, which would enable enough batteries to power five million EVs.”
Besides its Nevada facility, Redwood has broken ground on a second one in Charleston, South Carolina. The privately held company said it has raised more than $1 billion, and in February it received a conditional commitment from the DOE for a $2-billion loan from the DOE as part of the IRA. Last year Redwood struck a multi-billion dollar deal with Tesla’s battery supplier Panasonic, and it’s also inked partnerships with Volkswagen Group of America, Toyota, Ford and Volvo.
Ascend Elements, headquartered in Westborough, Massachusetts, utilizes hydrometallurgy technology to extract cathode-active material mostly from battery manufacturing scrap, but also spent lithium-ion batteries. Its processing facility is strategically located in Covington, Georgia, a state that has attracted EV battery makers, including SK Group in nearby Commerce, as well as EV maker Rivian, near Rutledge, and Hyundai, which is building an EV factory outside of Savannah.
Last October, Ascend began construction on a second recycling facility, in Hopkinsville, Kentucky, using federal dollars earmarked for green energy projects. “We have received two grant awards from the [DOE] under the Bipartisan Infrastructure Law that totaled around $480 million,” said CEO Mike O’Kronley. Such federal investments, he said, “incentivizes infrastructure that needs to be built in the U.S., because around 96% of all cathode materials are made in East Asia, in particular China.”
As the nation continues to build out a multi-billion-dollar renewable energy supply chain around solar, wind and EVs, simultaneously establishing a circular economy to recover, recycle and reuse end-of-life components from those industries is essential in the overarching goal of battling climate change.
“It’s important to make sure we keep in mind the context of these emerging technologies and understand their full lifecycle,” said Garvin Heath, a senior energy sustainability analyst at NREL. “The circular economy provides a lot of opportunities to these industries to be as sustainable and environmentally friendly as possible at a relatively early phase of their growth.”
