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Tag: electricity

  • Orsted Books $4 Bln Impairments, Walks Away From Two US Offshore Projects

    Orsted Books $4 Bln Impairments, Walks Away From Two US Offshore Projects

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    Updated Nov. 1, 2023 3:33 am ET

    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.

    Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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  • Nokia to cut as many as 14,000 jobs as profit drops by 69%

    Nokia to cut as many as 14,000 jobs as profit drops by 69%

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    Nokia on Thursday set out plans to cut its workforce by up to 14,000 as it reported a steep drop in third-quarter profit.

    The telecom equipment maker said it’s looking to reduce its workforce to between 72,000 and 77,000 workers, from 86,000 now, by the end of 2026. Nokia
    NOKIA,
    -4.14%

    NOK,
    -2.87%

    said that could save the company as much as €1.2 billion ($1.3 billion), or up to 15% of personnel expenses.

    “We continue to believe in the mid to long term attractiveness of our markets. Cloud Computing and AI revolutions will not materialize without significant investments in networks that have vastly improved capabilities. However, given the uncertain timing of the market recovery, we are now taking decisive action on three levels: strategic, operational and cost. I believe these actions will make us stronger and deliver significant value for our shareholders,” said Pekka Lundmark, president and chief executive, in a statement.

    The company didn’t provide a regional breakdown of the job cuts but said it will “act quickly” as it targeted mobile networks, cloud and network services, as well as its corporate function, for cuts.

    Nokia’s profit dropped by 69% to €133 million, or 2 cents a share, as revenue fell 20% to €4.98 billion. Analysts polled by Visible Alpha forecast earnings of €395 million on revenue of €5.66 billion.

    Nokia shares dropped 4%, and have fallen by 28% this year.

    In echoes of what rival Ericsson
    ERIC.B,
    -1.21%

    said on Tuesday, Nokia said a slowdown in India’s 5G deployment could not offset the situation in North America.

    Nokia said it’s tracking toward the lower end of its net sales range for 2023 and toward the mid-point of its comparable operating margin range.

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  • UN agency: There aren’t enough body bags in Gaza

    UN agency: There aren’t enough body bags in Gaza

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    As the war between Israel and Hamas escalates, the U.N.’s special agency for Palestinian refugees warned Monday that under-siege Gaza is short of body bags.

    “The number of killed is increasing. There are not enough body-bags for the dead in Gaza,” the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) said in a press release.

    Since Hamas launched its violent surprise attack in Israel nine days ago — killing more than 1,400 Israelis and triggering retaliatory air strikes from Israel and a siege of the Gaza Strip — 2,329 Palestinians have been killed, according to the report.

    “Gaza has had no electricity, pushing vital services, including health, water and sanitation to the brink of collapse, and worsening food insecurity,” the agency added in the report.

    Last week, Israel ordered civilians in Gaza City to evacuate to the south, as part of preparation for a ground assault on Gaza. More than a million people — which is nearly half of the Gaza population — have been displaced since, the UNRWA reported.

    As fears grow that the Israel-Hamas conflict will spiral into a bigger, regional war, U.N. Secretary-General António Guterres on Sunday warned that the Middle East is “on the verge of the abyss.

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    Laura Hülsemann

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  • Why uranium prices have climbed to their highest in over a decade

    Why uranium prices have climbed to their highest in over a decade

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    Uranium prices have reached their highest level in more than a decade as a global supply shortage persists, with the bull market for uranium investments still in its “earliest days.”

    The market is “definitely in a structural deficit as demand is growing at a 5% annual rate and the current (2023) gap between global production and consumption remains at over 50 million pounds,” Scott Melbye, executive vice president at mining company Uranium Energy Corp.
    UEC,
    +0.78%
    ,
    told MarketWatch.

    Weekly spot uranium prices stood at $72.75 a pound as of Oct. 2, the highest since February 2011, according to data from nuclear-fuel consulting firm UxC, and were last at $69 as of Oct. 9. Weekly prices have climbed nearly 45% since the end of last year.

    Weekly prices for uranium have climbed around 45% year to date, data from UxC show.


    UxC

    In late August, Jonathan Hinze, president at UxC, told MarketWatch that the market was seeing the “best set up for nuclear power expansion” that he’d ever seen. That observation still holds, he said.

    It is clear that the uranium supply/demand balance remains “extremely tight, and it will likely only get tighter” in the coming 12 to 24 months as demand continues to rise, “while new supplies are taking more time to materialize, and inventories keep getting drawn down,” he said.

    Read: Uranium prices are still ‘nowhere near the peak of the last cycle’: Here’s why nuclear energy ETFs could power your portfolio

    Since late August, financial players, including hedge and publicly traded funds active in uranium, have been quite active buying additional uranium off the spot market, said Hinze. These funds “clearly believe that prices are set to rise further, and investors are therefore adding money to their coffers to allow them to buy physical uranium.”

    This is demand that isn’t fully anticipated in the market and this has added to the overall positive demand picture, he said.

    Price pullback

    Still, Melbye pointed out that uranium prices have pulled back a bit more recently as some traders took some “very handsome profits on their accumulated long positions.”

    That pullback may have also come as an “overreaction,” he said, to news from Kazakhstan, which produced the world’s largest share of uranium from mines in 2022, according to the World Nuclear Association. Kazatomprom, Kazakhstan’s national operator for the export and import of uranium, announced in late September a return to full production in 2025 to meet global nuclear energy demand.

    Melbye believes there was an overreaction in uranium prices because “this will ultimately have little impact on Western supply and demand as most analysts had them producing close to those levels by that time in their forecasts.”

    Even with that production assumption, the market is “still dramatically undersupplied,” and based on Melbye’s estimation, requires eight to 10 new mines starting up globally by 2030, he said.

    And while uranium has been among the best performing commodities year to date, it has only recently reached the level which “incentivizes the world’s best mines,” he said.

    This bull market in uranium investments is “still in its earliest days,” said Melbye.

    Among the exchange-traded funds, the Global X Uranium ETF
    URA
    has gained more than 25% on the year through Friday afternoon, while the Sprott Uranium Miners ETF
    URNM
    has added almost 36%. The Sprott Physical Uranium Trust
    SRUUF,
    a closed-end fund, trades nearly 39% higher.

    Broader new mine developments with significant capital investments in an inflationary environment require higher prices to move ahead, Melbye said. “Even at those levels, the long lead times needed to achieve these necessary start ups could leave the market in a short squeeze for several years.”

    The recent spot market move lower in prices marks a “temporary pause, and not a peak,” he said. “Buyers should be active on this welcome dip.”

    Supply ‘challenges’

    Contributing to supply concerns, a July coup has disrupted mining operations in the country of Niger in West Africa. Niger produced just over 4% of the world’s uranium in 2022, according to World Nuclear News. 

    The coup caused borders to close, and major uranium mine and mill operation called Somair has been halted, said UxC’s Hinze. The mine, operated by the French company Orano, sells most of uranium to customers in Europe, he said.

    Meanwhile, Cameco Corp.
    CCJ,
    +0.64%
    ,
    one of the world’s largest providers of uranium, said it’s encountered challenges at its mine and milling operation in Canada. The company now expects to produce nearly 3 million pounds of uranium concentrate less this year than previously anticipated, said Hinze.

    “These production challenges add to the overall view that the supply/demand balance is very tight and will get even tighter,” he said.

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  • West urges Israel to show restraint amid escalation fears

    West urges Israel to show restraint amid escalation fears

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    Western governments are urging Israel to show restraint in its military campaign against Hamas in Gaza, as fears grow that the conflict could spiral out of control. 

    On Thursday, U.S. Secretary of State Antony Blinken and French President Emmanuel Macron combined their support for Israel’s right to retaliate with a warning: That response must be fair. 

    “Israel has the right to defend itself by eliminating terrorist groups such as Hamas through targeted action, but preserving civilian populations is the duty of democracies,” Macron said on Thursday night. “The only response to terrorism is always a strong and fair one. Strong because fair.”

    On Thursday, for the first time the United States hinted at Israel’s responsibilities. Speaking alongside Benjamin Netanyahu at a press conference, Blinken said that while “Israel has the right to defend itself … how Israel does this matters.” 

    In a call with Netanyahu late Thursday evening, British Prime Minister Rishi Sunak “reiterated that the UK stands side by side with Israel in fighting terror and agreed that Hamas can never again be able to perpetrate atrocities against the Israeli people,” according to a Downing Street readout. But the readout also added: “Noting that Hamas has enmeshed itself in the civilian population in Gaza, the Prime Minister said it was important to take all possible measures to protect ordinary Palestinians and facilitate humanitarian aid.”

    These concerns were privately echoed by other Western officials, who warned that the world is facing a precarious moment. 

    As Israel scales up its powerful counteroffensive in Gaza, the fear in some European governments is that a full-blown regional war could erupt. 

    “Whatever Israel and the Palestinians do now risks contributing to the increasing bipolarization over the conflict,” one French diplomat said, speaking on condition of anonymity because they were not authorized to talk publicly. “One big worry is the risk that the conflict spreads to the region.”

    Gilad Erdan, Israel’s ambassador to the United Nations, already called the Hamas attacks and the subsequent kidnapping of civilians “Israel’s 9/11.”

    But the 2001 attacks on the U.S. also led Washington to launch a global “War on Terror,” with American-led military involvement in Afghanistan and, two years later, Iraq, with the loss of many lives. The unified international support the U.S. enjoyed in the days and weeks immediately following 9/11 splintered over President George W. Bush’s decision to invade Iraq in 2003. 

    “Israel clearly sees this as a casus belli [an act that provokes or justifies war],” one EU official said. “There is a real danger Israel simply uses this for a major ground offensive and wipes out the whole of Gaza.” 

    Shock and fury

    Former Greek Finance Minister Yanis Varoufakis even publicly warned about making the same mistake. 

    “The shock and fury in Israel are reminiscent of the emotions in the US after 9/11,” he said on X. “That provoked a display of American unity and power. It also led to a misconceived and self-destructive war on terror. Israel may be heading down the same dangerous path.” 

    Hamas’ attacks against Israel last weekend, which left more than 1,200 dead, led to an incomparable wave of sympathy and outrage across the West. The Israeli flag was projected across the European Commission’s headquarters and Berlin’s Brandenburger Tor.

    But already, Israel’s retribution against Hamas is being scrutinized. Its counteroffensive has killed more than 1, 500 Palestinians, according to Gaza’s health ministry, and put the coastal strip of land under “complete siege.” 

    The United Nations has already sounded the alarm. Just two days after the attacks, Secretary-General António Guterres said he was “deeply distressed” at Israel’s announcement of a siege on Gaza. He also warned Israel that “military operations must be conducted in strict accordance with international humanitarian law.” This was echoed by the EU’s foreign policy chief Josep Borrell. 

    NGOs and Western governments now fear a humanitarian crisis, with the Red Cross warning that Gaza hospitals could turn into “morgues” without electricity. 

    So far, Israel seems to be doubling down. 

    On Thursday, Israeli Energy Minister Israel Katz said there would be no humanitarian exception until all hostages were freed and that nobody should moralize. 

    Speaking to POLITICO’s transatlantic podcast Power Play, Israel’s ambassador to Berlin, Ron Prosor, said the West must continue to stand with Israel as it fights the “bloodthirsty animals” of Hamas.

    Talking about Israel’s retaliatory measures in the Gaza Strip, Prosor said Israel decided to move “from containment to eradication” of Islamic jihadists. “This is civilization against barbarity. This is good against bad.”

    Haim Regev, the Israeli ambassador to the EU, acknowledged on Tuesday that there were few critical voices so far. “But I feel the more we will go ahead with our response we might see more.”

    Abdalrahim Alfarra, the head of the Palestinian Mission to the EU, told POLITICO on Thursday that a change in atmosphere is already underway. “It’s starting, since [Wednesday] there are several voices in the European Union itself that have started to ask Israel and Netanyahu’s government to at the least open up a passage for food aid to stop the Israeli aggression and war against the Gaza strip,” he said. 

    Gordian knot 

    Just like the U.S. response to 9/11, the escalation of the conflict risks destabilizing the entire region, Western diplomats fear. 

    “This whole conflict is a Gordian knot,” said one EU diplomat, describing the risk of escalation toward other countries in the region. The diplomat said the focus should now be on stabilizing the situation and to getting the parties back to the negotiating table.

    “The Middle East conflict has the danger of escalating and bringing in other Arab countries under the pressure of their public opinion,” former U.S. Secretary of State Henry Kissinger warned, while pointing to the lessons learned from the 1973 Yom Kippur War, during which an Arab coalition led by Egypt and Syria attacked Israel.

    Despite the historical peace efforts of the U.S. in the region, Washington is far from a neutral broker, as it has been traditionally a strong supporter of Israel. In previous crises in the region, Washington appeared to give Israel carte blanche in its response, but over time ramped up pressure to compel the Israeli government to agree to a cease fire.

    The EU official cited above doubted whether Washington will follow that playbook this time. “Biden has no more room for maneuvering domestically after the Hamas attacks,” the EU official said. “He has to support Netanyahu all the way.”

    Eddy Wax, Suzanne Lynch, Sarah Wheaton, Elisa Braun, Jacopo Barigazzi and Laura Hülsemann contributed reporting.

    This article has been updated with a readout from U.K. Prime Minister Rishi Sunak’s call with Benjamin Netanyahu, and to reflect the Palestinian death toll.

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    Barbara Moens, Clea Caulcutt and Nicholas Vinocur

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  • ‘Hell on Earth:’ Gaza resident describes chaos as Israel’s counteroffensive looms

    ‘Hell on Earth:’ Gaza resident describes chaos as Israel’s counteroffensive looms

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    Israel’s counteroffensive in Gaza is triggering a “traumatic” scene of chaos, according to an employee of an international humanitarian organization there.

    “All the people were running in the street, not knowing where to go or what to do,” she said in a voice note recorded Thursday. “I remember my son telling me that he was barely able to take his breath because of how frightened he was.”

    She left her home in Gaza City with her children on Friday after Israel Defense Forces (IDF) told all civilians to evacuate Gaza City and started walking towards the city of Khan Younis, 30 kilometers south. She describes a “hell on earth:” airstrikes pummeling Gaza day and night, no electricity, scarce water supplies, an unreliable telecoms network connection. And most of all, a feeling of hopelessness and helplessness, for being unable to protect her son.

    “[I] don’t know what to say more, but this has to end soon,” she said. “No human can tolerate what we are experiencing for that long.”

    Israel’s order to move Palestinians living in the north of Gaza — the latest in a series of retaliatory measures since Hamas’ attack on Israel last Saturday — has been condemned. International authorities are warning Israel, which has imposed a total siege of the more than 2 million inhabitants of Gaza, to act within international law; and the United Nations and the World Health Organization both called for Israel to reverse course.

    Listen to the full account, from the woman who agreed to publish her story from Gaza on condition of anonymity, here:

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    Claudia Chiappa

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  • These 20 stocks in the S&P 500 are expected to soar after rising interest rates have pushed down valuations

    These 20 stocks in the S&P 500 are expected to soar after rising interest rates have pushed down valuations

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    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.

    Sector or index

    2023 return

    2022 return

    Return since end of 2021

    1 week return

    1 month return

    Utilities

    -18.4%

    1.6%

    -17.2%

    -11.1%

    -9.6%

    Real Estate

    -7.1%

    -26.1%

    -31.4%

    -3.0%

    -8.8%

    Consumer Staples

    -5.4%

    -0.6%

    -6.0%

    -2.2%

    -4.4%

    Healthcare

    -4.2%

    -2.0%

    -6.1%

    -1.7%

    -3.3%

    Financials

    -2.5%

    -10.5%

    -12.7%

    -2.5%

    -4.7%

    Materials

    1.3%

    -12.3%

    -11.2%

    -1.9%

    -7.0%

    Industrials

    3.5%

    -5.5%

    -2.1%

    -1.8%

    -7.3%

    Energy

    4.0%

    65.7%

    72.4%

    -1.9%

    -1.4%

    Consumer Discretionary

    27.0%

    -37.0%

    -20.0%

    -0.6%

    -5.2%

    Information Technology

    36.5%

    -28.2%

    -2.0%

    0.8%

    -5.9%

    Communication Services

    42.5%

    -39.9%

    -14.3%

    1.1%

    -1.3%

    S&P 500
    13.1%

    -18.1%

    -7.4%

    -1.1%

    -4.9%

    DJ Industrial Average
    2.5%

    -6.9%

    -4.5%

    -1.7%

    -4.0%

    Nasdaq Composite Index
    COMP
    28.0%

    -32.5%

    -13.7%

    0.3%

    -5.1%

    Nasdaq-100 Index
    36.5%

    -32.4%

    -7.7%

    0.5%

    -4.2%

    Source: FactSet

    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.

    Market Extra: Bond investors feel the heat as popular fixed-income ETF suffers lowest close since 2007

    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:

    Company

    Ticker

    Current P/E to 5-year average

    Current P/E to 10-year average

    Current P/E to 15-year average

    SolarEdge Technologies Inc.

    SEDG 89%

    N/A

    N/A

    AES Corp.

    AES 66%

    75%

    90%

    Insulet Corp.

    PODD 18%

    N/A

    N/A

    United Airlines Holdings Inc.

    UAL 42%

    50%

    N/A

    Alaska Air Group Inc.

    ALK 51%

    57%

    N/A

    Tapestry Inc.

    TPR 39%

    49%

    70%

    Albemarle Corp.

    ALB 39%

    50%

    73%

    Delta Air Lines Inc.

    DAL 60%

    63%

    21%

    Alexandria Real Estate Equities Inc.

    ARE 59%

    68%

    N/A

    Las Vegas Sands Corp.

    LVS 96%

    78%

    53%

    Paycom Software Inc.

    PAYC 61%

    N/A

    N/A

    PayPal Holdings Inc.

    PYPL 33%

    N/A

    N/A

    SBA Communications Corp. Class A

    SBAC 27%

    N/A

    N/A

    Advanced Micro Devices Inc.

    AMD 58%

    39%

    N/A

    LKQ Corp.

    LKQ 92%

    44%

    78%

    Charles Schwab Corp.

    SCHW 75%

    54%

    73%

    PulteGroup Inc.

    PHM 94%

    47%

    N/A

    Lamb Weston Holdings Inc.

    LW 71%

    N/A

    N/A

    News Corp Class A

    NWSA 93%

    73%

    N/A

    CVS Health Corp.

    CVS 75%

    61%

    67%

    Source: FactSet

    Click on the tickers for more about each company or index.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    News Corp
    NWSA
    is on the list. The company owns Dow Jones, which in turn owns MarketWatch.

    Here’s the list again, with ratings and consensus price-target information:

    Company

    Ticker

    Share “buy” ratings

    Oct. 2 price

    Consensus price target

    Implied 12-month upside potential

    SolarEdge Technologies Inc.

    SEDG 74%

    $122.56

    $268.77

    119%

    AES Corp.

    AES 79%

    $14.16

    $25.60

    81%

    Insulet Corp.

    PODD 68%

    $165.04

    $279.00

    69%

    United Airlines Holdings Inc.

    UAL 71%

    $41.62

    $69.52

    67%

    Alaska Air Group Inc.

    ALK 87%

    $36.83

    $61.31

    66%

    Tapestry Inc.

    TPR 75%

    $28.58

    $46.21

    62%

    Albemarle Corp.

    ALB 81%

    $162.41

    $259.95

    60%

    Delta Air Lines Inc.

    DAL 95%

    $36.45

    $58.11

    59%

    Alexandria Real Estate Equities Inc.

    ARE 100%

    $98.18

    $149.45

    52%

    Las Vegas Sands Corp.

    LVS 72%

    $45.70

    $68.15

    49%

    Paycom Software Inc.

    PAYC 77%

    $260.04

    $384.89

    48%

    PayPal Holdings Inc.

    PYPL 69%

    $58.56

    $86.38

    48%

    SBA Communications Corp. Class A

    SBAC 68%

    $198.24

    $276.69

    40%

    Advanced Micro Devices Inc.

    AMD 74%

    $103.27

    $143.07

    39%

    LKQ Corp.

    LKQ 82%

    $49.13

    $67.13

    37%

    Charles Schwab Corp.

    SCHW 77%

    $53.55

    $72.67

    36%

    PulteGroup Inc.

    PHM 81%

    $73.22

    $98.60

    35%

    Lamb Weston Holdings Inc.

    LW 100%

    $92.23

    $123.50

    34%

    News Corp Class A

    NWSA 78%

    $20.00

    $26.42

    32%

    CVS Health Corp.

    CVS 77%

    $69.69

    $90.88

    30%

    Source: FactSet

    A year may actually be a short period for a long-term investor, but 12-month price targets are the norm for analysts working for brokerage companies.

    Don’t miss: This fund shows that industry expertise can help you make a lot of money in the stock market

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  • How El Niño will impact this winter: a warmer north, wetter Florida, good skiing

    How El Niño will impact this winter: a warmer north, wetter Florida, good skiing

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    Much of the northern half of the U.S. could see a milder winter in coming months thanks to a combination of the latest El Niño and ongoing patterns of above-average heat owed to human-made climate change.

    That’s especially true of forecasts for Maine and parts of Washington and Oregon.

    The recurring weather phenomenon known as El Niño could mean greater rain amounts in Florida’s typical wet season, and still doesn’t preclude a freeze that could put citrus crops at risk. The western Carolinas, too, could see greater-than-usual snow.

    The latest predictions from the National Oceanic and Atmospheric Administration could mean short-term relief for Americans who struggled through summer’s heat extremes, but also pose a downside for retailers banking on a flurry of winter-clothing and supplies purchases. The added precipitation, however, points to plenty of snowpack for skiing and snowboarding at popular sites.

    According to NOAA’s models, there is a 95% chance El Niño continues through the winter. Generally, whenever there is an El Niño pattern in place, the Northern U.S. has warmer winters, NOAA said. 


    NOAA

    Meanwhile, across the South and for much of the Atlantic coast into southern New England, the forecast calls for greater chances of a wetter-than-normal winter, said NOAA’s Climate Prediction Center.

    Parts of the Northwest, Mountain West and Great Lakes could see greater chances of below-normal precipitation and while a less-snowy winter can mean safer travel, it can hurt the precipitation build relied upon for a healthy crop-growing season later in 2024.

    What’s an El Niño and what does it mean for climate change?

    Because an El Niño, packing the opposite effect of a cooling La Niña, happens every few years, people often wonder what the relationship is between these weather events and long-running atmospheric warming known as climate change.

    “Climate change will likely strengthen any ‘normal’ El Niño effects,” Dr. Stefan Schnitzer, professor of biological sciences Marquette University, told MarketWatch. “The increased global temperatures will add to the El Niño event, especially where rainfall increases.”

    Human-made climate change — caused by the greenhouse gas emissions put off by burning coal, oil
    CL00,
    -0.02%

     and gas and blamed for accelerating historical climates shifts — has been warming the Earth’s temperature.

    An El Niño is the somewhat regular pattern in the tropical Pacific that brings warmer-than-average sea-surface temperatures and influences weather. It emerged earlier-than-expected in 2023. 

    NOAA in earlier reporting said that the continental U.S. had its ninth-warmest August on record. It also was the 15th-warmest summer on record for the continental U.S. alone. Globally, August 2023 was the hottest on record. Through August, 2023 has been the second-warmest year on record across the world, NOAA said. 

    Don’t miss: It’s official: This summer was the hottest on record

    “Not only was last month the warmest August on record by quite a lot, it was also the globe’s 45th-consecutive August and the 534th-consecutive month with temperatures above the 20th-century average,” said Dr. Sarah Kapnick, NOAA’s chief scientist.

    “Global marine heat waves and a growing El Niño are driving additional warming this year, but as long as emissions continue driving a steady march of background warming, we expect further records to be broken in the years to come,” she said.

    Read: Already roasting in extreme heat? 2024 could be even hotter, NASA scientists warn.

    What about El Niño and winter weather in the U.S. South and Midwest?

    El Niño tends to bring wetter conditions to the Southeast. Florida, in particular, experiences higher-than-average rainfall during El Niño winters. This can lead to localized flooding, especially in low-lying areas and regions prone to heavy downpours.

    According to the National Weather Service in Tallahassee, Central Florida averages between 8 to 10 inches of rainfall during a typical winter. But during El Niño winters, that rainfall total rises to between 10 and 13 inches.

    As for other parts of the South, El Niño typically means more precipitation, which in mountain areas, can mean snow.

    Because the jet stream is displaced farther south, El Niño brings frequent storms across these areas, leading to above-average precipitation and below-average temperatures. This combination typically means more snow in Western North Carolina. In fact, some of the biggest seasonal snow totals have come during El Niño winters. Most notably, in the winter of 1968-69, more than 48 inches of snow fell in Asheville, N.C. And more recently, the winter of 2009-10 was unusually snowy with a whopping 39 inches accumulating.

    In the Midwest, El Niño normally results in warmer and drier winters, meaning less snow.

    “During an El Niño winter, the polar jet stream shifts northward, reducing the extremely low temperatures that normally swing down into the Midwest, including Wisconsin, Illinois, Michigan, and so on,” said Marquette’s Schnitzer.

    Schnitzer reminds that weather variability is always unpredictable. Forecasts use models and historical patterns to try to offer an educated guess about the coming months.

    “Occasionally we can get very cold temperatures and snow during an El Niño. It depends on what other weather systems blow through the area,” he said.


    NOAA

     

    What is El Niño’s impact on skiing and snowboarding?

    Of course the amount of precipitation can impact how much snowfall is expected at higher elevations and what kind of season major skiing and snowboarding destinations can expect.

    During the early parts of the winter season, through the rest of 2023, data suggests a normal- to drier-than-normal period for most of the western U.S. As for the eastern U.S., predictions look wetter than normal, says meteorologist Chris Tomer, in an outlook for the On the Snow website, with a prediction closely aligning with other experts looking at NOAA’s data.


    Chris Tomer/On the Snow

    By January, says Tomer, the bulk of the El Niño-driven snowfall typically occurs across parts of the West with a strong subtropical jet. 

    “The pattern suggests a higher likelihood of atmospheric river (AR) events. In the Northeast, normal- to above-normal snowfall appears possible. Be warned, though. “The pattern suggests that NorEaster storm systems are more likely,” Tomer said.

    To him, that means New England ski areas could see a particularly advantageous snowy winter, which would be a welcome snapback from last season’s winter on the East Coast.

    Many Colorado ski areas, including Summit County resorts, Loveland, Telluride and Arapahoe Basin, also stand to be among the biggest snow “winners,” says Tomer. He’s also upbeat for accumulation for New Mexico ski areas and California ski areas in the Sierras.

    “El Niño historically doesn’t favor any particular outcome for Wasatch, Aspen Snowmass and Vail [in Colorado],” he added. “However, if the Modoki contribution [when the warming is generated in a different part of the Pacific Ocean] to this El Niño increases, then all of these resorts could tilt a little higher to 105% to 110% of normal winter snowfall.”

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  • Here’s how the Republican presidential candidates say they’ll whip inflation

    Here’s how the Republican presidential candidates say they’ll whip inflation

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    Inflation remains a top concern among Americans, so what do the Republicans seeking President Joe Biden’s job say they’ll do about it?

    MarketWatch asked the 2024 GOP White House hopefuls to give at least three ways that they would address the elevated prices that have blown up many household budgets.

    Most campaigns provided responses, while some didn’t but have offered proposals in other venues. See what they’re all planning below.

    The economy is the No. 1 issue for Republican voters, according to a recent Wall Street Journal poll, which found 36% citing the economy generally and an additional 10% citing inflation.

    MarketWatch contacted the eight contenders who took part in their primary’s first debate, along with former President Donald Trump, who skipped the debate, and two relatively well-known contenders who failed to qualify for the first debate, Larry Elder and former Congressman Will Hurd. They are listed below in order of their ranking in the latest polls, based on a RealClearPolitics moving average.

    Inflation was low when Trump became president, with prices rising less than 2% a year. That was even considered a problem before the COVID-19 pandemic, with inflation often characterized as stubbornly or persistently low. Inflation began to spike in 2021, shortly after Biden took office, due to a global shortage of goods and a huge rebound in consumer demand following the pandemic’s early stages. Economists say massive stimulus by both the Trump and Biden administrations as well as low interest rates fostered by the Federal Reserve helped to push inflation to a 40-year high.

    Biden has stressed that inflation, as measured by the consumer-price index, has “fallen by around two-thirds,” and he and his team have talked up their efforts to lower costs for prescription drugs and insulin, to crack down on junk fees for a range of services, and to use the Strategic Petroleum Reserve to lower gasoline prices. Biden’s re-election campaign didn’t respond to MarketWatch’s request for comment.

    Donald Trump

    “I would get inflation down,” Trump said in a recent interview with NBC’s “Meet the Press,” while saying that “we did a great job with inflation.” His campaign pointed MarketWatch to a number of policy proposals in which Trump himself is quoted.

    Former President Donald Trump walks over to speak with reporters before departing from Atlanta’s airport last month.


    AP

    • The former president says he’ll rein in what he calls Biden’s “wasteful spending,” which Trump says is key to stopping inflation. Trump is proposing to use what’s known as impoundment authority to reduce federal spending. That term refers to the ability of a president to withhold congressionally appropriated funds from their intended use, according to the Committee for a Responsible Federal Budget.

    • Trump also calls for boosting energy output. “When I’m back in the White House, I will immediately unleash energy production, slash regulations, like I did just three years ago, and repeal Biden’s tax hikes to get inflation down as fast as possible, and it will go quickly, so that interest rates can get back under control,” Trump says on his campaign website. “I would get inflation down, because drill we must,” he told “Meet the Press.”

    • A Trump spokesman did not respond when asked for specifics about which Biden-approved tax increases Trump would repeal. The former president and his advisers, meanwhile, have reportedly discussed deeper cuts to both individual and corporate rates that would build on the 2017 Tax Cuts and Jobs Act.

    Ron DeSantis

    Florida Gov. Ron DeSantis, says a spokesman, “will reduce inflation by, among other measures, tackling government spending, unleashing domestic energy and removing burdensome Biden administration regulations.”

    Florida Gov. Ron DeSantis speaks in July during a press conference in West Columbia, S.C.


    AP Photo/Sean Rayford

    • In his economic plan, DeSantis leans heavily into energy policy for addressing inflation. “DeSantis will unleash our domestic energy sector, modernize and protect our grid and advance American energy independence. This will not only increase our economic and national security while reducing inflation, [but] it will also help fuel a manufacturing renaissance that will create jobs, revitalize our communities and improve our standard of living,” says his plan.

    • He told “CBS Evening News with Norah O’Donnell” that, as president, he would “stop spending so much money. We need a president that’s going to be a force for spending restraint, because that’s one of the root causes, with Congress spending so much.” He criticized both Democrats and Republicans for government spending.

    Vivek Ramaswamy

    Republican presidential candidate Vivek Ramaswamy speaks in April at an event in Iowa.


    AP

    “This isn’t complicated,” entrepreneur and author Vivek Ramaswamy said in a recent post on X. “Fight inflation, unleash growth by taking the handcuffs [off] the U.S. energy sector & dismantling the regulatory state.” His campaign didn’t respond to MarketWatch’s request for comment, but his campaign website offers the following proposals:

    • “Drill, frack & burn coal : abandon the climate cult & unshackle nuclear energy.”

    • “Launch deregulatory ‘Reagan 2.0’ revolution: cut > 75% headcount amongst U.S. regulators.”

    • Ramaswamy is also calling for dramatically changing the Federal Reserve, by ending the central bank’s dual mandate of keeping inflation low and maintaining full employment. “Limit the U.S. Fed’s scope: stabilize the dollar
      DXY
      & nothing more,” his campaign site says.

    Nikki Haley

    A spokesman for Nikki Haley’s campaign pointed to a Fox Business interview on Wednesday in which she called for ending the federal gas tax and cutting spending, as well as to her speech Friday in New Hampshire on her economic plan.

    Republican presidential candidate Nikki Haley is a former U.S. ambassador to the United Nations and former South Carolina governor.


    Getty Images

    • “We want to eliminate the federal gas tax completely,” Haley told Fox Business. “We have to get more money in our taxpayers’ pockets.” That tax helps pay for highways, but she said the system isn’t working, echoing a point that some policy analysts have previously made. Biden pushed for temporarily suspending the federal gas tax in 2022, but Congress didn’t provide sufficient support for his proposal. In her economic speech, Haley also promised to cut income taxes for working families and make permanent the tax cuts that small businesses scored in 2017’s GOP tax overhaul.

    • The former U.S. ambassador to the United Nations said members of Congress are “spending like drunken sailors,” as she promised to reduce the federal government’s outlays. “I will veto any spending bill that doesn’t take us back to pre-COVID levels,” she told Fox Business, referring to budgets that date to before the onset of the coronavirus pandemic in March 2020.

    • Haley in her speech Friday pledged to support the U.S. energy industry, as she suggested that Washington has been “stifling it.” She said: “We’ll drill so much oil and gas, families will save big on their utility bills.”

    Mike Pence

    A spokesman for Pence’s campaign pointed to the former vice president’s plan for “ending inflation,” which calls for actions such as reducing the federal government’s spending and changing the Federal Reserve’s job description.

    Former Vice President Mike Pence served as governor of Indiana and as a congressman before becoming Donald Trump’s running mate in 2016.


    AP

    • A Pence administration would “end runaway deficits by freezing non-defense spending, eliminating unnecessary government programs, repealing over $3 trillion in new spending under Biden, and reforming mandatory programs that drive our debt,” the plan says. Earlier this year, he urged “commonsense and compassionate” reforms for programs such as Social Security and Medicaid.

    • Pence wants to end the Fed’s dual mandate, which calls for the U.S. central bank to focus on full employment and stable prices. “Trying to serve two, often contradictory goals has led to wild fluctuation in rates,” his plan says, adding that it’s better to “leave employment policy to the president and Congress.”

    • The former vice president’s plan said he aims to bring supply chains and production “back home,” and that would happen by “removing regulatory burdens, enacting pro-growth tax policies, and ensuring access to abundant American energy.” In other words: “We will fight inflation by making America the best place to do business again.”

    • Similar to his 2024 GOP rivals, Pence blasts Biden’s energy policies, though some of the Democratic incumbent’s stances, such as his approval of the Willow drilling project in Alaska, have also been criticized by environmental groups. Pence’s plan says: “It is time to reverse Biden’s attack on American energy by restarting oil and gas leasing on federal lands, opening the Arctic and offshore regions for exploration
      XOP,
      approving safe transportation of oil and gas, mining rare earth minerals, and rejecting climate change hysteria that is causing U.S. energy
      XLE
      production to fall.”

    Chris Christie

    Former New Jersey Gov. Chris Christie addresses a New Hampshire audience in April.


    AP Photo/Charles Krupa

    Chris Christie’s White House campaign didn’t respond to MarketWatch’s requests for comment, but the former New Jersey governor has emphasized that reducing government spending will help tame inflation.

    “The out-of-control government spending has created this inflation,” Christie said in June during a CNN town hall. “I mean, even Larry Summers, who I don’t agree with much on, former Democratic Treasury secretary, warned Joe Biden, ‘Don’t do this spending. It’s going to cause the inflation.’ So, first, we need to bring spending down, and we’ve talked about that before.”

    Related: Larry Summers has a new inflation warning

    Tim Scott

    U.S. Sen. Tim Scott pointed to reducing the federal government’s spending and repealing one of Biden’s signature legislative packages, when asked about how he would address inflation.

    Tim Scott, a U.S. senator from South Carolina, speaks last month during the presidential debate in Milwaukee.


    Getty Images

    • Scott, from South Carolina, said in a statement that he would aim to “snap non-defense discretionary spending back to the pre-COVID 2019 baseline.” He described that as stopping Democrats from “turning the temporary pandemic into permanent socialism.”

    • Scott said he would rescind the Inflation Reduction Act, which is Democrats’ big economic package aimed at addressing climate change, capping drug costs and raising hundreds of billions of dollars through taxes on corporations. “The Inflation Reduction Act actually increased inflation and the only thing it reduced was money in our pockets,” he said in his statement. “Cutting that off and restoring tax cuts and eliminating the tax increases would go a long way to having the kind of stimulative impact in our economy and controlling spending.”

    • Scott called for stronger economic growth. “We have to also grow our economy somewhere near 5% consistently,” he said, adding that could create 10 million jobs. The U.S. economy grew by nearly 6% in 2021 after contracting in 2020 as COVID hit, then it expanded by about 2% in 2022.

    Related: Republican presidential candidate Tim Scott says he wants to put the focus on tax cuts

    Asa Hutchinson

    Former Arkansas Gov. Asa Hutchinson blames “excessive federal spending” for leading to inflation when giving speeches, and outlines a plan for “fiscal responsibility” on his campaign site.

    Asa Hutchinson, governor of Arkansas from 2015 until this year, speaks at an Iowa event in April.


    Scott Olson/Getty Images

    • “Restore discipline by reducing federal government size, cutting spending, balancing the budget, and lowering the deficit to tame inflation,” it states.

    • When Hutchinson was governor, he signed a $500 million tax-cut package, saying “it could not come at a better time with the continued challenge of high food and gas prices.” That was in August 2022. On his campaign website, he repeats a call to cut taxes and “reduce regulations to boost the private sector and enhance wages for American workers.”

    Hutchinson’s campaign did not respond to a request for comment from MarketWatch.  

    Doug Burgum

    North Dakota Gov. Doug Burgum, a GOP presidential hopeful, speaks at the Iowa State Fair in August.


    Brandon Bell/Getty Images

    North Dakota Gov. Doug Burgum’s website says that as president he would “get inflation under control, cut taxes, lower gas prices
    RB00,
    +0.31%
    ,
    reduce the cost of living and help people realize their fullest potential.” It doesn’t provide specifics.

    A spokesman for Burgum’s White House campaign didn’t respond to MarketWatch’s requests for comment. A spokesman reportedly told the New York Times that the campaign will roll out its vision and plans on its own timeline.

    Larry Elder

    Larry Elder, a conservative radio host and a gubernatorial candidate in California in the failed 2021 recall of Democratic incumbent Gavin Newsom, said he views energy and tax policy and a constitutional amendment as ways to whip inflation.

    Larry Elder is a conservative radio host and former gubernatorial candidate in California.


    AP

    • “Reverse the war on oil
      CL00,
      +0.93%

      and gas
      NG00,
      -2.65%

      ; permit drilling in Anwar [Arctic National Wildlife Refuge]; authorize the Keystone Pipeline; reverse the Biden restrictions on drilling on federal lands; and encourage nuclear energy
      NLR,
      ” Elder said in a statement.

    • “Encourage an amendment to the Constitution to set spending to a fixed percent of the GDP,” he also said.

    • Elder said the reduction in spending forced by that constitutional amendment would “coincide with a steep reduction in personal and corporate income taxes,” offering further help to Americans with stretched budgets.

    Will Hurd

    2024 Republican presidential hopeful Will Hurd, a former Texas congressman, speaks in Iowa in July.


    AFP via Getty Images

    Former U.S. Rep. Will Hurd of Texas announced his candidacy in June but so far hasn’t made it to the debate stage. In his campaign-launch video, he labeled inflation “still out of control.”

    • In a post on X in June, Hurd called for reining in spending. “You cannot be putting government funds into, at a time where you’re seeing the rising inflation,” he said.

    • And he said tax hikes are a nonstarter when inflation is high. “The worst time to talk about increasing taxes is when everybody’s hurting from inflation.”

    • Hurd also said the deficit should be addressed, to “start bending the curve back on the debt.”

    Hurd’s campaign did not respond to a request for comment from MarketWatch.

    Now read: Republican presidential debate: Candidates could win with a clear economic message about the ‘crisis among working people’

    And see: As Biden joins UAW picket line, poll shows Democrats’ edge over GOP on ‘caring about people like me’ has vanished

    Jeffry Bartash contributed.

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  • Stock market’s 2023 run may hit roadblock after August’s energy-led boost to U.S. CPI

    Stock market’s 2023 run may hit roadblock after August’s energy-led boost to U.S. CPI

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    August was a hot month and it wasn’t just about the weather. Financial markets are now bracing for what’s likely to be a rebound in headline U.S. inflation next week, fueled by higher energy prices.

    Barclays
    BARC,
    +0.18%
    ,
    BofA Securities
    BAC,
    +0.62%
    ,
    and TD Securities expect August’s consumer price index to reflect a 0.6% monthly rise, up from the 0.2% monthly readings seen in July and in June. In addition, they put the annual CPI inflation rate at 3.6% or 3.7% for last month, which compares with the 3.2% and 3% figures reported respectively for the prior two months.

    While Federal Reserve policy makers and analysts are loath to read too much into one report, August’s CPI has the potential to disrupt expectations that getting back to the central bank’s 2% target will be easy. Inflation has instead been nudging back up since June, with the likely rebound in August being regarded as primarily driven by the energy sector. What now remains to be seen is how much longer energy prices will remain elevated and whether they’ll begin to feed into narrower measures of inflation that matter most to the Fed.

    Read: Stock-market investors just got reminded that the inflation fight isn’t over

    “We’re going to see a spike in gas prices and other commodity prices driven by supply cuts, which means headline CPI goes back up,” said Alex Pelle, a U.S. economist for Mizuho Securities in New York. Via phone on Friday, Pelle said that prospects for a hotter August CPI report have already been factored in by financial markets, with all three major U.S. stock indexes heading for weekly losses.

    How investors react to next Wednesday’s data will likely come down to whether the rebound in headline figures is seen as “a one-off” or something that gets repeated, and “what that means for the bottoming off of inflation,” Pelle said. “The equity market is going to have some trouble in the fourth quarter after a pretty impressive first half. Earnings expectations are still pretty high, but the macro-driven backdrop is challenging.”

    Rising energy prices in August have already spilled into the month of September, with gasoline reaching the highest seasonal level in more than a decade this week. Voluntary production cuts by Saudi Arabia and Russia are a major contributing factor curtailing the supply of crude oil into year-end, and Goldman Sachs has warned that oil could climb above $100 a barrel.

    In financial markets, there’s one group of traders which is telegraphing that the final mile of the road toward 2% inflation won’t be smooth.

    Traders of derivatives-like instruments known as fixings anticipate that the next five CPI reports, including August’s, will produce annual headline inflation rates above 3%. Though policy makers care more about core readings that strip out volatile food and energy prices, they’re aware of how much headline figures can impact the public’s expectations.


    Source: Bloomberg. The maturity column reflects the month and year of upcoming CPI reports. The forwards column reflects the year-ago period from which the year-over-year rate is based.

    At BofA Securities, U.S. economist Stephen Juneau said August’s CPI won’t necessarily change his firm’s view that inflation is likely to move lower next year and fall back to the Fed’s target without the need for a recession. BofA Securities expects just one more Fed rate hike in November and will maintain that view if August’s CPI report comes in as he expects, Juneau said via phone.

    After stripping out volatile food and energy items, BofA Securities, along with Barclays and TD Securities, expects August’s core CPI readings to come in at 0.2% month-over-month — matching June and July’s levels — and to fall to 4.3% on an annual basis.

    Based on core measures, August’s report wouldn’t “change the narrative all that much: Everything points to a moderation in price growth,” Pelle said. “There’s a reason why food and energy are typically excluded,” and “we don’t want to put too much stock into one month.”

    As of Friday afternoon, all three major U.S. stock indexes were headed higher, with the S&P 500 attempting to snap a three-day losing streak. Dow industrials
    DJIA,
    the S&P 500
    SPX
    and Nasdaq Composite
    COMP
    were respectively on track for weekly losses of 0.7%, 1.2%, and 1.7%. They’re still up for the year by more than 4%, 16% and 31%.

    Meanwhile, Treasury yields turned were little changed on Friday as fed funds futures traders priced in a 93% chance of no action by the Fed at its next policy meeting in less than two weeks, and a more-than-50% likelihood of the same for November and December — which would leave the Fed’s main policy rate target between 5.25%-5.5%.

    “There is a risk that investors are too complacent about the inflation report,” said Brian Jacobsen, chief economist at Annex Wealth Management in Elm Grove, Wis. “We might not get to 2% inflation as quickly as many hope.”

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  • Why crude-oil rally can’t be ignored by investors — or the Fed

    Why crude-oil rally can’t be ignored by investors — or the Fed

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    Central bankers like to focus on core inflation readings, which strip out food and energy prices, but that doesn’t mean that they, or investors, will be able to ignore a renewed surge in crude-oil prices.

    In a Thursday note, DataTrek Research observed that the correlation between energy prices and the core reading of the consumer-price index has returned to levels seen in the 1970s and 1980s. It stands at 0.62 since 2020, compared with an average of 0.68 in those prior decades, and well above its long-run average of 0.31. A reading of 1.0 would mean the measures were moving in perfect lockstep. (See table below.)


    DataTrek Research

    Core measures of inflation typically strip out volatile items like food and energy. While that often leads to eye-rolling by commentators who note that food and energy make up a big chunk of what consumers spend money on, the logic behind the move holds that such items are less responsive to monetary policy.

    Policy makers put more emphasis on the core reading for a better read on what they can influence. The core personal-consumption expenditures, or PCE, index, for example, is often described as the Federal Reserve’s favored inflation indicator.

    But that doesn’t mean rising energy or food prices can be ignored. Energy, after all, is an input, and can have an influence on overall prices.

    “Recent data says energy prices hold more sway on core inflation than any time since the 1970s/1980s, so rising oil prices are a legitimate concern for both the Fed and capital markets. Food inflation fits the same bill,” said DataTrek co-founder Nicholas Colas in the note.

    Oil prices have been on a tear this summer, with the rally accelerating after Saudi Arabia announced earlier this week it would extend a production cut of 1 million barrels a day through the end of the year, with Russia also pledging to extend a supply cut.

    West Texas Intermediate crude
    CL00,
    +0.48%
    ,
    the U.S. benchmark, extended a winning streak to nine days on Wednesday, while Brent crude
    BRN00,
    +0.60%
    ,
    the global benchmark, rose for a seventh straight day. Both grades ended at 2023 highs Wednesday before pulling back modestly in the Thursday session.

    The surge in crude threatens to further drive up fuel prices, including gasoline and diesel.

    And rising oil prices this week got a chunk of the blame from investors and analysts for a pickup in Treasury yields as market participants began to pencil in a longer stretch of higher interest rates — or weighed the possibility the Fed may need to deliver more monetary tightening. That’s also contributed to a rise in the U.S. dollar, with the ICE U.S. Dollar Index
    DXY,
    a measure of the currency against a basket of six major rivals, hitting a six-month high.

    U.S. stocks have weakened in the face of rising yields, with technology and growth shares, which are particularly rate-sensitive, leading the way lower. The Nasdaq Composite
    COMP
    was on track for a 2% decline so far this holiday-shortened week, while the S&P 500
    SPX
    has pulled back 1.4% and the Dow Jones Industrial Average
    DJIA
    has lost 1%.

    “With oil prices rising again, we got to wondering about the spillover effects of this move on inflation. Will pricier crude derail recent disinflationary trends?” Colas wrote.

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  • Texas paid bitcoin miner more than $31 million to cut energy usage during heat wave

    Texas paid bitcoin miner more than $31 million to cut energy usage during heat wave

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    As a bitcoin mining enterprise, Riot Platforms runs thousands of computers in the energy-guzzling pursuit of minting digital currency. Recently, however, the company got big bucks from Texas to lower the mining operation’s electricity usage.

    Riot said on Wednesday that the state’s power grid operator paid the company $31.7 million in energy credits in August — or roughly $22 million more than the value of the bitcoin it mined that month — to cut its energy consumption during a record-breaking heatwave in the state

    The Electric Reliability Council of Texas (ERCOT), which operates the state’s power grid, issues the credits to incentivize companies to reduce activities that might strain the state’s already overloaded energy system.

    “The effects of these credits significantly lower Riot’s cost to mine bitcoin and are a key element in making Riot one of the lowest cost producers of bitcoin in the industry,” CEO Jason Les said in a statement.

    Riot, which is publicly traded, in 2022 reported a loss of more than $500 million on revenue of $259.2 million. In its most recent quarter, it had a loss of roughly $27 million on revenue of $76.7 million.

    Texas’ power grid has faced growing demand from consumers and businesses in recent years as climate change leads to more extreme weather. In 2021, residents faced a blackout when a snowstorm knocked out coal and gas facilities, nuclear plants, and wind turbines.

    The strain on the grid persists. On Wednesday, Texas officials declared an emergency as sky-high temperatures again threatened to trigger rolling blackouts across the state. ERCOT asked that residents and business owners conserve energy between 5 p.m. and 9 p.m., according to CBS News Texas.

    “Operating reserves are expected to be low this afternoon due to continued high temperatures, high demand, low wind, & declining solar power generation into the afternoon & evening hours,” the group said in a post on X (formerly known as Twitter).

    Bitcoin mining, in which virtual transactions are verified on a computer network in exchange for a certain amount of bitcoin, is highly energy-intensive. Bitcoin consumes roughly 110 Terawatt Hours per year, or 0.55% of global electricity production — roughly equivalent to that consumed by Sweden, data from the Cambridge Center for Alternative Finance shows.

    Riot did not immediately respond to a request for comment.  

    Public concerns

    Heavy energy consumption from bitcoin mining has caused a stir in Texas, with some people expressing anger that their tax dollars are subsidizing energy credits for miners. Residents of Navarro County, Texas, started a petition last year opposing a bitcoin mining facility in their area. 

    “This factory-that-produces-nothing will affect every single citizen of Navarro County and MUST BE STOPPED,” reads the petition, which has amassed nearly 1,200 signatures. “We do NOT want this enormous burden on our already fragile infrastructure.”

    Some Texas lawmakers have also grown wary of cryptocurrency mining. In April, the state’s senate passed a bill that would limit incentives for miners participating in the state’s energy grid load-reduction program. 

    For now, the credits are a boon for Riot and other bitcoin miners whose profits have dried up during a cryptocurrency market downturn deepened by the collapse of exchange FTX last fall.

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  • U.S. oil prices score longest streak of daily gains in over 4 years

    U.S. oil prices score longest streak of daily gains in over 4 years

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    Oil futures settled higher on Wednesday, with U.S. prices posting a ninth consecutive climb — the longest streak of daily gains since early 2019.

    Prices for U.S. and global benchmark crude futures marked fresh settlement highs for the year so far, following the recent extension of supply cuts by Saudi Arabia and Russia.

    Price action

    Market drivers

    “Saudi…

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  • Dominion Sells Natural Gas Utilities to Enbridge for $9.4 Billion

    Dominion Sells Natural Gas Utilities to Enbridge for $9.4 Billion

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    Dominion Sells Natural Gas Utilities to Enbridge for $9.4 Billion

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  • Wet summer grants big cities in hydro-powered Norway 2 days of free electricity

    Wet summer grants big cities in hydro-powered Norway 2 days of free electricity

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    Oslo — Electricity was free in Norway’s two biggest cities on Monday, market data showed, the silver lining of a wet summer. With power almost exclusively produced from hydro in Norway, the more it rains or snows, the more the reservoirs fill up and the lower the electricity price.

    A particularly violent summer storm dubbed “Hans” that swept across Scandinavia in August, in addition to frequent rainfall this summer, have filled reservoirs in parts of Norway.

    TOPSHOT-NORWAY-WEATHER-FLOOD
    Water flows over a dam at the Braskereidfoss Power plant in Norway, August 9, 2023.

    CORNELIUS POPPE/NTB/AFP/Getty


    As a result, the spot price of electricity before taxes and grid fees was expected to hover between 0 and -0.3 kroner (-0.03 U.S. cents) on Monday in the capital Oslo and the second biggest city, Bergen, according to specialized news site Europower.

    On Nord Pool, Europe’s leading power market, wholesale electricity prices in the two cities on Monday averaged -1.42 euros per megawatt hour. A negative price means electricity companies pay consumers to use their production.

    “(Electricity) producers have explained in the past that it is better to produce when prices are a little bit negative rather than take measures to stop production,” Europower said.

    Even though the spot price was slightly in the red in some parts of the country — which is divided into various price zones — companies are still able to make money from green electricity certificates.

    According to climate experts, global warming is leading to more frequent and more intense rainfall and snowfall in northern Europe.


    Climate change’s role in the extreme weather around the world

    04:51

    Last week, the Norwegian Meteorological Institute said temperatures in August in Norway were an average of 0.9 degrees Celsius (or a little less than 2 degrees Fahrenheit) higher than usual, and that after an already rainy July, precipitation in August was 45% higher than usual.

    “All this rain, including ‘Hans’, contains an element of climate change,” researcher Anita Verpe Dyrrdal said.

    One weather station in southern Norway registered 392.7 millimeters (about 15.5 inches) of rain in August, 257% more than usual.

    According to Europower, this is the second time electricity prices have gone negative in parts of Norway. The first time was on August 8 in the wake of storm “Hans.”

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  • U.S. stocks end higher after Fed Chair Powell’s Jackson Hole remarks, S&P 500 snaps 3-week losing streak

    U.S. stocks end higher after Fed Chair Powell’s Jackson Hole remarks, S&P 500 snaps 3-week losing streak

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    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…

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  • How the Hawaii Fires Ensnared the State’s Third-Largest Bank

    How the Hawaii Fires Ensnared the State’s Third-Largest Bank

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    How the Hawaii Fires Ensnared the State’s Third-Largest Bank

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  • Republican debate: Why you may hear big numbers like 19% inflation, and how to make sense of it all

    Republican debate: Why you may hear big numbers like 19% inflation, and how to make sense of it all

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    Economists don’t much like presidential-campaign seasons. For them, it’s a bit like seeing their manicured gardens getting trampled by schoolchildren having a water-balloon fight.

    Robert Brusca, the president of consulting firm FAO Economics, predicted that the political discussion of the U.S. economy in the 2024 campaign would be “a farce.”

    Talk of inflation is likely to dominate the Aug. 23 Republican debate, for example.

    Republicans, eager to lay the blame for higher prices at the feet of President Joe Biden, are going to make the strongest case they can for that. For them, it is a happy coincidence that inflation started to pick up right when Biden was sworn into office.

    Larry Kudlow, a former top economic adviser to President Donald Trump, put it succinctly. “I have numbers. The consumer-price index is up 16% since February 2021. Groceries are up 19%. Meat and poultry up 19%. New cars up 20%. Used cars up 34%,” Kudlow said in an interview on the Fox Business Network.

    From last month: Mike Pence says inflation is 16%, but CPI is 3%. This is his logic.

    Unlike Kudlow, the Federal Reserve doesn’t usually measure inflation over 29 months. Instead, the central bank favors using inflation data that looks at the past 12 months.

    By that year-over-year measure, CPI is up 3.2%. Groceries are up 3.6%. Meat and poultry prices are up 0.5%. New-vehicle prices are up 3.5%, but prices of used cars and trucks are actually down 5.6%.

    Economists, meanwhile, tend to like even shorter measures, such as the three-month annualized rate. They think the 12-month rate says more about the rate a year ago than it does about what is happening today.

    “Looking at year-over-year [data], the only new piece of information is the current month. You are looking at 11 months that you already know,” said Omair Sharif, president and founder of research company Inflation Insights.

    Using the shorter metric, headline CPI for the three months ending in July is up 1.9%, while food at home rose 1.1% and meat and poultry is down 4.5%, he said.

    Trends have been favorable in recent months, but that might not last. “It’s been a good summer,” Sharif said. “But unfortunately, the winter data won’t be as pleasant.”

    What caused the spike in inflation?

    Economists tend not to blame one political party or the other for spikes in inflation.

    In the 1970s, for example, the culprit was increases in oil prices by the Organization of Petroleum Exporting Countries.

    This time, there was no one single factor. While the debate is not yet over, economists tend to focus on the pandemic, the war in Ukraine and the move to end reliance on fossil fuels in order to combat climate change.

    Brian Bethune, an economics professor at Boston College, said prices started to rise when the healthcare industry had to adjust to a new, unforeseen risk. There were steep costs to dealing with the deadly coronavirus and developing vaccines.

    People working in frontline industries were able to command higher wages. And demand outstripped supply for many things, as shelves were emptied by consumers and supply chains were strained.

    Bethune also stressed recent moves toward renewable energy. The best way to explain inflation to your grandmother, he said, is to look at a chart of electricity prices.


    Uncredited

    The steady increase stems from efforts to move closer to a carbon-free economy, Bethune said. And those prices get passed along “right through the whole cost pressure of the economy,” including the price of refrigerated foods.

    Inflation boomed and is now coming off its peak, said Brusca of FAO Economics. Prices are still rising, but not at the same rapid clip. And they won’t roll back to prepandemic levels.

    “Consumers are caught in a trap,” he said. “If prices are going to come down, you have got to have deflation.”

    Deflation comes with its own unique set of woes. It can make the cost of borrowed money, like mortgages, much more expensive. And it can lead to serious economic weakness.

    “All of this is why the Fed targets price stability,” Brusca said.

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  • Hawaiian Electric’s stock slides 26% as S&P downgrades credit to junk on risk from Maui wildfire lawsuits

    Hawaiian Electric’s stock slides 26% as S&P downgrades credit to junk on risk from Maui wildfire lawsuits

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    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.

    The devastating…

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  • WeWork flags ‘substantial doubt’ about its ability to stay in business

    WeWork flags ‘substantial doubt’ about its ability to stay in business

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    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.”

    See also: Proterra stock craters as electric-bus maker files for Chapter 11 bankruptcy

    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.

    The company’s prior CEO stepped down in May.

    See more: WeWork bonds sink after top executives resign from cash-burning company

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