ELAM: Green energy cools a bit

Hertz is selling a third of its global electric car fleet, a major reversal after positioning itself as a champion of EV technology.

Wall Street Journal Friday

Hertz originally bought 65,000 EVs from Polestar, formerly Volvo. Since then Tesla cut prices. Ford and GM have pared back their EV production plans. Hertz found that maintenance costs were higher than for IC autos. And swollen dealer inventories of EVs and price cuts decreased the value of their EV holdings. A special depreciation charge of $245M is the result. Hertz stock dropped 4% on the news.

Chesapeake Energy and Southwestern Energy are merging in an all stock deal worth $7.4 billion. This creates the largest natural gas producer in the U.S. Liquified natural gas export centers are being built along the Gulf Coast. Corpus Christi is deepening its harbor to allow for larger LNG transport ships. This is also part of replacing Russia as the sole supplier to Europe.

I have to wonder about Team Biden’s war on gas kitchen ranges. Recall that his Vice-President was just photographed using one. Texas is facing another freezing cool front Monday. Having a gas kitchen stove and an outside propane grill insulates our home from an electric failure as we had in the last storm. I think this is a non-starter for Biden.

There is not much to report on the price of crude oil. It trades in the low 70s at least providing some stability for the industry. Unleaded gasoline futures likewise trade around $2.10.

Headlines report an uptick in inflation after its recent drop. This is the pattern we will see for many years. Inflation surges, recedes and then advances again. This is the result of the end of the 39 year cycle of lower interest rates in March 2020. And the last few administrations have spent way more money than we have increased productivity to offset that increase.

Milton Friedman was the champion of money-supply as a measure of the economy. A booming economy would produce more money at various levels noted as M1 and M2. Notably, M2 has fallen 4.2% year over year. The last time that happened was 1931-33 when one-third of the banks closed ushering in the Great Depression. This is another warning of a stock market top.

Horror movies were a staple of the 1930s as mood became more negative. Disney has lost its copyright on Mickey Mouse. The result will be an independent made horror flick starring Mickey the Murderer. Like the drop in money supply this is another early warning signal.

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