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Sunday, April 15, 2012


Obama v Romney = It Begins

With the decision by Rick Santorum to "suspend" his campaign, Mitt Romney is the de facto, if as yet unofficial winner of the GOP sweepstakes. We predicted this result ages ago, though we thought it would end sooner. So why did Rick pull out now? It was necessary to save his future viability as a candidate for much of anything to avoid the embarrassment of losing in Pennsylvania again, his former home state, which appeared increasingly likely to happen. And all the candidates who give up suspend, rather than curtail, their campaigns so they can continue to collect donations to pay off their campaign debts.

So now, Mr. Romney gets to do the traditional GOP candidate "move toward the center" and to focus on defeating Mr. Obama. No one should underestimate how difficult that will be, but there are good reasons for optimism. For one thing, the Rasmussen poll out yesterday (by far the most accurate polling service in recent years) showed Mr. Romney with a 48-44 lead. If it stays that way, or anything close to it, that's a disaster for the Dems, who win populous states like California and New York by miles and therefore have more wasted popular votes than Republicans. Also, the undecided voters tend to break away from incumbents as you get closer to election day. After all, they've lived with the incumbent for four years and if he hasn't sold them yet, he ain't closing. That's why pollsters look for incumbents to get to the magic 50% mark. Obama has a long way to go to get there.

There are trouble signs economically again too, bad news for everyone, but good election dynamics for Romney. Not only are the jobs numbers softening again, but inflation is in the air, and not just at the gas pump. This should surprise no one since we have had full bore inflationary monetary and fiscal policy for this entire administration. It's why we have been accumulating gold ETF shares and common stocks.

Last week, there was much in the liberal press (in fact the whole media) concerning Romney's alleged "gender gap," that is his much lower poll numbers among women than among men. Let's acknowledge that Barack has a double digit lead among women, for whatever reasons. Since the various polls have the race about even, doesn't that say that Romney has a double digit lead among men? Why don't we hear about the Obama gender gap with respect to men?

On this subject, Meet The Press had a segment featuring debate between NY Senator Gillibrand and Minnesota representative Bachmann. It was pretty hilarious. You could just see Gillibrand going through her memorized talking points and once that was done, we didn't hear from her again. Her job at that point was to smile and show why she has been given the title of "hottest U.S. Senator." Meanwhile, Bachmann scored all the actual debating points.

The Sunday morning news shows are a great opportunity to test the conservative thesis concerning the liberal dominated media, and yesterday was no exception. While good old David was tossing softball questions to Tim Gaitner on Meet the Press (instead of grilling him about the lousy economic numbers that came out last week), Chris Wallace was challenging Republican operative Ed Gillespie on every response with solid follow up questions on "fair and balanced" Fox. No wonder Fox leads the other three networks easily in news ratings.

Meanwhile, our hapless President O'Blama goes about his business with startling ineptitude. Only days after trumpeting his "negotiated agreement" with the North Koreans to provide them with emergency food aid, the Koreans launched a rocket in violation of the agreement and various UN resolutions. So the Admininistration cancelled the food agreement. The episode managed to embarrass all parties involved when the three stage rocket's alleged payload landed harmlessly and laughingly in the ocean less than two minutes into the flight. I guess no one here can play this game.

And in the environmental wars, the hysterical concerns raised by the "anti-frackers" turned out to be bogus when it was shown that any water contamination was a result of faulty construction of the water wells, and was not caused by fracking, as was obvious since the frackers were nowhere near the water supplies they allegedly contaminated. The worst part of all this is that, like the global warming crowd, the premature charges (without evidence) only undermine the environmental movement's credibility, when in fact there are real problems to address. As someone wise said, just because it turns out that climate change is not man made doesn't mean we shouldn't be working to improve the viability of electric cars.

Unfortunately, the greens are not only hysterical, they are totally unrealistic. Here are the stats in terms of trillions of BTU's by energy source consumed in the U.S. in 2010 (published in WSJ last week).

Natural gas 24,701
Coal 22,077
Crude oil 11,669
Nuclear 8,441
Biomass 4,310
Hydroelectric 2,509
Wind 924
Geothermal 212
Solar 109

And this is with all kinds of subsidization for the green sources (not to mention tax credits for their users). So carbon based fuels are going to be our main source of power for a long time to come.

In fact, the environmental movement was long ago taken over by people whose real agenda has nothing to do with the environment. They are strictly anti-industrial, anti - growth, anti-business, and anti-globalization. If they were really interested in the environment, it wouldn't have been thirty years since we last commissioned a nuclear power plant.

In the end, it's not really about carbon or carbon dioxide. It's about really bad stuff like methane and mercury. Of course, flatulent cows give off more methane than industrial plants. Whether cows are to be blamed for global warming (and we all acknowledge we are in a slight warming trend, which has often happened before in earth's history), I don't know, but I do know that the weather in the northeast is improving as a result.

We have been busy on the buy side trying to deploy our cash in excess of the 20% allocation we aim for. Cash swelled because of the Con Ed preferred sale and the Kaydon dividend.

On 3/30, we bought 100 shares of Kaydon (KDN), putting some of that dividend money back in the stock from whence it came. This was a value buy at 25.92. On 4/2, we bought 50 shares of Dupont (DD) at 52.71. On 4/3, we paid 21.73 for the Hartford preferred (HIG.PR.A) we've been accumulating. You would have thought there would be more buying interest after the company announced it was spinning off the life and annuity division. On 4/4, we paid 70.19 to buy 100 shares of Devon (DVN) for the IRA. Then on 4/5, we bought 100 more shares of Harsco (HSC), this time for the IRA, at 22.93, a "zero" buy. On 4/9, we bought 20 Tips (TIP) for the IRA at 118.28. On 4/10, we bought 400 shares of good old Petroquest (PQ), a value buy at 5.80. That caught us up for all the transactions missed during confinement. On 4/11, we were back in there buying 50 more shares of Dupont for the IRA at 51.72. It's very much the norm for new names to go down a bit more after we make the initial purchase. A la Cramer, we tend to buy on the way down, and don't expect to catch the bottom. Friday, we bought 100 shares of Protective Life preferred (PLP) at 23.33.

Here's our periodic disclaimer: Neither Redwavemusings nor its author are investment advisors. The securities mentioned here are not recommendations, only transaction recordings. No reader should think that any of the securities mentioned here are suitable as investments for their own portfolio.

Dear Redwave:
I many regards I have a great deal of respect for your intellect. That just makes it even more tragic when I see you arguing in favor burning carbon. You should try to look past your current portfolio to the atmosphere that your descendents will have to endure.
My more specific concerns with this post are:
1. listing of 2010 sources of BTUs and using that as evidence of the folly of the “greens”
is ridiculous / manipulative, on your part, on a couple of levels. First mankind has had a much longer period of time over which to come to rely on the carbon based fuels at top of your list. We take ourselves back to 1980 and I could point out the folly of desktop computers compared to good old adding machines based on the volume of calculations performed or perhaps back to 1900 to talk about the folly of the automobile versus a good old horse based on miles traveled. Secondly those numbers were, as you wrote, in trillions of BTUs. Therefore Solar at 109,000,000,000,000 does not look nearly as pathetic as you would have your reader take it to be.
2. You declare that evidence against fracking is the well builders fault, because you have an instance of that to point to, while at the same time you know that doesn’t cover nearly a reasonable sample of the instances of harm done by fracking.
3. You label environmentalists as “anti-industrial, anti - growth, anti-business, and anti-globalization” and your one piece of support for this sweeping assertion is that they failed to support more nuclear power plants. Have you noticed that humans have issues when we get those wrong? Nuclear power plants are far from a no-brainer green solution.
4. You like to point out that the earth has had earlier periods of climate change, as though that gives us a basis to relax and just roll with it. To that I would point out that the earth has not had to cope with one of its inhabitants beavering away at sourcing and burning carbon based fuels into its atmosphere. I would also point out that the earth has also not always been a comfortable place for human life. Do we just roll with whatever mass displacements are to come or could we work now to reduce the severity of those displacements?
You’re an intelligent fellow. Your fellow humans could use you on the merciful side of these arguments.
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