The Trump Deregulation ‘Binge’ and Your Money

When it comes to signing executive orders that roll back Obama-era regulations, President Trump is on a … well … roll.

In what the Washington Times described as a "deregulation binge," on Monday the president signed four bills that canceled rules regarding federal contracts, land use and education.

In his signing ceremony, the president said, "Only one time in our history did a president sign a bill to cancel federal regulations."

This deregulation binge is all about the president’s pledge to, as he’s said, "remove every job-killing regulation we can find."

Per the Washington Times:

The first bill he signed rolled back the "Fair Pay and Safe Workplaces" rule, also known as the "blacklisting" rule, that barred federal contracts to companies with a record of breaking wage, labor or safety laws. The president called the rule "a disaster" and "one of the greatest threats to growing American businesses."

But wait, there’s more!

The really big deregulation came on Tuesday. That’s when the president signed an executive order that began the process of undoing Obama-era climate-change policies.

From emissions standards and restrictions on coal mining on federal land … to national security planning and social cost research … the president’s pen has been working overtime.

The main thrust of Tuesday’s rollback was the reversal of rules aimed at pushing U.S. utilities to shift from coal plants to cleaner-burning fuels.

"My administration is putting an end to the war on coal," Mr. Trump said, right before signing the rollback order at the Environmental Protection Agency.

Indeed, the energy space is one where the Trump administration has been very active. Mr. Trump has already approved the building of the Dakota Access and Keystone XL oil pipelines.

Now, given the push toward eased-up environmental regulations, and in favor of coal and oil, what’s the best way for investors to play the altered Washington zeitgeist?

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At first thought, you might think coal stocks such as CONSOL Energy (CNX), Arch Coal (ARCH) or Peabody Energy (BTUUQ) would be the immediate beneficiaries.

Certainly, the VanEck Vectors Coal ETF (KOL) saw a bounce this week …

KOL is up 14.5% year-to-date.

Yet despite the favorable treatment from the White House and the EPA, coal stocks might not be the best bet in terms of the energy sector.

That’s the opinion of one sector expert, Roberto Friedlander, head of energy trading at Seaport Global Securities.

In an interview with CNBC on Tuesday, Friedlander said that he still likes natural gas. That’s because "demand is here and it’s going to be here to stay."

Friedlander also said that liquefied petroleum gas and liquefied natural gas are the natural replacement for coal, diesel and other fuels.

This makes sense, as natural gas is just cheaper to obtain right now. It’s also much cleaner-burning than coal.

As for specific stocks in the sector, Friedlander told CNBC that he likes Range Resources (RRC). He says it has "some of the best acreage in the country and a solid management team."

Other companies in the space he likes include energy infrastructure giant Williams Partners (WPZ), and refiner Tesoro (TSO).

So, the Trump administration may be on a deregulation binge. But that doesn’t mean investors should race to embrace coal and oil stocks.

Sure, the segments may have some long-term upside. For now, though, natural gas and stocks related to pipelines might be the better short- and medium-term profit opportunities.

For a real "profit pipeline," our small-cap mining expert Sean Brodrick says it’s time to tap into Canada. And not just for resource plays (although those look pretty good here too) …


Mining for Money

Canadian Stocks are Cheap … But Not for Long!
By Sean Brodrick

Canadian stocks are cheap. But I wonder for how much longer.

Let me show you what I mean in two charts.

First, here are the price-to-book ratios for three major indices.

  We have America’s leading stock index, the Dow Jones Industrials.

  We have the S&P 500, the index of the 500 leading stocks in the U.S.

  And we have the S&P TSX Composite Index, the benchmark Canadian index.

The S&P/TSX Composite represents about 70% of the market cap of the Toronto Stock Exchange. It has about 250 of the biggest companies on the TSX.

The price-to-book value for a stock is just its share price compared to what its component parts would be worth if you sold them off today. It can be a way to see if something is undervalued. But a low P/B ratio can also show that something is fundamentally wrong.

So look at this chart and ask yourself: "Does the market believe that there is something fundamentally wrong with Canadian companies?"

Because they sure are cheaper …

According to Bloomberg, the recent P/B for the S&P TSX Composite was 1.79. Compare that to 2.79 for the S&P 500 and 3.38 for the Dow.

Now, maybe there’s more economic growth in the U.S., and those Canadians are sandbagging it, right? Nope! Canada is growing at around 2.6% to 3%, according to the Bank of Canada. The U.S. is growing at around 1.9%, after 1.6% last year. And some forecasters put U.S. growth lower.

Note: Those forecasters aren’t very popular.

Anyway, it’s not that. One thing it might be is the currency. The Canadian dollar has been in a long slide.

The Canadian dollar is also known as the "Loonie," because its one-dollar coin features a picture of a loon.

The Loonie has slumped for years. Ever since the end of the last gold bull market. That’s not a coincidence. Mining is VERY important to the Canadian economy.

In fact, mining accounts for 19% of Canada’s total exports. Canada ranks in the top five countries in the global production of potash, uranium, nickel, cobalt, aluminum, platinum, sulphur, tungsten, diamonds, graphite, gold and more!

Have you seen what’s happening to mineral prices lately? I’m not just talking gold. Silver … nickel … zinc … cobalt!

Zoom-zoom-zoom!

The long bear market in many commodities is over. The new bull is polishing his horns.

And the companies that mine those commodities should see their share prices inflate right along with the price of their products.

Sure, we’ve seen many of these stocks rally. A bit. But we aren’t close to done. Heck, we aren’t at the end. We may not even be at the end of the beginning.

Get wise, and get long Canada. You’ll want to be onboard for this rally.


Have a comment or question about today’s Afternoon Edition topic, or any of the topics we cover? Let me know. All you have to do is leave me a comment on our website or send me an e-mail.

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The Dow’s triple-digit gain was its only up day in 10 sessions. It shed 42 points, or 0.2%, in Wednesday’s trade.

• Financials were the biggest losers, thanks to a target date for a tax-reform bill being set for August. The Financial SPDR (XLF) slid 0.6%, and is down in after-hours trade.

• Energy was today’s top-performing sector after a report of a smaller-than-expected build in U.S. oil stockpiles. WTI crude surged 2.4% to $49.51, and the Energy SPDR (XLE) gained +1.4%.

• Amazon.com (AMZN) was a standout stock today, after its 2.1% gain took it to a record high.

• Happy Brexit day! Well, it’s not exactly a happy day in the European Union. But as Prime Minister Theresa May said, there is "no turning back" now that she has written the letter to the European Parliament that officially triggers Article 50 of the Lisbon Treaty. Negotiations can now begin to extricate the UK from the EU by this date in 2019.

• It’s also Vietnam Veterans Day. Yesterday President Trump signed an order declaring March 29 a day of recognition for those who served there. This morning, Grant Wasylik offered a unique way that you can invest in America’s heroes. We’ve heard that several of our readers are already on their way to using these "VetBizBonds" to boost small businesses … and their own savings. Click on the link above to learn more.

Good luck and happy investing,

Brad Hoppmann
Publisher
Uncommon Wisdom Daily

Your thoughts on “The Trump Deregulation ‘Binge’ and Your Money”

  1. DEAR MR. BRAD HOPPMANN , THANK YOU FOR YOUR GREAT, GOOD VIDEO-PART I!THANK OF YOUR NEWSLETTRE FOR THIS POSSIBILITI!I WAITE WITH INTERES YOUR SECOUND PART FROM YOU . THANK YOU AND ALSO OF MR. GRAND WASYLIK!WITH RESPECT AND BEST WISHES ;TATYANA MIRCHEVA

  2. Trump will destroy this country, our environment, and our people. We raise our children with rules and regulations. Our economy and government need them too. We experienced what deregulation got us back in 2008. More of the same on the way? Do we never learn?

  3. He is a complete, selfish idiot. Data means nothing to him. I only hope we have a country left when he is done.

  4. PLEASE DO NOT get rid of to many safety rules. we need a few .in the coal mines and train tracks .safe Trucks on the road .a wage law ..

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