Peabody [BTU] goes Chapter 11, Doha OPEC charade on horizon

Obama meets stated goal, bankrupts largest U.S. coal producer killing thousands of jobs. Upcoming OPEC meeting in Doha promises fake “freeze” in oil production.

Skyscrapers, part of the urban lanscape in Doha, Qatar, site of the April 2016 meeting of OPEC. (Image via Wikipedia entry on Doha, Qatar)

WASHINGTON, April 14, 2016 – So much business and financial news has been hitting the wires this week that we’ve had a hard time focusing on main topics and issues for this column. While there are many additional things to discuss, key happenings coming into focus this week include the sad state of America’s once great coal industry and the looming potential effects that may result from the upcoming OPEC meeting to be held this weekend in Doha, Qatar.

America’s energy industry effectively lost a major player yesterday when coal and mining giant Peabody (symbol: BTU) threw in the towel and filed for Chapter 11 bankruptcy, joining other coal ex-majors currently in the midst of their own Chapter 11 journeys to oblivion.

As any rational U.S. citizen must know by now, Barack Obama has done his best over two terms to hobble or destroy American industrial might, relentlessly focusing his powerful Presidential Destructor Ray on fossil fuels and most particularly on coal.

If you doubt that this was Obama’s intention even before his inauguration, we invite you to view the following under 4-minute video clip in which presidential candidate Obama clearly states his intention to destroy anyone who chooses or has already chosen to use coal as an energy source.

Obama encrypts his anti-coal intentions a bit with the usual Washingtonspeak and gobbledygook and does the same thing with nuclear energy which he despises equally, portraying the use of both energy sources as a zero sum game, offering no real alternatives to his stated intent. But, unlike his public views on any number of issues, he’s very clear that if elected he plans to destroy coal along with any utility that is stupid enough (in his opinion) to build a new coal plant or continue to operate existing coal plants. And that’s just what he’s done. So Peabody’s current fate should be no surprise.

We wonder if, in a moment of reflection, if any state and local union leaders ever paid any attention to what candidate Obama clearly promised before lavishly funding his campaign not only in 2008 but in 2012. Between his destruction of the coal industry and his utterly unsupported opposition to the Keystone Pipeline completion, Obama has eliminated or prevented tens of thousands of mining and construction jobs involved with the energy industry, all at the behest of the environmental extremists and wealthy anti-coal investors who, of course, have a stake in now-Federally subsidized “clean” energy ventures, many of which have already failed.

So, union bosses, how’s that unswerving support workin’ out for ya? Tens of thousands of union members are, well, no longer union members because they don’t have jobs and never will again. Small wonder that even the once automatically Democrat-voting state of West Virginia has gone Republican and has recently—to the Maven’s astonishment—passed a right-to-work law. How many coal mining jobs in that state did union pooh-bahs manage to save by supporting the man who vowed, in public, to destroy the livelihoods of union members?

Like the other bankrupt mining companies, Peabody continues to function under Chapter 11. But the writing is on the wall, and they along with the others will fade away into obscurity, likely under private ownership until they disappear entirely. And those union jobs? What union jobs? They’re gone for ever, and the rest of them will follow. No wonder unions work so hard to “organize” state and local workers. It’s about the only game left under an administration that’s pretty much destroyed the ability of miners, laborers and the trades to earn a middle class wage.

Doha is another issue, although in the end it’s really a non-issue. The financial media is hyping OPEC’s long-awaited meeting in Doha, Qatar this weekend—the one that media types breathlessly expect will result in the official announcement of a production “freeze” at current levels to prevent the currently volatile price of oil from dropping much further, thus allowing that fossil fuel industry to at least stabilize.

It’s appropriate, however, that this meeting is being held in a desert nation, as any announced production freeze will be nothing more than a mirage. That’s because countries like Iran, Iraq and perhaps even Libya are going to ramp up and produce oil at full blast to pump up the economies they ruined by their own stupidity. Which means that any “freeze” is no freeze at all, because all the usual suspects—and probably the U.S.S.R. Russia, too, will ignore the agreement.

Hope springs eternal, of course, in our currently manipulated bull market. Yet it’s hard to say what kind of trading we’ll encounter next week when we find out the actual results of Doha, even though we’re already sure what they’ll be. Stay tuned.

Today’s trading tips

Given all the energy nonsense we’re dealing with over the next few days, we’re pulling in our investment horns a bit Thursday and Friday. We already have a small hedge position in our large portfolio in the form of the double-short S&P 500 ETF, symbol SDS.

We’re also going to pare back recent positions we’ve taken in a pair of international oil companies, particularly BP, at least for the short term. We were surprised today to learn that BP shareholders actually voted against a generous compensation package for their current CEO, given that the company didn’t make any money last year, at least from an accounting standpoint.

As might be expected, the company’s board immediately threatened to cut BP’s dividend, the kind of typically churlish response that anyone in the American or European elite have to any rational proposal put forward by the stupid peasantry.

We actually approve of this shareholder vote and wish we’d see more of them. Why the hell should hundreds of CEOs—who pump up earnings by buying back shares and claiming earnings and profits per share are up every quarter—keep collecting fat bonuses while running their company’s (and their investors’) futures in the ground by ignoring the R&D they’ll need in the years ahead to stay competitive?

That said, this kind of turmoil messes with a stock for a certain period of time, so it’s best, we think, to pretty much back away from BP until the dust settles.

Our growing investment in Allergan preferred stock A (AGN/PRA at our brokerage, your symbol could vary) grew even larger yesterday as the stock got slaughtered, inducing us to buy more. It’s weak again today. For our reasoning on this one, consult our previous column here.

Given the unpredictability of the upcoming Doha meeting, and seeing that sneaky selling has been going on beneath this week’s apparent bull move, we’ll sell off a few profitable positions as well before Friday’s close. We’re already so close to “Sell in May” that it’s better to be safe than sorry.

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