Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Accelerating Tomorrow’s Independent Research

Boost Research

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Thematic (Sector/Industry)

<ul>
<li>Quantifying nuclear statistics with substantial discrepancies</li>
<li>LT contracts &amp; speculative hoarding driving recent 40% spot price increase</li>
<li>Primary/secondary Uranium supplies currently 112% of 2017 demand</li>
<li>Uranium supply deficits extremely unlikely before 2022</li>
<li>Global Uranium demand to fall 25-40% by 2050</li>
<li> Primary Uranium sector LT SELL</li>
</ul>
We have independently audited global nuclear construction statistics in order to determine future Uranium demand.  Although near-term statistics match those in the public domain, long-term demand determined via construction pipeline illustrates substantial discrepancies.  Compiling planned plant construction, operational extensions, nameplate upgrades, versus decommissioning announcements/events, and in many cases, public policy inertia; has led us to believe that despite historical primary supply shortages, global nuclear demand peaked in 2006.
Since plateauing and despite strong Chinese growth, nuclear power generation has fallen &lt;2% over the past two decades, a decline that is predicted to accelerate as a number of developed and developing nations pursue other energy options.
The macro-trend not replacing existing nuclear infrastructure means (dependent on assumptions), according to our calculations, global uranium demand will decrease between 20 to 40% by 2050.
As opposed to signifying a fundamental change in underlying demand, we believe that recent Uranium price increases are the result of producers closing primary operations, and substituting production with purchases on the spot market to meet long-term contract obligations.  In addition, hedge funds are buying physical uranium in order to realise profits on potential future commodity price increases.  Critically, we determine that primary and secondary supplies are more than sufficient to meet forecast demand over the next four to five years; before taking into account substantial existing global uranium stocks, some of which are able to re-enter the spot market at short notice.


Quantifying nuclear statistics with substantial discrepancies
LT contracts &amp; speculative hoarding driving recent 40% spot price increase
Primary/secondary Uranium supplies currently 112% of 2017 demand
Uranium supply deficits extremely unlikely before 2022
Global Uranium demand to fall 25-40% by 2050
 Primary Uranium sector LT SELL

We have independently audited global nuclear construction statistics in order to determine future Uranium demand.  Although near-term statistics match those in the public domain, long-term demand determined via construction pipeline illustrates substantial discrepancies.  Compiling planned plant construction, operational extensions, nameplate upgrades, versus decommissioning announcements/events, and in many cases, public policy inertia; has led us to believe that despite historical primary supply shortages, global nuclear demand peaked in 2006.
Since plateauing and despite strong Chinese growth, nuclear power generation has fallen &lt;2% over the past two decades, a decline that is predicted to accelerate as a number of developed and developing nations pursue other energy options.
The macro-trend not replacing existing nuclear infrastructure means (dependent on assumptions), according to our calculations, global uranium demand will decrease between 20 to 40% by 2050.
As opposed to signifying a fundamental change in underlying demand, we believe that recent Uranium price increases are the result of producers closing primary operations, and substituting production with purchases on the spot market to meet long-term contract obligations.  In addition, hedge funds are buying physical uranium in order to realise profits on potential future commodity price increases.  Critically, we determine that primary and secondary supplies are more than sufficient to meet forecast demand over the next four to five years; before taking into account substantial existing global uranium stocks, some of which are able to re-enter the spot market at short notice.

Uranium - About to Enter Its Own Nuclear Winter

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

The S&amp;P 500 was not able to break through the 2,817 and 100-day moving average resistance levels last week, and has now fallen abruptly back to test 2,600 support. For now our outlook remains cautious and we continue to expect heightened volatility and horizontal consolidation between the aforementioned support and resistance levels. Absent any real clarity in regards to Fed policy or U.S.-China trade relations, the S&amp;P 500 is vulnerable to a breakdown.  We highlight opportunities within Pharmaceuticals and Waste Services, two areas of the market with defensive characteristics that currently exhibit timely technicals.

The S&amp;P 500 was not able to break through the 2,817 and 100-day moving average resistance levels last week, and has now fallen abruptly back to test 2,600 support. For now our outlook remains cautious and we continue to expect heightened volatility and horizontal consolidation between the aforementioned support and resistance levels. Absent any real clarity in regards to Fed policy or U.S.-China trade relations, the S&amp;P 500 is vulnerable to a breakdown.  We highlight opportunities within Pharmaceuticals and Waste Services, two areas of the market with defensive characteristics that currently exhibit timely technicals.

A breakout late last week in the high yield spread over 10-year Treasuries can now be added to the already long list of concerns we have for the market. Continued volatility remains our expectation, and it is becoming increasingly likely that the February 2018 lows will be tested, with new YTD lows a very real possibility.  In today’s report we reiterate our U.S. investment thesis, and highlight attractive Groups within Utilities and Financials.

A breakout late last week in the high yield spread over 10-year Treasuries can now be added to the already long list of concerns we have for the market. Continued volatility remains our expectation, and it is becoming increasingly likely that the February 2018 lows will be tested, with new YTD lows a very real possibility.  In today’s report we reiterate our U.S. investment thesis, and highlight attractive Groups within Utilities and Financials.

U.S. Equity Strategy: How Much Worse Can It Get?

We remain extremely cautious and expect consolidation, volatility, and lower prices to continue as the market searches for a bottom.  In today's report we recap our U.S. equity investment thesis and highlight attractive Groups within Services and Utilities: SV-16 Waste Services, Small-Cap, and UT-06 Electric, Midwest.

We remain extremely cautious and expect consolidation, volatility, and lower prices to continue as the market searches for a bottom.  In today's report we recap our U.S. equity investment thesis and highlight attractive Groups within Services and Utilities: SV-16 Waste Services, Small-Cap, and UT-06 Electric, Midwest.

U.S. Equity Update - Cautious Outlook, Downgrading Manufacturing

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

<ul><li>The drive to green power is the well-understood destructive impact of fossil fuel consumption: Investment in renewable energy is driven by the reality that the current consumption of fossil fuels, and related air pollution, water pollution, and public health costs, are unsustainable. As hundreds of millions of people push for higher living standards&mdash;and thus increased consumption of polluting resources&mdash; governments around the world are acting. With governments meeting in early December for the COP21, stronger commitments are possible. We do not expect legally binding agreements on all parties to emerge from the talks.</li><li>With policy support, high investment is set to continue: Though some governments have throttled back support following inefficient overbuild, the trend points upward in the largest markets, primarily the United States and China, and key new markets in emerging economies like India, Mexico, South Africa, Turkey, and others. With more players chasing development, and lower absolute subsidies in many cases, we think renewable energy investment returns may fall.</li><li>Ormat is our favorite way to play renewable energy generation capacity: Even though we think the stock is currently modestly overvalued, Ormat Technologies&mdash;a narrow-moat pure-play geothermal developer&mdash;is the only independent power producer with an economic moat. It has a long and impressive growth runway well beyond our five-year explicit forecast, and its baseload geothermal generation has a major operational advantage over intermittent solar and wind.</li><li>Renewable energy growth was one factor in our recent midcycle power price cuts: We recently cut our midcycle outlook for Texas power markets by 20%, primarily because of the state's huge pipeline of renewable energy projects that we expect to go into service during the next three to five years. There are more than 24.5 GW of active generation requests under review for new-build wind generation through 2020, including 11 GW in the next two years, with the state's primary grid operator, ERCOT, or the Electric Reliability Council of Texas.</li></ul>Analysts: Mark Barnett, Travis Miller, Andy Bischoff CFA &amp; Charles Fishman, CFA

The drive to green power is the well-understood destructive impact of fossil fuel consumption: Investment in renewable energy is driven by the reality that the current consumption of fossil fuels, and related air pollution, water pollution, and public health costs, are unsustainable. As hundreds of millions of people push for higher living standards&mdash;and thus increased consumption of polluting resources&mdash; governments around the world are acting. With governments meeting in early December for the COP21, stronger commitments are possible. We do not expect legally binding agreements on all parties to emerge from the talks.With policy support, high investment is set to continue: Though some governments have throttled back support following inefficient overbuild, the trend points upward in the largest markets, primarily the United States and China, and key new markets in emerging economies like India, Mexico, South Africa, Turkey, and others. With more players chasing development, and lower absolute subsidies in many cases, we think renewable energy investment returns may fall.Ormat is our favorite way to play renewable energy generation capacity: Even though we think the stock is currently modestly overvalued, Ormat Technologies&mdash;a narrow-moat pure-play geothermal developer&mdash;is the only independent power producer with an economic moat. It has a long and impressive growth runway well beyond our five-year explicit forecast, and its baseload geothermal generation has a major operational advantage over intermittent solar and wind.Renewable energy growth was one factor in our recent midcycle power price cuts: We recently cut our midcycle outlook for Texas power markets by 20%, primarily because of the state's huge pipeline of renewable energy projects that we expect to go into service during the next three to five years. There are more than 24.5 GW of active generation requests under review for new-build wind generation through 2020, including 11 GW in the next two years, with the state's primary grid operator, ERCOT, or the Electric Reliability Council of Texas.Analysts: Mark Barnett, Travis Miller, Andy Bischoff CFA &amp; Charles Fishman, CFA

United States

Ameren Corporation is a public utility holding company.  The Company, through its subsidiaries, generates electricity, delivers electricity and distributes natural gas to customers in Missouri and Illinois.

WEC Energy Group, Inc. operates as a utilities provider. The Company distributes electricity and natural gas to its customers in Wisconsin, Illinois, Michigan and Minnesota.

Consolidated Edison, Inc., through its subsidiaries, provides a variety of energy related products and services. The Company supplies electric service in New York, parts of New Jersey, and Pennsylvania as well as supplies electricity to wholesale customers.

CMS Energy Corporation is an energy company operating primarily in Michigan. The Company, through its subsidiaries provides electricity and/or natural gas to its customers in Michigan. CMS Energy also invests in and operates non-utility power generation plants in the United States and abroad.

CenterPoint Energy, Inc. is a public utility holding company. The Company, through its subsidiaries, conducts activities in electricity transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations, and power generation.

NiSource Inc. is an energy holding company. The Company's subsidiaries provide natural gas, electricity and other products and services to customers located within a corridor that runs from the Gulf Coast through the Midwest to New England.

Public Service Enterprise Group Incorporated is a public utility holding company. The Company, through its subsidiaries, generates, transmits, and distributes electricity and produces natural gas in the Northeastern and Mid Atlantic United States.

Public Service Enterprise Group Inc (PEG US)

Dominion Energy, Inc. produces and transports energy products. The Company offers natural gas and electric energy transmission, gathering, and storage solutions. Dominion Energy serves customers in the United States.

MDU Resources Group, Inc. provides various commercial services. The Company offers distribution of electricity, natural gas, and construction materials, as well as construction services. MDU Resources Group serves customers in the United States.

Black Hills Corporation is a diversified energy company.  The Company generates wholesale electricity, produce natural gas, oil and coal, and market energy. Black Hills serves customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming.

Veolia Environnement SA operates utility and public transportation businesses. The Company supplies drinking water, provides waste management services, manages and maintains heating and air conditioning systems, and operates rail and road passenger transportation systems.

E.ON is one of Europe's largest operators of energy networks and energy infrastructure and a provider of innovative customer solutions for some 51 million customers. The company's operations are energy networks and customer solutions.

Engie SA offers a full range of electricity, gas and associated energy and environment services throughout the world. The Company produces, trades, transports, stores, and distributes natural gas, and offers energy management and climatic and thermal engineering services.

YTL Corporation Berhad is an investment holding and management company. Through its subsidiaries, the Company operates an integrated infrastructure development which includes construction work on contractual basis, property development, power generation, and hotel development and management. YTL Corporation also manufactures industrial products and supplies.

Engie offers a full range of electricity, gas and associated energy and environment services throughout the world. The Company produces, trades, transports, stores and distributes natural gas, and offers energy management and climatic and thermal engineering services.

Centrica PLC is an integrated energy company offering a wide range of home and business energy solutions. The Company sources, generates, processes, stores, trades, saves and supplies energy and provides a range of related services.

YTL Power International Berhad is an investment holding company which provides administrative and technical support services. Through its subsidiaries, the Company develops, constructs, maintains, and operates power stations which includes Paka Power Station in Terengganu and Pasir Gudang Power Station in Johor.

A2A S.p.A. is an Italian utility company.  The Company is active in electricity (production, distribution, trading and sales), gas (supply, distribution, trading and sales), district heating, waste (collection, treatment and disposal), integrated water cycle, public lighting and other activities. A2A S.p.A  has a strong presence in the North of Italy.

Canadian Utilities Limited conducts operations in electrical utility services, independent power production, and retail gas and electricity marketing.  The Company also distributes, transmits, gathers, processes, and stores natural gas. In addition, Canadian Utilities provides technical logistical services and billing and call center services.

DTE Energy Company, a diversified energy company, develops and manages energy-related businesses and services nationwide.  The Company, through its subsidiaries, generates, purchases, transmits, distributes, and sells electric energy in southeastern Michigan. DTE is also involved in gas pipelines and storage, unconventional gas exploration, development, and production.

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DTE Energy Company (DTE US)

Uranium - About to Enter Its Own Nuclear Winter

Quantifying nuclear statistics with substantial discrepancies LT contracts & speculative hoarding driving recent 40% spot...

Boost Research

S&P 500 Revisiting 2,600 Support

The S&P 500 was not able to break through the 2,817 and 100-day moving average resistance levels last week, and has now fallen abruptly back to...

Vermilion Research

U.S. Equity Strategy: How Much Worse Can It Get?

A breakout late last week in the high yield spread over 10-year Treasuries can now be added to the already long list of concerns we have for the...

Vermilion Research

U.S. Equity Update - Cautious Outlook, Downgrading Manufacturing

We remain extremely cautious and expect consolidation, volatility, and lower prices to continue as the market searches for a bottom. In today's...

Vermilion Research

Why the Renewable Energy Boom Has Legs

The drive to green power is the well-understood destructive impact of fossil fuel consumption:Investment in renewable energy is driven by the...

Morningstar, Inc.

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