Editor's note: Today's Digest will be brief, as our editorial team is traveling for our annual Spring Editors Conference today. We'll bring you updates from the conference later in the week.
Last Friday, an event took place that sets our country on the path to a huge economic boom... The U.S. government approved its first liquefied natural gas (LNG) export facility since 2011.
The Department of Energy granted the company Freeport LNG approval to export gas from its Quintana Island, Texas facility. Freeport expects to begin exporting up to 1.4 billion cubic feet of gas per day by 2017... And it's already signed agreements with Japanese utilities to buy the output.
The only other government-approved export facility in the U.S. is Cheniere Energy's Sabine Pass, Louisiana facility (granted in 2011). The company expects to begin exporting by 2015.
We've been following the explosion in domestic natural gas production for years... And we've long believed opening the borders for LNG exports is one of the most important steps our country can take toward economic improvement.
In Porter's most recent issue of Stansberry's Investment Advisory, he wrote:
Today, the U.S. has a massive glut of natural gas. This excess supply is the result of the overinvestment in exploration and production from the previous decade. And even though drilling for natural gas has all but stopped in the U.S., supply hasn't fallen.
That's because oil exploration is raging ahead, and natural gas and natural gas liquids (NGLs) – fuels like propane and butane – are frequently found alongside oil in shale. This so-called "associated" gas continues to be produced, despite the low price of natural gas. Tremendous efforts are being made to collect this associated gas (instead of simply burning, or "flaring," it at the wellhead as an unwanted byproduct).
In addition to these new methods of distribution, roughly $50 billion worth of new industrial and chemical facilities are being built near the sources of natural gas in the U.S. And hundreds of compressed natural gas (CNG) filling stations are being built right now across the U.S. to help support the growing number of natural-gas-powered trucks.
Finally, perhaps most important, U.S. electricity producers will retire roughly 13% of the country's fleet of coal-fired power plants in the next year, replacing them with natural-gas-powered plants.
In short... we believe that within three to five years, massive amounts of new domestic demand and a huge expansion in export capacity will cause the price of natural gas in the U.S. to approach international prices around $10 per mcf. That will make U.S. natural gas producers some of the most profitable businesses in the world.
Some 26 applications are pending for the construction of LNG facilities... And as the Obama administration continues approving these companies to export natural gas, we'll see higher natural gas prices and soaring profits for natural gas companies.
Freeport expects to begin work on two liquefaction and purification facilities by the end of the year... The two facilities (called "trains") are expected to cost $8 billion. And SIA portfolio holding Chicago Bridge & Iron (CBI) got the contract to build it... The company has already begun engineering for the project.
Shares of CBI rose 2.67% yesterday to a new high on the news... Investment Advisory subscribers are up 77% on the position since June 2012.
Yesterday, congressional investigators accused Apple of avoiding billions of dollars in taxes by exploiting loopholes and using Irish subsidiaries that aren't tax residents of any country.
Dan Ferris, who warned against corporations sheltering foreign income from taxes in Extreme Value, sent me this e-mail about Apple's troubles...
I've been saying it's a mistake for big corporations like Microsoft and Apple to shelter foreign income from U.S. taxes since last November...
You don't create shareholder value by screwing around with taxes. You create it by running a great business and increasing the operating income.
And now Apple is proving that maybe jerking around with taxes isn't the wonderful business everybody thought it was.
"Apple sought the Holy Grail of tax avoidance," said Democratic Senator Carl Levin, who will head the hearing, in a press statement. "It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere."
Staff on the investigative committee said Apple's maneuvers saved it $44 billion in taxes over the past four years... One subsidiary, Apple Sales International, paid almost no taxes on sales of $74 billion between 2009 and 2012. In 2011, it paid $10 million on $22 billion in earnings – a rate of 0.05%, according to the committee. The committee already noted Apple hasn't done anything illegal... Still, it's another black eye for a company whose stock has fallen from more than $700 a share last September to less than $450 today.
New 52-week highs (as of 5/20/13): Abbott Laboratories (ABT), Chicago Bridge & Iron (CBI), WisdomTree Japan Hedged Equity Fund (DXJ), Energy Transfer Partners (ETP), Fidelity Select Medical Equipment & Systems Fund (FSMEX), Corning (GLW), Chart Industries (GTLS), KBR (KBR), Loews (L), 3M (MMM), Microsoft (MSFT), Allianz Equity & Convertible Income Fund (NIE), Superior Energy Services (SPN), Cambria Shareholder Yield Fund (SYLD), Targacept (TRGT), Wells Fargo (WFC), WPX Energy (WPX), and Washington Real Estate Investment Trust (WRE).
If you think being cited as one of the greatest CEOs in American history is impressive… one subscriber reminds us that it's nothing compared with what earned Bill Anders his status as "Distinguished Graduate" of the U.S. Naval Academy. As always, please send all your feedback to feedback@stansberryresearch.com.
"Of the ten CEOs listed in the Friday, 5/17 S&A Digest, as Thorndike's greatest and largely unknown, Bill Anders of General Dynamics might be more readily recognized as Astronaut and U. S Air Force Major General Bill Anders (Ret), a 1955 graduate of the U.S. Naval Academy, who made, in my opinion, the gutsiest space flight of them all... the first flight to the moon and back that paved the way for the subsequent lunar landings.
"At that time, there was no real certainty that the three men on board might not have ended up lost in space. People will recall their Christmas Eve scripture reading as they circumnavigated the moon. How many of us would have the guts to have made that ride? Prior to taking over General Dynamics, Bill also served in multiple Senior VP positions at General Electric and has been further honored as being among the first group selected as a 'Distinguished Graduate'" of Annapolis." – Paid-up subscriber Bob Vollum
"I made 38% my first year – I got in with a raging bull market that is very forgiving to making every stupid mistake there is. Your newsletters are helpful. You seem to be both right brained visionary and left brained logical. A rare combination. I hope to meet you in person someday. Thanks for all the tips." – Paid-up subscriber Stephen Guffanti
Regards,
Sean Goldsmith
Miami Beach, Florida
May 21, 2013
In yesterday's Digest Premium, I (Porter) discussed why I believe stocks could go higher… But why I also think this will all end badly.
I think the most important thing you have to do to protect yourself is just be conservative. People will do foolish things over the next several quarters (like paying record prices for fine art and buying $90 million Manhattan apartments). Now that credit markets are wide open, you'll see people borrowing money to buy these expensive assets to speculate.
I recently read that New York Stock Exchange margin debt is at its pre-2007 highs. In other words, people are more leveraged today in order to buy stocks than before the financial crisis. It's very, very foolish. When people get greedy, you must get cautious. And there is no doubt we have tipped way over from rational investing to greedy investing.
Now, why would you buy T-bills if you believe the dollar is going to crash? You buy T-bills if you believe the dollar will crash because they are still, up to this point, the most widely exchanged form of liquidity. So you buy T-bills simply because they're liquid. And you'll hedge it by also buying gold. I really like this trade.