By Justin Spittler, editor, Casey Daily Dispatch
General Electric just announced it’s laying off 12,000 workers.
The industrial conglomerate is making the cuts to its power division.
This division, called GE Power, provides equipment and services to power plants around the world. It’s one of GE’s oldest and most important businesses.
Last year, this division did $27 billion in sales, or about 22% of GE’s total revenues.
But don’t let that fool you. GE Power is in serious trouble.
I’ll explain why in today’s essay. I’ll also show you how to turn GE’s big problem into huge profits.
But let’s first look at why GE made these “painful but necessary” job cuts.
• The world is moving away from fossil fuels…
I’m talking about oil, coal, and natural gas.
These fuels, as I’m sure you know, are bad for the environment. They’re dirty.
Because of this, world governments are doing everything they can to get their economies off fossil fuels.
They’re passing “green energy” policies…and taxing carbon emissions.
Now, you might not agree with these policies. But that doesn’t matter.
The point is that governments are putting them into place… and forcing power companies to abandon coal and gas.
• That’s taking a huge toll on GE…
That’s because GE sells more gas turbines than any other company on the planet. Its power business is built around fossil fuels.
And that market is dying much faster than anyone anticipated.
Because of this, Russell Stokes, who runs GE Power, had no choice but to make steep job cuts:
Traditional power markets including gas and coal have softened…
This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services.
To be clear, the global economy isn’t about to use less energy…it’s just going to get more energy from “green" sources.
• I’m talking about renewable energy like wind and solar…
For years, these alternative energy sources couldn’t compete with coal and natural gas.
They were too expensive. But that’s changed thanks to technological advances.
These days, wind and solar are viable options in many parts of the world. So naturally, more power companies are turning to them.
That’s why GE just gutted its power division. But it’s certainly not the only major industrial company that’s having to radically rethink its business.
• Last month, Siemens announced it plans to lay off 6,900 workers…
Siemens is a German industrial giant, and one of GE’s biggest competitors.
It made these deep job cut plans for the same reason GE did.
According to Bloomberg, Siemens announced these cuts due to “a sharp drop in orders for power-plant equipment.”
About 6,100 of these job cuts will be made to the company’s power and gas division. The company also plans to close several factories due to investors losing interest in traditional utility companies.
These moves by GE and Siemens tell us that the green energy revolution is happening much faster than most people anticipated.
• And that’s extremely bullish for copper…
Now, I know most people don’t think of copper when the topic turns to renewable energy.
But copper will play a massive role in the green energy revolution.
That’s because copper is one of the world’s best conductors. It can efficiently transmit heat and electricity with little impact on the environment.
Because of this, copper is used extensively in renewable energies.
Wind power generation, for one, requires four times as much copper as coal power. Solar requires about two and a half times as much.
• And demand for wind and solar power is skyrocketing…
Today, renewable energy (excluding hydroelectric) accounts for about 8% of all electricity generated worldwide.
By 2040, the International Energy Agency (IEA) predicts that renewables will account for 40% of the world’s power. At that point, they’ll generate more power than coal.
Of course, this can’t happen without massive investments in energy infrastructure.
And the IEA projects that renewables will account for two-thirds of all power plant investment between now and 2040. That’s about $7.5 trillion…and a lot of that money will be spent on copper.
• Of course, renewable power is just one aspect of the green energy movement…
An electric vehicle (EV) revolution is also underway.
Regular readers know exactly what I’m talking about. In short, demand for electric vehicles is about to shoot through the roof.
Today, there are about 2 million EVs being driven around the world. And that number grows by the day.
As I showed you in this recent Dispatch, analysts estimate that there will be 27 million electric vehicles on the road by 2027.
And these vehicles require anywhere from three to four times as much copper as traditional vehicles.
• The world is racing toward cleaner energy…
And that’s setting the stage for a massive rally in copper.
So, consider speculating on copper if you haven’t already.
You can easily do this by buying the iPath Bloomberg Copper Subindex Total Return ETN (JJC). This fund tracks the price of copper. That makes it one of the easiest ways to profit from the coming rally.
New Orleans, LA
December 11, 2017
P.S. I also encourage you to read my three-part series on how EVs will ignite a massive bull market in copper. You can find them right here:
Chart of the Day: This Sector Continues to Soar
By Joe Withrow, analyst, Casey Research
Industrial real estate investment trusts (REITs) have been on fire this year.
Industrial REITs are companies that own, lease, and operate warehouses. While that may not sound exciting, these companies are benefiting directly from the shift to online retail.
Two of our picks—DCT Industrial and Prologis—continue to rally, each up more than 14% since we covered them in July.
And they are both up more than 35% since their February lows. By comparison, the S&P 500 has only returned 16% in that time frame.
As we mentioned in those Dispatches, the online shopping boom will continue to grow.
So look for industrial REITs to outperform the S&P 500 over the next several years as this trend plays out…
The electric car revolution and green energy movement are two huge catalysts for copper. Are you going to take advantage? Or have you already started betting on copper from reading our essays over the past month? Let us know right here.