October will soon give way to November.
This year, that means saying goodbye to another fraught 10th month. October is the month of the 1987 crash. And the onset of the Great Depression is popularly traced to "Black Tuesday," Oct. 29, 1929.
According to Ned Davis Research, of the "69 major trend changes since 1900, nine took place in October."
But the Stock Trader's Almanac notes that the six months that follow October are, on average, the best half of the year for equities.
November will also usher in the last midterm election of the Obama presidency.
That event--voting for all 435 seats in the US House of Representatives and the full terms for 33 of the 100 seats in the US Senate along with 38 state and territorial governorships, 46 state legislatures (all except Louisiana, Mississippi, New Jersey and Virginia), and numerous state and local races--will generate a lot of noise and little signal.
The most likely outcome at the federal level--based on recent polling trends as well as the forecast of a senior member of a sitting US Senator's staff (a Democrat, not on the ballot this year)--is Republican control of both houses of Congress.
There is a zero percent chance of the House flipping Democratic, a function of gerrymandered congressional districts in the aftermath of the 2010 census.
We will endure two more years of divided government, though the balance of power will have shifted rightward. With a Democratic Senate no longer in place to block legislation passed in the Republican-controlled House of Representatives, President Obama will have to either sign or veto bills passed by Congress.
There are mutual interests that could drive passage and signature of meaningful legislation on such matters as free trade, corporate tax reform, federal highway funding and the basis of US military operations in the Middle East.
There are also areas where Republicans will very likely be able to pick up sufficient support across the aisle to pass bills.
Such areas include energy policy, where regulators could be pressured to expedite the process for granting export licenses for liquefied natural gas and to make it easier to drill for oil on federal lands.
The GOP will likely want to pass a formal federal budget, and it seems highly unlikely they'll make the mistake of playing politics with the debt ceiling, which must be raised in 2015, and risk a catastrophic default.
It's also highly likely that a Republican-controlled Congress will pass a bill mandating approval of TransCanada Corp's (TSX: TRP, NYSE: TRP) Keystone XL pipeline project, which would put Mr. Obama in the position of either cowing to left-wing environmentalists or signing off on a jobs-creating infrastructure project.
Republicans will want to demonstrate their ability to govern responsibly ahead of the 2016 presidential cycle, while Mr. Obama's eyes will no doubt turn to his legacy in his last years in office.
Kentucky Republican Mitch McConnell--who, according to my senior Senate staffer friend, is on track to survive a stiff reelection challenge from Democratic nominee Alison Lundergan Grimes and become Senate Majority Leader--noted in a recent speech to donors, "We own the budget."
That will allow Republicans to use riders on spending bills to restrict the federal bureaucracy. No money will be budgeted to fund federal health care programs, for example, or the Environmental Protection Agency (EPA).
This, of course, is a critical issue for electric utilities and their investors. But outcomes on Tuesday, Nov. 4, will likely have very little impact on EPA's proposed Existing Source Performance Standards for electric generating units, its "Clean Power Plan."
It takes 60 votes in the Senate to attach riders to normal spending bills. And that means, based on the Republicans eking out a slim majority, Mr. McConnell will need to pick up Democratic votes to impede implementation of the rule on carbon emissions.
In any event, the Clean Power Plan represents mostly business as usual for the sector. Persistent low natural gas prices are already pushing industry away from coal.
At the same time, the proposal likely faces substantial implementation and litigation hurdles before the compliance period begins next decade. State governments, even those friendly to the rule, have complained about difficult timelines and concerns that the rule doesn't give enough credit to low-emitting sources including existing nuclear plants.
EPA extended the comment period on the rule until Dec. 1, 2014, but still hopes to finalize it by June 2015.
Approval of state plans required for the rule and ultimate implementation will be a job for the next president's administration.
New Nukes
Speaking of nuclear power, on Sept. 30, 2014, the US Dept of Energy (DoE) announced that as much as $12.6 billion in loan guarantees could be extended to help finance the next generation of nuclear energy technologies.
According to the DoE, such guarantees are necessary to help commercialize advanced nuclear projects that are often unable to secure traditional financing because of their scale and use of innovative technologies.
The proposal has yet to be finalized is open to public comment.
It's another move designed to help diversify the country's clean energy portfolio. It comes as competition from cheap natural gas and subsidized wind power, along with high operating and maintenance costs at aging nuclear reactors, have led operators such as Dominion Resources Inc (NYSE: D) and Entergy Corp (NYSE: ETR) to retire nuclear power plants early.
Generation of nuclear power doesn't lead to carbon dioxide or other greenhouse gas emissions. As such nuclear must be part of a serious effort to address climate change.
The DoE has identified four "key technology areas of interest" for the loan guarantees, including small modular nuclear reactors that are typically 300 megawatts or less in size and can be manufactured in factories rather than built onsite.
The agency is also interested in projects involving advanced nuclear reactors with "evolutionary, state-of-the-art design improvements" in areas of fuel technology, thermal efficiency and safety systems.
The Doe will also consider funding improvements and upgrades to existing reactors to increase efficiency or capacity, and "front-end" nuclear projects, such as uranium conversion or enrichment.
The draft solicitation follows the DoE's $6.5 billion loan guarantee for the construction of two nuclear reactors at Southern Company's (NYSE: SO) Vogtle plant near Waynesboro, Georgia, the first new reactors to be built in the US in 30 years.
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