War Room Capital

Could Cap and Trade Still Happen?

With Cap-and-Trade: like it or dislike it and with Global Warming: believe it or dont believe it, the markets are here and will continue to evolve. China and India are considering taking on "no lose" targets and/or sectoral targets. US is too big not to leave out, pressure is on these developing nations to come to the table. A tax will not work for several reasons and a cap and trade system has been proven in US already with the Acid Rain market. Yes, there's discrepancies and problems, but one would not be complaining if they were bringing profits out of these markets daily.

How Will Obama's Administration Affect Emissions Trading Stocks?

The consensus in the market is that Obama will place caps on emissions. He has stated the other day that the US will "reengage" in the international climate talks. An international agreement's deadline is the end of 2009, but there is a meeting in the coming weeks taking place in Poland to further talks on an international agreement. However, US negotiators will not be making any major moves until Obama takes office. Obama has said he wants to cut emissions to 1990 levels by 2020 and then 80 percent below 1990 levels by 2050. Comparatively, the Kyoto has set a goal at six percent below 1990 levels by the end of 2012. So although Obama's goals are lower than Kyoto's, it is a start. There will be several sectors that will be affected by emissions caps as any new international agreement is expected to be economy wide and cover additional emissions than the current plan. There will be numerous opportunities within the emissions markets including arbitrage, derivatives valuation discrepancies, and simple volatility trading.