💍 Coal's new power couple

What’s going on here?

Coal mining giants Arch Resources and Consol Energy are tying the knot in an all-stock merger, and changing their name to Core Natural Resources.

What does this mean?

The happy couple are creating a $5.2 billion powerhouse – one with the potential to generate up to $140 million in annual cost savings. So there are plenty of handshakes and back slaps going around right now, with the boards at both firms raising a glass to the union. Arch and Consol have both been keeping debt levels low and cash reserves high. Once combined, they’ll have even more financial muscle – which will give them a better shot at surviving the ever-evolving energy scene. Of course, that’s assuming shareholders and regulators don’t throw a wrench in the works and quash the deal.

Why should I care?

For markets: Friends of mines.

Coal may be out of fashion, but it’s seeing a rise in demand nonetheless. That’s thanks to two things: AI’s boundless energy consumption and Russia’s war in Ukraine. In fact, coal consumption hit an all-time high in 2023, according to the International Energy Agency, as India and China bought more of the black stuff. Now, big companies are betting that coal will keep working hard – even as the world expands its green energy sources.

The bigger picture: Bright idea.

The ongoing tug-of-war between energy sources is a powerful reminder that investing isn’t always straightforward. So while betting on clean energy may be smart, betting against fossil fuels might not be. Those old-school companies are still cash-generating powerhouses, after all – and they’re crucial for keeping the lights on.

What’s going on here?

The British pound sterling is punching the air after hitting a six-month high against the US dollar.

What does this mean?

The foreign exchange (forex) market doesn’t hand out Olympic medals – but if it did, God Save The King would be playing right now. The UK’s currency has been the best performing out of the Group of Ten nations this year, rising 3% against the greenback alone. That, er, sterling performance has been helped by an increasingly perky economy at home: the UK’s latest business activity survey showed a welcome combination of stronger growth, better job creation, and downright mild inflation. Interest rates are the biggest forex driver, though – and the higher they are, the more attractive a country’s currency appears to international savers and investors. So all eyes are on the Bank of England and the Federal Reserve: mere expectations of their next moves will likely determine where the pound and dollar go next.

Why should I care?

Zooming in: Cheap as chips.

According to Morgan Stanley, Europe’s big stock funds have been investing in AI-related firms, weight-loss drug superstar Novo Nordisk, and… British stocks. See, there’s plenty to like about the UK right now: historically “cheap” stock valuations, strong returns, enticing buybacks and dividends, and some new political stability. But those valuations have been stuck in the mud, in part because of a lack of interest among Brits themselves – roughly two-thirds of UK stock buyers come from abroad. And that would need to change for London’s shares to become more pricey.

The bigger picture: The hunt for magnificent… values.

Now the UK’s stocks aren’t exactly on the verge of overshadowing the Magnificent Seven: those glittery tech stocks have driven much of the S&P 500’s gains this year. But they could soon garner some glitz of their own. Interest rate cuts are expected to begin next month in the US (and they’ve already started in Britain), and that just might cast value stocks in a better light – like, you know, those in the UK.