Back in April 2008 we posted:
US warns worsening economy could hit climate change battle
If you missed the story last week, this is an example of why we try to give a macro overview to what is ostensibly a blog focused on climate-related investment opportunities; everything is connected.We focus on the drivers of equity prices. If it's bottoms-up analysis that gets us the edge, we do that. But as the economic situation worsened, more and more of our posts were on the big picture and fewer were on individual names. I haven't looked but I'd bet that during the first part of September, as Lehman failed, AIG became a wholly owned subsidiary of the U.S. Treasury, etc., we didn't have a single post on lab breakthroughs in photovoltaics or a VC's $4 mil. first round. That stuff wouldn't have mattered. Such things were, as the saying goes, a pimple on a gnat's ass.
Plus, I know something about this stuff....
Now, as the seriousness of the macro situation is on the front page of every small town newspaper and Katie Couric has become a financial journalist, we're starting to see some of the signs of Churchill's "End of the beginning".
Here's one example- Companies are putting out what, in more normal circumstances, would be considered bad news and their stocks are either not dropping or are even moving up. We saw this big-time last week when GE said they might consider cutting their dividend and the stock was up a double digit percentage.
It's almost as if honesty is cathartic for the market's soul [the market's soul?-ed]
Anyhoo, from 24/7 Wall Street:
Last year was the year that alternative energy was set to take the world over. High energy prices and election promises made green energy look like it had unlimited growth. Then came the massive drop in energy prices. Then came the recession. Then came the lack of credit. Combine all that with lower stock valuations and this is looking like solar companies will get hit with a wave of rolling blackouts.Applied Materials Inc. (NASDAQ:AMAT) gave us the impression that what we are setting up for is the third wave of negatives for the sector. What we saw out of JA Solar Holdings Co. Ltd. (NASDAQ: JASO) only adds fuel to that fire. SunPower Corporation (NASDAQ:SPWRA) and GT Solar International Inc. (NASDAQ: SOLR) are both up since their earnings, but these might not be representative of the whole group. Investors’ negative bias toward te will effect earnings expectations for Suntech Power Holdings Co., Ltd. (NYSE: STP) next week and First Solar, Inc. (NASDAQ: FSLR) the following week....
...Right now there is a crack in the solar sector. Shares have already been punished. And punished hard. But we are also seeing a run here on what is not good news, and in some cases, the stocks have been unfairly punished.
So we are very cautious on the sector. Guidance which may still be too aggressive. Obama’s plans may offer some support if things start to get too bad. The sector can’t implode. But the two largest problems are lack of financing for many new projects and the notion that green energy projects are not at all competitive with energy prices anywhere around the current levels....MORE
He closes on a more negative note than I'm singing:
...The sector will again have a day in the sun. But the economy and credit markets need to be better, and ultimately it really does look like lower energy prices take away many of the ambitions of alternative energy.