Last week, Jefferies & Co. held its Global Clean Technology Conference. Unsurprisingly, the tone wasn't as optimistic as in previous years, with cash and funding worries top of mind. Nearly two months ago, I discussed some tangible signs pointing to looming problems in the industry. However, despite all the gloom, it seems as though several firms (and investors!) are expecting the American Reinvestment and Recovery Act (ARRA) to provide the industry with a lifeline. But will this really be the case?
For one thing, the major environmental spending programs in the ARRA are relatively targeted (i.e. smart grid, storage, clean transportation) and, although a broad range of companies could benefit from measures such as an extension of the production tax credit, direct government cash payouts will not be forthcoming for all. What's more, it now looks like Obama's plan for a cap-and-trade system, which would have provided a major boost for clean power, will be scrapped....MORE
Thursday, March 26, 2009
How Likely Is A Big Rally For Alt Energy Stocks?
Wednesday, March 25, 2009
Former CNN Anchor Moves to The Onion
In yet another sign that the line between real news and fake news is getting thinner, one of CNN’s main anchors during the 1980s and 1990s, Bobbie Battista, has taken a step through the looking glass and can now be seen anchoring reports online for ONN, The Onion News Network....MOREAnd from America's Finest News Source:
The Effects Of Global Warming
Local Office Betting On Who Will Win NCAA Tournament Pool At Other Office
Panicked Agriculture Secretary Momentarily Forgets What Corn Is
Experts Agree Giant, Razor-Clawed Bioengineered Crabs Pose No Threat
Right To Privacy Not Guaranteed By Constitution, Says Supreme Court Justice Peeking In Bathroom Window
Getting Randomly Picked To Make Half-Court Shots Now Best Way To Earn Living
Climate Change Capital targeting €500m for European renewable energy private equity fund
UK investment manager Climate Change Capital is looking to raise up to €500m for a private equity fund targeting investments in European renewable energy, according to reports.The news follows the recent report that CCC’s head of fund strategies and investor relations Roger Berry has left the company....MORE
Lobbyists Are First Winners in Obama’s Clean-Technology Push
At first glance, SmartSpark Energy Systems looks like a lot of technology startups. It raised $6 million in venture capital, employs 24 people and doesn’t make any money.What sets the company apart: It has two teams of lobbyists.
The first jobs of the federal clean-energy stimulus plan are here -- and they’re for lobbyists. SmartSpark is part of a stampede of technology companies hiring insiders in Washington and state capitals to gain influence. They’re vying for a piece of last month’s $787 billion stimulus package.
“There is so much at stake here that there’s an enormous need for entrepreneurs to get close with policy makers,” said Jason Matlof, a partner at Battery Ventures in Menlo Park, California. “There are billions just for R&D. It’s a lot of money.”
The spending is far more than venture capitalists can give renewable-energy companies, especially during a recession, Matlof said. Battery told its eight clean-technology companies last month to put a specific executive in charge of getting public money, and to consider hiring lobbyists.
The stimulus bill, signed by President Barack Obama last month, includes $77.6 billion for clean-energy projects, according to the research firm IDC.
Money Chase
Competition for government dollars will be intense, said Jon Sakoda, a partner at New Enterprise Associates in Chevy Chase, Maryland. NEA has 25 clean-energy startups in its portfolio, he said....MORE
Odd Timing of a Great Call on SunPower (SPWRA)
Eric Savitz , The Hardest Working Man In Show Business! And: Book-to-Bill Ratio at 0.10
From Research Recap:
Watching the flow of research on stocks can be fascinating. Take the recent case of Sun Power (SPWRA), a manufacturer of solar power products with a $2 billion market cap:On January 27, two days ahead of the fourth quarter earnings announcement, three analysts cut their 2009 earnings forecasts for the company: Mehdi Hosseini of Friedman Billings, Jeff Osborne of Thomas Weisel and Mark Bachman of Pacific Crest. Eric Savitz of Tech Trader Daily had an excellent roundup of the coverage
On January 29, as reported again by Tech Trader Daily, Gordon Johnson of Hapoalim Securities initiated coverage on SPWRA with a sell recommendation and a target price of $15.00. The stock was trading at around $30.00. Savitz remarked, “That’s pretty bold timing, given that the company should report Q4 results today after the close.”>>>MORE
Short Sellers Double Down Against Green & Alternative Energy (CSIQ, CPST, CLNE, ENER, ESLR, FSLR, FCEL, SOLR, JASO, LDK, SFUN, SPWRA, STP)
There was what appears to be a massive increase in short selling for the period report ending March 13, 2009. The short selling increases in companies like First Solar, Inc. (FSLR), Suntech Power Holdings Co. ( STP), SunPower Corp. (SPWRA) and others were well into double digits....MORE including table.The WSJ's Geoffrey Rogow said in the MarketBeat piece "Undaunted, Bears Put Down More Bets":
The bears have tired of betting against banks, but they’re placing plenty of bets elsewhere....
America to Geithner: "Will You Please, Be Quiet, Please?" And: "Is a global super-currency on the agenda?"
"Would you categorically renounce the United States moving away from the dollar and going to a global currency as suggested this morning by China and also by Russia, Mr Secretary?"
Geithner replied, "I would, yes."
Today MarketBeat says:
From FT Alphville:Oh, Mr. Geithner.
Some have commented that whatever merits Treasury Secretary Tim Geithner may have, public speaking is not one of them. The dollar slumped dramatically against the euro, yen and other currencies after Mr. Geithner Wednesday said the U.S. is “quite open” to a suggestion from Chinese officials of a move to a “Special Drawing Right” linked currency system.
Oy. “Geithner is learning the hard way about the impact that his comments can have on the currency market and despite his attempt to pacify investors, his words have left an air of uncertainty in the U.S. dollar,” writes Kathy Lien, director of currency research at Global Forex Trading.With the Chinese of late making plenty of noise about U.S. borrowing and spending and the health of the U.S. dollar, officials in the U.S. would be expected to push back against that. President Barack Obama did as much in his press conference Tuesday, saying that the dollar was fundamentally strong, and that there was no need for another reserve currency....MORE
It started out as a call from the likes of George Soros and Ted Truman.
But the IMF’s little known international accounting system of special drawing rights [SDRs] has now been propelled straight into the limelight thanks to both China and Russia. However, while Soros and Truman saw the units as a means to help induce a global helicopter cash drop to kick-start the world economy and save the peripheral states from financial implosion, the Chinese and Russians are advocating the accounting system as a means towards a new global reserve currency.
And this does make some sense. Many months ago, when the topic was firmly off the agenda we asked Ken Rogoff, Harvard economics professor and former chief economist of the IMF, about the role of SDRs in the future. His said they were basically not very meaningful in the absence of a consensus to have a world currency. So is that really what China, Russia, Soros and Truman are advocating?
Worth considering is the following quote from Paul Volcker...MORE
I think I saw Cuba make a similar proposal, no word on North Korea's thinking.
Banks to Write-UP Assets?
Mark-to-Market Accounting: Shooting Ourselves in the Foot
The author was president of the Dallas Federal Reserve Bank, 1991-2005...Suspending Mark-to-Market. Mark-to-market had its critics early on. Federal Reserve Board Chairman Alan Greenspan wrote a 4-page, single-spaced letter to the SEC in November 1990, urging them not to apply mark-to-market to commercial banks because their business model is not that of a trader, but involves holding assets on their balance sheet. In 2002, Treasury Secretary Nicolas Brady wrote a similar letter to the SEC.
Earlier this year, Paul Volcker, speaking as chairman of the "Group of 30," a private nonprofit composed of senior representatives from the private and public sectors and academia, released their study of the financial crisis. Recommendation No. 12 on Fair Value Accounting says:
a. Fair value accounting principles and standards should be reevaluated with a view to developing more realistic guidelines for dealing with less liquid instruments in distressed markets.
Even the International Accounting Standards Board, the international equivalent of the FASB, allowed European banks to relabel their MBSs as "held to maturity" in 2008 to avoid marking them to market. As a result of this change, says Wallison, Deutsche Bank went from a projected loss to a profit, and its stock price increased by 18 percent.
Conclusion. The most serious example of doing the right thing at the wrong time is overly strict adherence to mark-to-market accounting rules. Fortunately, there is historical and international precedent for suspending and reworking these rules. Congress and the SEC should consider doing so until the economy recovers.
HT: David Goldman at the Asia Times' Inner Workings blog who writes
...He’s completely correct, and the Financial Accounting Standards Board is rushing its deliberations on the matter to rule by April 2, in time for banks to restate their first quarter profits. The FASB might decide against suspending mark to market, but that doesn’t seem likely. As McTeer observes, it’s the cheap way to do it. I’ve been arguing for this for months.
This will allow banks to write up enough assets to then re-sell to private equity at lower prices — everyone wins.
I expect banks to outperform expectations for the first quarter by construction, that is, by clawing back some of the exaggerated mark to market losses of the past several quarters. If I am correct, banks stocks should rally on earnings news. There seem to be enough people out there who believe Krugman who have not yet given up on the thought that bank equity will go to zero.
Mr. Goldman was global head of fixed-income research for Banc of America Securities and global head of credit strategy at Credit Suisse.
EUROPE: Carbon down 7.5% by midday
If anything, carbon tends to lag the other indices I've compared it to, which of course, may be of some worth in itself.
A snippet from PointCarbon:
Carbon prices slumped on Wednesday morning amid steep losses in German power prices.
DEC 2009
Last 30 days
![[Price graph]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_uj_hqwdtehEwjhs7oVrAWpHEW2RJ4VYu0wmbyvC4yg6oUPezivFIV70GbnLx_RCGfkxHEzt1obzhM_ZTXXQ3FI8DHfbG2SoRxR-GO7surKBOSHakhm4XJYvYIe16lVcXcUTvJc9cxSmpQ9Y6cmuHmDbZAUlP4ce3vPAfoi5A0DJGjqFgWLzgPgHkF4MMjkWHC2PoJxvX0G_YaqPlOCVe1su2DNox8236c=s0-d)
Tuesday, March 24, 2009
U.K.: Green pressure grows for cow flatulence tax
THE UK government and the devolved administrations must avoid the temptation to introduce a "flatulence tax" on cows and other farm livestock, according to Struan Stevenson, a Scottish Conservative MEP who takes a keen interest in farming and rural affairs. The very notion may seem decidedly obtuse to practical farmers, but it is under consideration in both the Irish Republic and Denmark....MOREAlso from the Scotsman:
- Innis & Gunn aims to build its beer sales in homeland
- Sheep tag row rumbles on as EU dithers
- Green pressure grows for cow flatulence tax
- Nairn's deny sale rumours
- Brewer bids to pump up sales
- Milking the sysytem may leave dairy farms high and dry
- Wine firm collapse threatens top drink brands
- Coffee bar founder will chew the fat with Carnegie delegates
Novozymes to invest up to $200 million in Nebraska enzyme plant (NVZMF.PK)
From SmartBrief:
Danish company Novozymes is scheduled to announce today its plan of investing as much as $200 million in the construction of an enzyme plant in Blair, Neb. Novozymes North America President Lars Hansen said he is optimistic about the ethanol sector, which uses enzymes to break down starch in corn, because of a federal mandate that requires gasoline to be blended with 36 billion gallons of biofuel by 2022.The local angle:
Denmark's crown prince to visit Nebraska
Denmark's Crown Prince Frederik and his wife, Mary, will be in Nebraska as part of a 5-day visit to the United States.
The pair will be in Blair on Tuesday to help celebrate the 125th anniversary of Dana College in Blair, founded by Danes.
It will be the third time in the college's 125-year history that Dana College has hosted Danish royalty. During his visit, the crown prince will receive an honorary degree from Dana College. The royal couple also will attend a groundbreaking ceremony in Blair for Novozymes, a Danish biotech firm....
-via KMEG-TV, Sioux City, IA
Here's Novozyme's homepage, in English
Genes Control Your Stock Picks (and Other Research)
In honor of some recent gains in the stock market, a few interesting stock-related studies:
1) Left-Digit Effect: Investors buy stocks the same way they shop for toothpaste: They are seduced by prices that end in “.99.”
This effect is called the “left-digit effect” — that is, the tendency to pay inordinate attention to the left-most digit in a price, and to read “$2.99″ as being significantly cheaper than “$3.00.” An abstract of the paper — which is by Utpal Bhattacharya, Craig W. Holden and Stacey E. Jacobsen at Indiana University-Bloomington — can be found here. Here’s a news article explaining the research in more detail...
...4) Aversion to the Mean: This study, by Luboš Pástor and Robert F. Stambaugh, finds that, contrary to conventional wisdom, a stock’s price doesn’t revert to the mean over a long time frame. In fact, “stocks are substantially more volatile over long horizons from an investor’s perspective.”>>>MORE
U.S.' Geithner, Bernanke reject global currency idea
U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke on Tuesday rejected suggestions that the world move toward a global currency system....MORECompare with:
March 11
Kazakh leader calls for single global currency
Mar 16
Russia to propose new reserve currency at G20
March 18
U.N. panel says world should ditch dollar (But it won't be replaced with Carbon Credits)
March 23
China Urges New Money Reserve to Replace Dollar
How to Finance Your Clean Energy Project
From the Climate + Energy Project blog:
...From the geniuses at LBNL - PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States (by Bolinger M. and R. Wiser, Lawrence Berkeley National Laboratory; K. Cory and T. James, National Renewable Energy Laboratory. LBNL-1642E. March 2009)...
Russia: Oil Prices Are Going Back Down
Falling oil prices are particularly bad for Russia. A large part of the country’s GDP comes from exporting its vast supply of crude and gas.So, it is especially surprising that a senior Russian official is predicting that oil will fall again after advancing above $50 recently.
According to the AP, the nation’s finance minister Alexei Kudrin referring to oil prices said, “This is most likely to be a temporary improvement.”
Fortunately for Russia, he may be wrong. Although OPEC did not cut production at its last meeting, it said it would enforce production cuts already in place. That should keep the supply of crude stable....MORE
Britain: "Opposing wind farms should be socially taboo, says Ed Miliband" And: "Energy firms demand £2bn to save wind farms"
From the Times of London:Opposition to wind farms should become as socially unacceptable as failing to wear a seatbelt, Ed Miliband, the climate change secretary, has said.
Speaking at a screening in London of the climate change documentary The Age of Stupid, Miliband said the government needed to be stronger in facing down local opposition to wind farms.
He said: "The government needs to be saying, 'It is socially unacceptable to be against wind turbines in your area - like not wearing your seatbelt or driving past a zebra crossing'."
Wind power is crucial to government attempts to meet an EU target of producing 20% of all energy through renewables by 2020, but plans to build some 4,000 onshore wind turbines are being opposed by more than 200 anti-wind farm groups....MORE
ENERGY COMPANIES have warned the government that unless they get £2 billion in “immediate” state aid several offshore wind farms will be scrapped – and this would leave Whitehall’s pollution-reduction targets in tatters.
Companies have put off giving the green light to several big projects, such as the £3 billion London Array in the Thames estuary and Npower’s £2.2 billion Gwint y Mor farm off the coast of Wales, until the government decides whether it will stump up more cash to offset building costs that have doubled in the past three years....
...The energy industry has made three suggestions to the government. One would be to double the per-megawatt subsidy – so-called renewable obligation certificates (ROCs) – that offshore wind receives. Increasing the subsidy from one ROC per megawatt to two would triple the revenue that power companies collect for wholesale electricity. The second suggestion would allow for direct aid through government grants or tax breaks on construction costs.
The third would be to distribute the cost of building the offshore grid – expected to be about £10 billion – among all power companies, whether they have offshore farms or not.
The energy industry wants clarity soon....MORE
Trade War! "U.S. Big Steel pushes for carbon fees on China"
China's steel industry should face fees on its exports into the United States if Washington adopts greenhouse gas cuts and Beijing does not, U.S. steel industry officials and advocates said.As President Barack Obama begins to form plans to regulate greenhouse gases, U.S. steelmakers are nervous they will lose market share if rapidly developing steelmaking countries, like China and India, do not commit to similar emissions goals.
U.S. steelmakers say they have already invested far more in pollution control on pollutants like particulates and components of acid rain, sharply boosting production costs.
"Chinese steelmakers enjoy an unfair advantage in global trade due to the lack of enforcement of exceptionally weak pollution standards," Scott Paul, the executive director of the Alliance for American Manufacturing, told reporters in a teleconference....MORE
Pimco gets behind Geithner plan. And: Private Equity Welcomes Toxic-Assets Plan
From the New York Times' DealBook blog:
The Treasury’s plan to buy up banks’ toxic assets has been warmly greeted not only by the stock market but by the Private Equity Council.
Douglas Lowenstein, the president of the Washington-based lobby group, said in a statement that the council “commends the Obama administration for its creativity in taking on this challenge” and that it was “hopeful” that the plan would reopen the credit markets.
Private equity funds are sitting on billions of dollars waiting to be deployed. But most of the funds have held off from making major investments during the current financial crisis as leverage, the life blood of the industry, has been in short supply.
Leverage, which generally means using borrowed money to increase one’s buying power, is a critical component of the Treasury’s plan, because it allows the government to parlay less than $100 billion in federal funds into $500 billion in purchasing power.
The government will require the investment firms it is working with to put up a fraction of the equity necessary to buy the distressed assets, effectively extending credit to the group — something the big banks used to do before the credit crisis began to take hold in 2007....MORE
From Dealscape:
Pimco co-founder Bill Gross is jumping on board with Tim Geithner's public-private toxic asset plan, giving the Treasury Secretary a big endorsement from the world's largest bond fund.
The co-chief investment officer of Pimco told Reuters that "from Pimco's perspective, we are intrigued by the potential double-digit returns as well as the opportunity to share them with not only clients but the American taxpayer," Gross said. "This is perhaps the first win/win/win policy to be put on the table and it should be welcomed enthusiastically."
While the participation of the giant bond fund is likely to help draw more investors from the private sector into the process, the ringing endorsement from Gross may be used by critics of the plan as evidence that it is just another government giveaway to Wall Street as well....MORE
Monday, March 23, 2009
If I Were Manipulating the Dow Jones Industrial Average
...This history came back to me as I watched IBM today. Big Blue is the highest priced stock in the DJIA. It was down $1.67 to $85.81. The current divisor is 0.1255527090 which means a $1.00 move in any component stock is worth just under 8 points on the index.Of course, I'm not saying anyone was doing it. MarketBeat reports the largest contributors to today's 498 point gain:
Thus a 1.16% move in IBM is worth as much to the index as a 97% move in Citi (closed at $1.03).
If these were the bad old days, and one were looking for the opposite move, up rather than down, then one would look for a way to paint a negative picture, perhaps by taking a high priced stock down while the lower priced issues were firming up.
That's how they used to do it in the old days*....
Today’s top contributors to the Dow’s movement and their point contribution:Thus 10% of today's gain came from one stock, IBM.
IBM (49.38), JPM (45.48), XOM (35.36), CVX (35.36), MMM (27.00).
Interesting, no? Here's the one month percentage move chart, via BigCharts:
Alaska volcano Mount Redoubt erupts 5 times
From the AP:
Alaska's Mount Redoubt volcano erupted five times overnight, sending an ash plume more than 9 miles into the air in the volcano's first emissions in nearly 20 years. Residents in the state's largest city were spared from falling ash, though fine gray dust was falling Monday morning on small communities north of Anchorage. The ash began falling around daybreak and continued into midmorning. They were supposed to end by noon....MOREThe Redoubt webcam is showing the ash haze.
The hut webcam, located 7 1/2 miles from the summit crater is not operative: