What on Earth Has Happened to A123? (AONE)

Sorry about the disappearing act, reality intruded in the form of BIDU's $80 drop and subsequent $30 rebound.
I just happened to take a glance at A123, the stock had an $18 handle!
Here's the chart (from BigCharts):



As I said the day the stock started trading:

...I don't have an interest in IPO's in general (all the allocation shenanigans, quid pro quo, etc.) but would be remiss if I didn't at least mention this one...

The only things I know for sure are the stock is 25% cheaper than it was four days ago (below the first day close!) and earnings (loss) are due on Nov. 10.
Previously:

A123: A deeper look (AONE)
Investing in the Battery Industry (AONE; ENS; HEV; XIDE)
A123 Systems vs. BYD and Other Irrational Battery Investments (AONE; BRK.A)
A123 IPO Roundup II (AONE) "A123 in Talks to Settle Lithium Battery Patent Fight
"GE, Sequoia on A123Systems and cleantech (AONE)

Columbia Journalism Review: "Bloomberg has an important story today on the bailout of the banks through AIG"

That's the first line of this post at CJR's The Audit blog:

Bloomberg on AIG as Banks’ Backdoor Bailout

Bloomberg has an important story today on the bailout of the banks through AIG.

Estimating that an essentially bankrupt company like AIG could have shaved 40 percent off what it owed big banks like Societe Generale and Goldman Sachs (an Audit funder), Bloomberg says the New York Fed’s decision to make its buddies whole (its then-chairman was a former Goldman chairman who would soon start re-loading up on its stock) cost taxpayers more than $13 billion.

In fact, Bloomberg reports that before it flopped into the government’s arms, one of AIG’s divisional chief financial officers had for months been negotiating with its counterparties to take huge haircuts on their credit-default swaps, insurance they bought on their junk assets called collateralized debt obligations.

So why’d the government not do the same—with its much greater leverage having rescued AIG from complete collapse?

One reason par was paid was because some counterparties insisted on being paid in full and the New York Fed did not want to negotiate separate deals, says a person close to the transaction. “Some of those banks needed 100 cents on the dollar or they risked failure,” Vickrey says....MORE

Is BYD’s Electric Car Ready for Prime Time?

From the WSJ's ChinaRealtimeReport:

Chinese auto makers would love to break into the U.S. market, and BYD Co., the auto upstart part-owned by one of Warren Buffett’s companies, may be among those closest to that goal. However, its vehicle may need more than a little fine-tuning.

The tech chief of a global auto maker who recently drove BYD’s all-electric battery car, the e6, told The Wall Street Journal that he was “truly astonished that they plan to sell such a half-baked car” in China later this year and in the U.S. next year.

The ride was “rough,” which indicates a problem with the car’s computer control technology, and its handling was “squishy,” the executive said.

BYD has said it would start building beachheads in America by the end of next year by launching the e6. It plans to pick a specific region within the U.S. and initially market “a few hundred” e6s to government agencies, utilities and other corporate fleet customers, priced at slightly more than $40,000.

That’s a risky move because one of electric battery cars’ key enabling technologies — high-capacity, high-power lithium-ion battery — is still punishingly costly and considered still-maturing technologically. Toyota Motor Corp. had planned to use the technology in 2008 but delayed its use in products at least a couple of times. It recently decided to use lithium-ion batteries in a plug-in hybrid it is planning to launch later this year in Japan and the U.S. but is only tiptoeing into the technology as it plans to make only a limited number of the plug-ins available to fleet customers....MORE

HT: Environmental Capital

Is a Green World a Safer World?

Butch Cassidy:
"Kid, the next time I say, 'Let's go someplace like Bolivia,'
let's go someplace like Bolivia."
- Butch Cassidy & the Sundance Kid (1969)

From Foreign Policy:

Greening the world will certainly eliminate some of the most serious risks we face, but it will also create new ones. A move to electric cars, for example, could set off a competition for lithium -- another limited, geographically concentrated resource. The sheer amount of water needed to create some kinds of alternative energy could suck certain regions dry, upping the odds of resource-based conflict. And as the world builds scores more emissions-free nuclear power plants, the risk that terrorists get their hands on dangerous atomic materials -- or that states launch nuclear-weapons programs -- goes up.

The decades-long oil wars might be coming to an end as black gold says its long, long goodbye, but there will be new types of conflicts, controversies, and unwelcome surprises in our future (including perhaps a last wave of oil wars as some of the more fragile petrocracies decline). If anything, a look over the horizon suggests the instability produced by this massive and much-needed energy transition will force us to grapple with new forms of upheaval. Here's a guide to just a few of the possible green geopolitical tensions to come.

The Green Trade Wars

One source of international friction is far more certain to be a part of our energy future than many of the new technologies being touted as the next big thing. Consider the new U.S. approach in the energy and climate bill recently passed by the House of Representatives, which contains provisions for erecting trade barriers to countries that do not adopt measures to limit emissions. Proponents say these are necessary to reduce the chances of companies relocating to countries with lower emissions standards in order to get an unfair competitive edge. Such tariff regimes are also seen as keeping corporations from relocating to places where climate laws may be more lax, such as China.

Green protectionism is already a growth business. When the European Union considered restricting entry of biofuels based on a range of environmental standards, eight developing countries on three continents threatened legal action in the fall of 2008. In fact, there is a long tradition of such disputes (dolphin-safe tuna, anyone?), but the business community is worried that green protectionism could be a defining feature of international markets in the decades ahead. And of course, the prospect of green trade wars or even just opportunistic fiddling with trade laws to "protect" local jobs suggests a period of related international tensions, especially between developed countries and the emerging world.

National Geographic/Getty Images

The Rise and Fall of the Oil Powers

We're also going to witness the complex consequences of the simultaneous rise and decline of petrostates. First, the soaring price of oil -- which could skyrocket to $250 a barrel, according to some recent Wall Street estimates -- will fill their coffers. Sovereign wealth funds will grow fat again, and with the dollar likely to be weak for years to come, oil fat cats will be buying cheap U.S. assets and making American nationalists uncomfortable all the while.

Those fat cats still have a few good decades ahead of them. Twenty years from now, the world will still be getting at least three quarters of its energy from oil, coal, and natural gas. Today's energy infrastructure took years to develop, and even with revolutionary technological change, the energy mix can shift only marginally in the short term. So, as much as the West may wish to reduce its dependence on the likes of OPEC -- because it's not good to be too dependent on anyone, because oil is dirty and killing the environment, because Providence has seen fit to identify the world's most dangerous regions by locating oil beneath them, and because oil is a drug that has corrupted the character of many of its producing nations -- these countries will have considerable power for the foreseeable future....MORE

LDK Solar lifts outlook for 3rd-quarter revenue

The stock is trading up 5 1/2% at $7.52 in pre-market trade.
From MarketWatch:

LDK Solar Co., (LDK 7.54, +0.41, +5.75%) the Xinyu City, China, producer of solar wafers, the main raw material used to make solar cells, lifted its estimate of third-quarter revenue. The company now expects to report revenue of $270 million to $290 million, compared with its previous estimate of $240 million to $270 million....MORE

Emissions Cut to Cost 3% of Global GDP, Pachauri Says

All I ask is that we have an accurate estimate of the numbers.
I've been accused of focusing on the negative in markets or individual stocks. This brings to mind a line from a very sharp and very brave assistant some years ago as she laid out the facts of, and possible reactions to, a very large potential problem: "Would you prefer to have the facts or not?"

Well if you put it that way...

Back in June of '08 we had a post "Sir Nicholas Stern: Cost of Carbon Biz Has Doubled to 2% of World Economy":

No it hasn't.
Sir Nick was low balling the cost of his proposals last year.
On May 31, 2007 we wrote:

...we're starting to get to the real number and we should be able to keep it all under a third-of-a-trillion dollars per year for the U.S. contribution (before adding in direct costs like putting vodka in your tank but that's okay, the Stern number of 1% of World Gross Product should be 2% minimum so we've got incorrect estimates piling on incorrect estimates anyway).

I don't know why he was having fun with numbers but he was. If a humble blogger can work the abacus I'm pretty sure Stern knew.
If he didn't, here's a headline from the Times of India, September 25, 2007:

Cost of dealing with climate change: 2% of GDP

...This was disclosed on Thursday by Jayant M Mau-skar, joint secretary in the environment ministry, at a conference on climate change organised at the Vatavaran Film Festival here. Mauskar said, "In 2000-01, India was spending 0.63% of its GDP on climate change adaptation and mitigation which has now risen to 2.17%. So we can say that Nicholas Stern's argument (that climate change action does not hurt economy much) is perhaps not true."

The actual dollar amount for the U.S. now looks to be $400-500 Billion per year....

Here's the latest via Bloomberg:

The cost of cutting greenhouse gas emissions to avoid the impact of climate change may amount to 3 percent of the world’s economic output, said Rajendra Pachauri, the chairman of the Intergovernmental Panel on Climate Change.

“The cost to the global economy in 2030, so that’s 21 years from now, will be no more than 3 percent of the global GDP,” he told the CarbonExpo Australasia conference on the Gold Coast, Australia today via video link....MORE

Although he is often referred to as a climatologist Mr.* Pachuri's doctorate is a joint Econ/Industrial Engineering degree from NC State.

Lord Stern is vice-chair of the parent of carbon consultancy, IDEACarbon.

*On my mom's side of the fam. are a couple M.D's. One of them was a firm believer that if you couldn't set a kid's broken arm she wouldn't use the honorific, Doctor. Her locution was "Mr. (Mrs.) Blank Blank, PhD.

The other one was more liberal, she'd acknowledge the doctorate if she liked your jokes.

Tough old birds.

They'd both call Lord Stern "Lord" though.

China, US: Head to Head Solar Power competitors (FSLR)

From China Daily:

The United States and China are in a head-to-head race to become the world's top market for solar power.

Solar panel makers are wasting no time making plans to cash in on the growth promise of both markets despite the global recession.

At the recent Reuters Global Climate and Alternative Energy Summit, Chinese and US solar companies including Suntech Power Holdings Co Ltd, SunPower Corp, Trina Solar Ltd and BrightSource Energy Inc laid out plans to capture their share of what is expected to be explosive demand for solar-generated electricity in the world's biggest and third-largest economies.

The US and China lag far behind Europe in demand for solar power, but are expected to vault ahead in the next few years as both countries work to curb their emissions of greenhouse gases that contribute to global warming.

This year, Washington and Beijing have both rolled out programs designed to grow their fledgling solar power industries and thus boost growth in their economies. Together, they are expected to drive the building of at least 5 gigawatts (GW) of solar installations between 2009 and 2011, according to a recent report by investment firm CLSA.

Thanks to strong government incentives, Germany is the world's biggest solar market and is expected to remain so until 2013, when the United States will become its equal. China will be slightly behind, according to the research firm Lux Research.

In China, recently enacted subsidies for utility-scale solar power projects have prompted a host of plans for solar power plants.

US solar in China

Those plans include the recent announcement of the first major foray by a US company into the Chinese solar sector by Arizona-based First Solar Inc.

That announcement, said spokesmen for several US companies, opens the door for other non-Chinese companies to compete in China's solar market....MORE

Inflation in China at 15%?

From naked capitalism:

This tidbit, from a report on impressions of conditions in China, via a steel buyer who has been making the rounds in Asia (hat tip reader Michael) is more significant than it appears. High inflation levels in China (and the powers that be seem to get worried when it goes over 11%-12%) is consistent with the authorities having started to ease up on stimulus, particularly pushing banks to lend.

And high interest rates feed stock market speculation. Interest rates on deposits are low, so the routes for investors to preserve cash are stockpiling commodities (we’ve read various reports of both businesses and speculators going this route) and the stock market. But stocks often backfire as a store of value when too many people latch on to the same strategy.

I was at presentation a couple of years ago at the Asia Society on China, and one of the panelists observed that if you wanted to design a system guaranteed to produce hyperinflation, it would be hard to do a better job....MORE

General Electric (GE) Generally Down

UPDATE: "Can R&D Save General Electric?" and "GE's Risky Energy Research" (GE)
Original Post:
The stock closed at $16.84 on the 14th (two days before earnings were released), $15.01 at the close today.
From Bespoke Investment Group:

General Electric (GE) has now been down 8 days in a row. Since 1980, GE has only had five other 8-day losing streaks. On day 9, the stock has gone up three times and gone down twice. The last two times that the stock has had an 8-day losing streak, it has gone up exactly 2.51% on the next day. Go figure....TABLE

Posts last week:

General Electric; Jeff Immelt: FAIL (GE)

GE executives are funnier than Jay Leno

Immelt’s Plans May Comfort Investors as Profit Falls (GE)

GE, Cleantech and Your Tax Dollars

U.N. lowers expectations for Copenhagen climate deal

That's their headline, not mine.
I'd go with something like "Welcome back my friends, to the show that never ends..."
[We're so glad you could attend, come inside, come inside... -ed]
From Reuters:

The United Nations on Monday lowered expectations for clinching a legally binding agreement at a U.N. climate change summit in Copenhagen in December, saying it might take longer to secure a final deal.

For months Secretary-General Ban Ki-moon and other top officials at the United Nations have been urging industrialized and developing nations to overcome their differences so they can "seal the deal" and get a binding agreement in Copenhagen.

But recently U.N. officials and diplomats have said privately that it is unlikely a legally binding deal on reducing greenhouse gas emissions will be clinched at the Copenhagen summit. They have suggested that the most that could be expected was a nonbinding political declaration.

Ban's climate adviser Janos Pasztor made clear that the secretary-general was planning for "post-Copenhagen" talks....MORE

New Private Equity Firm Focuses on ‘Green Tech’

From DealBook:

The race to cash in on the environmental technology wave just got a little more crowded on Monday with the founding of the New World Capital Group, a private equity firm focused on investing in companies in the nascent “green tech” sector.

Led by Carter Bales, an industry heavyweight who founded the environmental practice at McKinsey in the 1980s, and assisted by four partners including Bradley Abelow, former head of operations at Goldman Sachs and later chief of staff to Gov. Jon S. Corzine of New Jersey, New World is hoping to fill what they believe is a huge funding gap in the green industry by providing growth capital to more established, middle-market companies.

Mr. Bales estimates that there is only $3 billion in private equity capital pledged to help green-focused companies — those in the fields of clean energy, energy efficiency, environmental services, waste management, water, and sustainable and biodegradable materials. That represents just 1 percent of an industry that Mr. Bales believes is worth around $300 billion, growing at a rate of 8 to 10 percent a year....MORE

Solar: German Subsidy Update (FSLR; SPWRA)

Following up on this morning's post (Solar: "Solarworld, Phoenix Shares Gain After Merkel Retreats on Cuts " (FSLR)) linking to the Bloomberg story, here's Tech Trader Daily:

Analysts this morning are parsing the fine print of a four-year coalition agreement ratified in Germany today that will likely have an impact on funding for solar technology projects, and on solar technology vendors such as First Solar (FSLR) and SunPower (SPWRA).

As Bloomberg notes, German Chancellor Angela Merkel’s Christian Democratic Union pushed through measures for a $36 billion tax cut meant to spur economic growth, a compromise with more aggressive proposals. The measures relating to solar funding appear vague and thus open to widely differing interpretations.

The agreement does not call for immediate cuts in the so-called feed-in tariff for solar projects, subsidies that have helped boost German investment in the technology, writes Collins Stewart analyst Dan Ries. The agreement “highlights that the coalition is committed to solar and indicates that the government will pursue a dialog with the solar industry and community leaders to determine if the current subsidy is too generous.”

Ries is optimistic, writing that “we do not believe the outcome will be as harsh as the “enormous” one-time cut of perhaps 20-30% reported in the press.”>>>MORE

A small nit to pick to pick with the writer. He says:

...The effects of the a potential tariff cut have already begun to be felt by some vendors. SunPower, for example, last Thursday offered a disappointing Q4 revenue outlook, which some analysts attributed to orders being pulled into last quarter from the current quarter, as projects scrambled to buy panels before tariffs run dry....

Whereas on their conference call the company said:

...Our rapid growth and our dealer network allowed us to grow our component segment, business segment 58% in Q3 with a strong surge in Germany as well as share growth in California and Italy....

Who knows?

Someone’s betting against solar stocks… (FSLR)

UPDATE: Great minds and all that-- "Cowen's "Stone Maintains OUTPERFORM Rating on First Solar Ahead of Report" "Comments on Solar Sector Underperformance" (FSLR; TSL)"
Original post:
With FSLR reporting Wednesday and considering their history of beats, I'm not sure I'd make this bet quite yet. The stock was recently trading at $154.69, up $2.30.
From the FT's Energy Source:

Enthusiasm for betting on a fall in the share price of some of the world’s biggest solar companies is high, according to Data Explorer.

They say that almost 16 per cent of outstanding shares in First Solar, which last week joined the S&P 500, are available for loan as of October 23. That was more than a third higher than a week earlier, when it was 11 per cent....MORE

First Solar IPO in Over a Year Is Coming (Set to Price Nov. 5) STR

As I've said, I don't do much with IPO's but this one is notable just because there has been such a dearth. First up, Greentech:

STR, an encapsulant maker in Connecticut that counts First Solar and SunPower among its customers, could raise $212.2 million

Specialized Technology Resources (STR), maker of materials to protect solar cells inside a panel, plans to go public on the New York Stock Exchange and raise up to $184.5 million.

The Enfield, Conn.-based company plans to sell 12.3 million shares and expects the price to fall somewhere between $13 and $15 per share, according to the company's filing with the Securities and Exchange Commission Thursday....

...STR has been around since 1944 and makes encapsulants that are sold under the brand PhotoCap. The company said it has more than 100 customers worldwide, including First Solar, SunPower, BP Solar and United Solar Ovonic....MORE

Further detail via Reuters:

CORRECTED - CORRECTED-UPDATE 2-IPO in solar sector, STR, set to price Nov.5

(Corrects to reflect that current owners, not executives, are selling 81.3 percent of the IPO's shares)

* Company sees net IPO proceeds of $25.4 mln

* Sales fell 14 pct in first half of 2009

* Current owners selling 81.3 pct of the IPO's shares

NEW YORK, Oct 22 (Reuters) - STR Holdings Inc set terms for what is likely to become the first U.S.-listed initial public offering by a solar company in 15 months.

The Connecticut-based company, which provides encapsulants that protect a solar module's semiconductor circuit, plans to sell 12.3 million shares for between $13 and $15 each, raising an estimated $172 million, according to an updated prospectus filed on Thursday with U.S. regulators. The shares would trade on the New York Stock Exchange, under the ticker symbol "STRI.N".

Its encapsulants are used in both crystalline and thin-film solar modules....MORE

Equities: Well We Filled the Gap in the S&P 500 Chart

The S&P 500 is currently at 1070.74, down 8.86.
On October 16 (S&P close 1,087.68) we pointed out the gap in the post "Equities: S&P 500 Back to the Gap":

It is almost uncanny how many times a stock or index makes a gap up and then comes back to fill the gap before resuming the move. In this case S&P 1073 or thereabouts.
On the other hand, I knew an old-timer who spent much of the eighties waiting for the Dow Joneses to fill a gap in the high 500's that dated from 1974....

...The gap is the space between the close on Tuesday the 13th at 1,073.19 and the open on Wednesday the 14th at 1,078.68.

On Friday the S&P backed into the gap and this morning filled it, getting down to 1066.97.
Here's the chart (BigCharts):

For Investors in Rentseeking Businesses: All You Need is Love (and money...and lobbyists...and regulation...and...)

From Environmental Capital:

Want Clean-Energy Investment? Offer More TLC, Deutsche Bank Says

Dealing with climate change is undoubtedly becoming big business. But that big business depends on governments—the push to curb greenhouse-gas emissions or boost clean energy is inextricable from government targets and mandates.

For Deutsche Bank, this means that what governments do on the climate and energy front will be increasingly important for investors around the world, even if that hasn’t always been the case so far.

In a nutshell, Deutsche Bank Climate Change Advisors conclude in a big new report out today, investors want TLC—“transparency, longevity, and certainty”–in government energy policies. Countries that offer that—Australia, Brazil, China, France, Germany, and Japan—will attact capital. Countries that don’t—including the U.S. and the U.K.—will struggle.

“Investors will become increasingly concerned about regulatory risk and thus countries that deploy a transparent, long-lived, comprehensive and consistent set of policies will attract global capital,” writes the investment bank. “Many major emitters such as the US do not have enough ‘TLC’ in their policy frameworks.”>>>MORE

To put it a bit more bluntly, Sen. Simon Cameron, D. and R. PA:

...Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):

"The honest politician is one who when he is bought, will stay bought."

Our Hero

Solar: "Solarworld, Phoenix Shares Gain After Merkel Retreats on Cuts " (FSLR)

In early pre-market trade the U.S. company with the most German exposure, First Solar, is up 1/2%.
From Bloomberg:

Shares of German solar-power companies Solarworld AG, Q-Cells SE and Phoenix Solar AG climbed after Chancellor Angela Merkel’s incoming government retreated from threats to cut their subsidies.

The government will talk with the solar-energy industry about possible “adjustments” to avoid “excessive subsidies,” according to the coalition contract published Oct. 24. Solar power is an important technology for the future, it said.

“This is a positive surprise,” Daniel Kluge, spokesman for the Berlin-based German Renewable Energy Federation BEE lobby group, said in a phone interview. “After all the tough talk, this is a sensible way to proceed.”

Earlier language drafted by lawmakers for Merkel’s Christian Democratic Union and her Free Democratic Party allies pointed to reductions in 2010 solar-power subsidies. They wanted “quite an enormous” cut in solar-power prices, Gudrun Kopp, the FDP’s energy spokeswoman, said in an Oct. 15 interview.

Such reductions would have trimmed profits for solar companies such as Solarworld. The coalition is sending “a clear positive signal” on solar energy, Kluge said....MORE

DOE places bets on 'transformative' energy tech

We prefer the word disruptive vs. transformative. If any of the wilder ideas pan out, they will seriously "disrupt" existing businesses.
From cnet:

The Department of Energy on Monday named the first winners of a program aimed at generating breakthroughs in clean-energy technologies.

The program, called Advanced Research Projects Agency-Energy (ARPA-E), began taking applications earlier this year for research ideas that reduce imports of foreign fuel, cut greenhouse gas emissions, and improve energy efficiency. Funding for the agency is part of the Obama administration's goal to improve the economic competitiveness of the U.S. by investing in energy technology.

The DOE is awarding $151 million in 37 grants to both academics and green-tech companies, most of which are start-ups. The ideas are meant to be high-risk and high-reward, with a number not expected to meet their goals....

...One awardee is an effort at the Massachusetts Institute of Technology to make an all-liquid battery, which would make storage of storage of solar and wind power more cost effective.

Another is funding for a bioreactor developed by the University of Minnesota which proposes using two microorganisms to make a vehicle fuel. One bacteria would convert sunlight and carbon dioxide into a sugar, and another would convert the sugar into a fuel.

Two other efforts include developing enzymes which would more effectively capture carbon dioxide from power plants and a low-cost material for making LED lighting. The full list of awardees is at the ARPA-E site....MORE

Trader Opens Short Straddle on Energy Conversion Devices Ahead of Earnings (ENER)

From Schaeffer's Research:

Energy Conversion Devices (ENER) appears to have been the center of a short straddle on Friday, as traders focused on the stock's November 15 call and put. Overall, the security saw more than 10,000 puts change hands in the front three months of options, which is nearly five times the equity's average daily trading volume of 2,095 contracts.

Digging into the action, the November 15 put traded 4,100 contracts in three large blocks between 3:07 p.m. and 3:18 p.m. Eastern time at what looks to be a bid price of $2.08. The trader would have collected a premium of $852,800....MORE

Transmission: "General Cable Hit by Weak Construction Market" (BGC)

The stock was recently trading down $3.04 (7.88%) at $35.56.
From Barron's Tech Trader Daily:

Shares of $2 billion market cap General Cable (BGC), a maker of ethernet wiring for corporate data centers, are selling off in a big way after the company beat Q3 expectations but forecast the current quarter below expectations.

Rising metals costs are threatening profits, the company said, and continued fall-off in non-residential construction also means lower profitability. The company expects to trim production this quarter, though it did not say by how much....MORE