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Akoustis WLP qualification and more +3

09:24 22-Dec-22


I see today and tomorrow as important trade-wise for a few stocks, with only 17 trading days over the month to follow as markets are closed 3 out of the next 4 Mondays for Xmas, New Years & MLK on January 16th.

I will be looking to see if NFE can hold its ground or advance in a down market today, as investors digest energy policy from the E.U.  I actually think that the LNG price cap political stunt is vaguely positive for New Fortress.  The 180€/MWh fixed price is the same as the global reference price, at least to begin with.  It is roughly 2.5x current TTF contract prices and equates to about $56 per million Btus, which is well above even the highest margins projected by New Fortress.  Furthermore, knowledge of the mechanism's 3-day trigger period will make it difficult for it to ever kick in and it is likely to be suspended under any conditions where the price actually would spike anyway:
The regulation includes a suspension mechanism, if risks to security of energy supply, financial stability, intra-EU flows of gas, or risks of increased gas demand are identified.
Finally, I think this clears the way to the joint EU LNG purchase agreements that I've been looking for, per the speech by the VP of the European Commission, which aims to setup demand aggregation next month, publish offers in early spring, and conclude its first purchase agreements well before summer.  This lines up well with the New Fortress deployment schedule.  That said, the Council also expects to fast track permitting for renewable energy, though its idea of fast remains laughable and whether or not traders still in the market will realize any of this is questionable.

In other corporate news, Himax has announced a joint CES demo of WiseEye-v1-based sensors from a startup founded by Pete Warden, a founding member of Google’s TensorFlow open-source machine learning framework.  Presumably this is in addition to debuting WiseEye-v2 and will raise awareness of the broad use cases.  However, I would be pleasantly surprised if HIMX responds before next year.

I'll also be looking for tradable lows in INTC after Intel split up its graphics unit.  This sounds bad, but I see it as a sign that management understands that consumer graphics and high performance computing will have different architectures going forward, due to 3d-Xpoint non-volatile memory, as I foresaw.

I may have spoken too soon on the budget, as well, as Title 42 immigration drama is threatening to hold up the process the day after it expired.  I still expect last-minute passage, though.

On 12/21/22 10:07, Esekla wrote:
Akoustis has completed qualification for its WLP (wafer level packaging) using its first Tier 1 5G mobile customer.  This enables production shipments for 5G mobile and timing control markets.  AKTS hasn't really moved in early trading, but this is an important step toward the the 2023 volume ramp that I've been anticipating.

Vuzix has also announced a six-figure shipment to kick off another European distribution agreement.  Presumably the size refers the purchase amount rather than the unit count, and is thus fairly insignificant.

Polestar investors should ignore recall headlines as they relate to the Polestar 1 and a trivial number of vehicles.  Polestar did recently roll out the P2.4 system update to our car, though.  None of them seem to explicitly address Google's system corruption problems, but I will report publicly on whether or not the problem continues to pop up.

Finally, Congress has a deal on the budget, and will probably approve it this week.  Other than avoiding more drama, there are no key issues for the market, aside from the negative for cannabis investors.  However, the exclusion of the Afghan Adjustment Act seems like one more reason why would-be allies should never trust America.

Nonetheless, the market has turned positive this morning.  I don't think we're done with declines for the year, but per Q&A with a subscriber below, that's an open question with the next update on Friday:

On 12/20/22 11:34, Esekla wrote:
For this year, I've been anticipating significant tax loss selling in the service since October, and reiterated the point many times, particularly with respect to LUMN.  It typically doesn't reach its zenith until after December options expiration (last Friday), in line with what you noted for 2018 and my most recent mention.  The only complicating factor is that the market seems pretty sure that it has peak Fed in sight, and it is probably right, at least in the medium term.  But for that, the tax loss effect might have been much deeper.  I'm probably not the only one who is anticipating a rebound in the New Year.  PCE on Friday will be the final bit of information affecting those judgments for this year.

On 12/20/22 11:06, a subscriber wrote:

Do you think we will see much tax loss selling in the last days of 2022?

I was just looking back at 2018.  The bottom fell out on about December 13th.  At that time the S&P 500 was about 2650 which was only slightly down from 2695 on January 2nd 2018.  From there it dropped to 2350 on December 24th before rebounding a bit by the end of the year.  I attribute that big drop with the quick recovery in the new year to tax loss selling.

This year, 2022, opened at 4796 and currently sits much lower than that at 3828.  Has everyone already harvested their tax losses or are we going to see even more selling in the next week or two?

Many thanks,