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Resonant proxy settlement and tariffs +1

09:35 02-Apr-18


Resonant has announced that it will replace three directors on its board with independent candidates from Longboard Capital, Broadband Initiatives and The Maven as part of a settlement of the proxy contest with Park City Capital.  Hopefully this will help mitigate management's readiness to dilute shareholders going forward.  I will review the 8-K with the full settlement when it is available, but only report again if I find something surprising.

In the meantime, the market is set to decline on the imposition of retaliatory tariffs from China, mostly on U.S. agricultural goods, but also, a 25% tariff on aluminum scrap.  That last may have a minor impact on Covanta, but the overall impact should have been good, as HMS #1 has held above $300/MT since the last Covanta report, where prices for the year were estimated at $235-285.  I have a request into the company for comment.

More broadly, I note that the Chinese reaction is targeted at Trump's political base, and that the trade war is vastly unpopular.  I expect the market reaction to this escalation to be limited, but bear in mind this may be the last time that the U.S. actually gets to set the tone of trade on a global basis.  I'm even more concerned with the continued inability of the U.S. government to address its own issues and its intent to make some of them worse.  Next up on the macro front should be Friday's jobs report, which will be more important than most, given renewed uncertainty over the pace of rate hikes.