currencies, value and what comes next ?4

11:33 24-May-22

The single currency has bounced above €/$1.07 on Lagarde's signaling that its associated rates was likely to finally be positive by the end of 3Q22.  However, the latest press release from the ECB counters that to some extent by essentially saying that it will be slower than other central banks.  Europeans are a different breed than Americans, and that has hurt them historically.  Clinging to cultural differences has caused them to be ineffective at tearing things down until meaningful change occurs at the E.U. level.  Hence, the ECB isn't about to admit that monetary policy just doesn't work for fiat currencies.  This isn't meant to disparage Europeans; Americans are apparently too stupid to stop producing ethanol from corn or institute a carbon tax.  Maybe democracy just doesn't scale beyond some local level, but the point here isn't to get all gloom and doomy or analyze human nature at the macro level.  It's to look ahead from a transitional market when I feel like this service has become a broken record on natural gas and volatility. 

Those are very likely to remain the prime investment themes until at least winter, or to put it in terms of macro events, until the Fed is signals an end to rate hikes and/or Putin's war on Ukraine end or metastasizes.  In the meantime, it's still VIRT, NFE, KNTK, along with LUMN and its bonds.  For the adventurous and patient, XBC/XEBEF looks like an option again given the big drop in stock prices, with the rebate rate jumping around between 50-75%.  Those who are merely patient seem likely to do better with MTSI, AMSC and AKTS, as the M&A craziness is mounting.  For even more cautious types, other North American utilities like TU and CWEN(A) can remain buy the dips opportunities.  However, increased investment by the former may limit near-term dividend growth.  Global and European utilities like Shell are still out for me, as windfall tax ideas will probably cross the English channel; we can only hope they don't jump the pond.  Also, note recent weakness in the Canadian dollar and see yesterday's note for color on the rate environment while noting that Flash PMI reading from S&P Global this morning give hope that only modest rate increases will be enough to improve the inflationary trends in Europe and America.  Finally, assuming the war does end without China invading Taiwan, HIMX should out-gain all of these, and for next month+ the dividend is absolutely compelling; I think the 13% yield will drop (and thus HIMX will rise) dramatically as more brokerages get up date on the payout.

But you've heard all that before; this morning's news is that decent earnings from Best Buy are negated by an understandably cautious outlook.  SnapChat is also the latest tech darling to out the dirty secret that advertising isn't worth the cost, especially in contracting economy.  Google remains a primary market victim of this inconvenient truth, in addition to its mounting legal problems.  These should combine to irrevocably entrench the value over growth theme that I've been championing.  But again, nothing new, other than that the liquidity crunch does appear to be ending as predicted, but that doesn't mean that indexes will rise.

So here's what I'm looking at for when the world changes, as it must.  Things are going to be tough in Europe, which means cheap as possible transportation.  Thus, I am considering Gorgoro's battery swapped scooter solution after the post-SPAC swoon in GGR.  SPACs have had a tough time of it lately, but I continue to think Polestar will complete its merger, and that GGPI remains a much better option for now.  Eventually, though, Europe is going to have to give nuclear another look, and thus I am also tracking the efforts of Rolls Royce (RYCEF) in this area.  Finally, I will continue to track currency movement, but for now it looks like India will be able to successfully play the middle ground between west and east.  Thus, I may get back into cautiously buying the dips in EBIX below $30, and am also tracking RNW for Renew's plans to manufacture solar panels domestically as a reconsider the chances for India's green hydrogen ambitions. 

None of the new symbols here are being added to the website yet, as I wish to avoid the situation that occurred with LPL, where a prematurely added symbol is now just cluttering the website until there is more clarity.  For the display space, it's increasingly clear that manufacturers are going to continue playing with new recipes while the global consumer market is in the dumps anyway.  Of course, that means uncertainty for UDC too, and thus danger for OLED.  Questions are always welcome though, and I will certainly write continue my general pattern of writing before it's time to act as much as possible.