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Ebix travel agreements and macro follow up +3

11:42 08-Oct-19


Macro events are dominating the market today, but I've already foreshadowed most of it: trade, Brexit, and middle-eastern angst were all expected.  So was execution from Nokia & Vuzix, Shell's transition away from oil but into gas services, and optimization from Vodafone, though the part about opening more stores in Britain is puzzling.  An IDC report highlights what I've been saying about CenturyLink's Streamroot purchase.  I see only two things that are really new:

This first is consumer credit, which the Fed says showed an extreme divergence between revolving and non-revolving debt.  That's good for banks, but mediocre for the market unless wages pick up much more than they have.  For the short term, the U.S. economy doesn't look like a problem that would crash the market.  If there is immediate trouble, it will come from abroad, but eventually the world will be forced to see that the Germans and the Greens are right.

Also, Ebix has announced a 5-year deal with multiple travel exchanges which it expects to add $15-20M per year in sales.  That's over about a 3% bump to projected 2019 revenue and 3.5% of last year's figure.  Furthermore, the company has received a $25M pre-payment, which is over 9% of current liabilities.  Macro events not withstanding, I think EBIX should be rising on this announcement, but it is down slightly below $40 again.

As ever currencies are part of my predictive toolset.  The rupee has been steady despite central bank jawboning, which is good or Ebix in the short term.  On the other hand, the offshore yuan is rising toward highs last seen at the beginning of September.  If the dollar appreciates more than another half percent to top 7.20 yuan, general market chaos could ensue.  We'll see what the Chinese do over the remainder of the month, but hopefully you've all had more than enough warning about the possibility of things spinning out of control.  Despite that I'm still buying NOK ahead of the quarter report in two weeks, and maintaining full EBIX positions while we wait for something more definitive on its Indian IPO.