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Ebix 3Q19 schedule & value down the macro path ?4


Right on cue, Ebix has scheduled its third quarter report for the morning of Tuesday, November 12th.  The mid-points of the estimates from two analysts are $1.09 of EPS from $148M in revenue rising to $154M to close the year.  The only points I will add to yesterday's commentary are that the rupee has been steady above $0.014 and Indian startups have had success raising cash.  This bodes well for the EbixCash IPO, even though both analysts and the market apparently doubt the company's growth, which management has said should reach over $1b in annual sales by next year.

Nobody should have doubted my prediction that Brexit was headed for another extension, through January as it turns out, and the U.K. for yet another election.  The rest of Europe isn't out of the woods yet either, which is troubling for CUI.  Such dysfunction is causing anomalies everywhere, and judging from subscriber conversations, CVA pricing could be one that it's contributing to, however improperly.  There is no question that the balance sheet is under pressure in the current environment, at 6x debt/EBITDA, and market concern about the dividend is why I went out of my way to make my contrarian argument on that point.  I'll add that the balance sheet was in worse shape the last time we saw such concerns, with relief further off.  Though I've been on the wrong side of similar arguments before, I still see Covanta's management as being a cut above, and the market dynamics I've looked at indicate that we've just seen a short-term bottom below $14.  Tax loss selling could bring more pressure as we get closer to year end, but I still expect the next dividend announcement to mitigate that.  By that point we should also have over a month of foreign trading history for the first step in Aramco's IPO.  Brent has been holding above $60 of late, with WTI almost $6 behind, and that's a further positive for CVA, as well as RDS(A/B).

While the U.K. insists on continually shooting itself in the foot, and Europe is slowly strangling itself with negative rates and bad employment policy, America is opting for poison, not only literally at the EPA, but also with unpredictable foreign policy and questionable regulation of communications and accounting.  Note that the author of that last link was actually criticized for NOT pushing for tougher accounting rules during his time heading the SEC.  If the federal government does succeed in crashing California, it'll take down more than just Clearway.  This report says that green energy is already employs far more people than fossil fuels, in addition to growing faster, and metal pricing supports that view.

It's not a good path we're on, but the cliff edge is not quite in sight yet.  Everything above simply points to further global balkanization in technology and information.  In the meantime, the market will focus on things that matter less, like Google's worrisome earnings and its anticipated acquisition of Fitbit at a price that will probably be well below where I sold the stock long ago.  I'll continue to mostly ignore such events while looking for more important signs along the trail.