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  • Currency Debasement
    Mon, Sep. 15 GLD 43 Comments

    Summary

    • Real rates have declined almost everywhere in the developed world, the savings glut doesn't turn into an investment glut.
    • The result is excess capacity, slow growth and underperforming economies. How can this be turned around?
    • If desired savings and investment can equate only at deeply negative real rate, higher inflation targets are one logical solution to get there, but not one without cost or risk.
    • One of the risk is that we'll finally get the long predicted currency debasement.
  • Japanese Shares Are Still A Buy
    Tue, Sep. 9 DXJ, EWJ, DFJ 4 Comments

    Summary

    • We think that Japanese shares are still attractive, for a number of reasons.
    • They are not expensive, haven't done much this year, profits are good, big institutions are buying and the government is hell bent of getting Japan out of its deflationary funk.
    • The main risk to us is that the recent tax hike might have done more damage to the reflationary effort than first hoped.
  • Envy Has Got Nothing To Do With It
    Fri, Sep. 5 262 Comments

    Summary

    • Evidence is mounting that rising inequality is producing negative economic effects.
    • These effects range from producing insufficient demand, financial instability, a decline in societal cohesion, trust and upward mobility.
    • Those who are worried by these developments are not necessarily motivated by envy, nor do they want to abolish capitalism.
    • What is necessary is a dispassionate cost-benefit analysis of the rise in inequality, which is what we'll try below.
  • 22nd Century: Cigarettes Without Nicotine, How Much Are They Worth?
    Thu, Sep. 4 XXII 13 Comments

    Summary

    • 22nd Century Group owns unique IP that enables it to produce cigarettes with low or very low nicotine levels.
    • It is now allowed to sell these in the US under the Master Settlement Agreement, so domestic sales will start. The first distribution deal is already in place.
    • The company also has significant opportunities overseas via sales, joint ventures and license agreements.
    • Over time, regulatory changes will likely enable the company to exploit its capabilities more, but this will take time.
  • From Value Creation To Value Extraction
    Tue, Sep. 2 26 Comments

    Summary

    • When the SEC greatly facilitated corporate share buybacks and executive pay was tied to the stock price, the elements were in place for management to game the system.
    • Stock markets became vehicles for massive extraction, rather than funding, of corporations as these embarked on enormous share buybacks which boosted share prices and executive compensation.
    • While this has been the major fuel behind an epic stock market rally, the system isn't without significant cost.
  • What If Central Banks Aren't Responsible For Asset Bubbles?
    Editors' Pick • Tue, Sep. 2 30 Comments

    Summary

    • Many assume central banks are the main culprit for creating asset bubbles by running too loose monetary policy.
    • However, central banks are not in control of longer-term interest rates and these have been on a downward trajectory for a couple of decades. We look at what's behind this.
    • The fact that central banks aren't the main culprit creating asset bubbles doesn't mean they are helpless in preventing (or at least moderating) them.
    • But that comes at a significant cost which so far few central banks are willing to assume.
  • Japan's Lost Decades Revisited
    Mon, Sep. 1 EWJ, FXY 11 Comments

    Summary

    • Japan's experiment with Abeconomics remains widely misunderstood.
    • It is modelled on an earlier successful Japanese reflation attempt in the 1930s.
    • Since the eurozone is plagued by similar ills which threaten the stability of the world economy, the experiment has special relevance here.
  • Risk Is Returning, Time To Sit On The Fence
    Sun, Aug. 31 ERO, VXX, XIV 3 Comments

    Summary

    • We see risks to stocks increasing, it's time to get more cautious.
    • The Ukrainian situation seems to escalate with the eurozone economy already in big trouble, but consumption growth in the US came to a halt and QE will follow, stock buybacks.
    • After the big rallies in stocks and bonds, time to bet against the euro and on a spike in the VIX, whilst being more cautious overall.
  • Revolt In The Eurozone?
    Thu, Aug. 28 ERO, FXE, EZU 84 Comments

    Summary

    • The present path of policies in the eurozone is not sustainable for economic nor for political reasons.
    • A move toward complete monetary union is politically unfeasible and the prospect of countries bolting from the policy constraints is real.
    • We believe the ground is more fertile for policy changes not only because of the above, but also because the German economy is no longer immune from the eurozone woes.
    • Mario Draghi seems to prepare the ground for a more aggressive monetary policy, European shares could benefit and the euro will fall further.
  • Intrusion Rally Still Has Legs
    Tue, Aug. 26 INTZ Comment!

    Summary

    • Intrusion (INTZ) is a little known security company with several interesting products.
    • TraceCop is a stable cash flow generating product that has a unique database which makes the product difficult to dislodge from the market.
    • Growth opportunities lie in its new product Savant, the sale of which goes largely through a big channel partner selling it under their own name and ramping up efforts.
    • Not widely known is that Savant beat a much bigger competitor to a substantial order, sign of market acceptance.
  • The Japanification Of Europe
    Sun, Aug. 24 DBJP, DXJ, EWG 24 Comments

    Summary

    • The eurozone is resembling Japan's lost decades ever closer on a host of metrics, including demographics, growth, inflation, yields and debts. In some respects, the eurozone crisis actually resembles the Great Depression of the 1930s.
    • If policy makers do not respond to this crisis, things are likely to get worse rather than better.
    • Japan responded with new policy initiatives, getting it out of deflation; its stocks remain a better bet until the ECB wakes up.
  • The Coming Solar Capex Boom
    Fri, Aug. 22 AMAT 11 Comments

    Summary

    • Demand for solar energy keeps on rising briskly, after steep price falls.
    • Prices have stabilized and companies recovered some of their profit margins.
    • For growth to continue, companies need to significantly expand capex, which has interesting implications for certain stocks.
    • If capex doesn't increase enough, prices could actually increase.
  • Secular Stagnation Effects On Financial Markets
    Wed, Aug. 20 20 Comments

    Summary

    • There is a lot of confusion what secular stagnation really means; here is a quick introduction and scheme.
    • We look at what impact secular stagnation has on asset prices.
    • Secular stagnation has likely been beneficial for both bonds and stocks, but at the cost of greater financial instability.
  • Solar + Storage Is Close To An Inflection Point
    Wed, Aug. 20 BYDDY, CBAK, ENS 78 Comments

    Summary

    • Solar energy has already achieved grid parity in a number of locations, but problems with its intermittent nature remain.
    • Energy storage will greatly diminish these remaining problems, so solar + storage is becoming a big investment opportunity.
    • We survey the landscape and the investment implications.
  • Supply-Side Versus Keynesian Economics
    Mon, Aug. 18 SPY, DIA, QQQ 189 Comments

    Summary

    • In the battle of economic ideas, one that has been raging for nearly four decades is that between supply-siders and Keynesians.
    • While we think some supply-side measures can be useful, one really has to be specific as to the kind of measures and expected effects, it's all in the details.
    • A general supply-side approach seems a little out of place as a recipe to combat what is a distinctly Keynesian crisis.
  • Phoenix New Media Shares Are Undervalued
    Fri, Aug. 15 FENG 2 Comments

    Summary

    • The shares sold off after Q2 figures but we only see healthy growth.
    • Debt free, solid growth, quality media reputation and close ties to one of the best media brands in China.
    • The shares are too cheap, especially taking the whopping cash position into consideration.
  • The Bond Markets Vs. Peter Schiff
    Thu, Aug. 14 IEF, MBB, UUP 109 Comments

    Summary

    • Some market observers like Peter Schiff have warned us that many markets and even the whole economy are kept up by asset purchases by the Fed.
    • So we should expect the recovery to stall, the dollar, stocks and bonds to fall when the Fed stops these purchases.
    • Not only is this not happening, some of these markets are actually up, like the bond market. So who is right, bonds or Peter Schiff?
  • SunPower Shares Are Still Very Attractive
    Editors' Pick • Tue, Aug. 12 SPWR 3 Comments

    Summary

    • SunPower shares have been on a tear the last couple of years.
    • Shares supported by significant competitive advantage, innovations, strong market growth and stable ASPs.
    • The shares have sold off on Q2 results but this provides a new buying opportunity.
  • Is The Fed Falling Behind The Curve?
    Tue, Aug. 12 SPY, DIA, QQQ 9 Comments

    Summary

    • The nature of the 2008/9 crisis was different from previous crisis, and the nature of the recovery also differed.
    • Apart from explaining the tepid nature of the recovery itself, it also shows the difficulties in interpreting the economy.
    • These difficulties complicate the timing of policy changes by the Fed and significantly increase the risk that the Fed is falling behind the curve.
  • Ellie Mae Breaks Out Of Multi-Year Resistance
    Fri, Aug. 8 ELLI Comment!

    Summary

    • Shares in Ellie Mae (ELLI) have finally broken out from multi-year resistance.
    • This on stellar results in a very difficult market.
    • The company is very well positioned to profit even more when mortgage volume will increase next year.
  • Sell The Euro
    Thu, Aug. 7 FXE, EUO, ERO 7 Comments

    Summary

    • The eurozone is stuck into low or even negative growth on the border of deflation.
    • Yet the ECB balance sheet has shrunk, this will not last as the risks are increasing.
    • Risks are a deflationary shock from the Russia crisis and tightening US monetary policy.
    • The euro will also suffer from a flight into the dollar as a result of its safe haven status in times of international crisis.
  • Panic Selling In Destiny Media Is Unwarranted
    Wed, Aug. 6 DSNY 36 Comments

    Summary

    • With the introduction of the security pack, Destiny's streaming media solution is finally ready for launch in the first out of two dozen verticals.
    • Other problems, like a work around of ISP throttling, are in the works, as well as customization for other market verticals.
    • All this has taken significantly longer than many people hoped and/or expected, and the stock has been sold off way too much, helped by incorrect info which needs correcting.
  • Panic Selling Turns Into Panic Buying In Sphere 3D
    Wed, Aug. 6 ANY 20 Comments

    Summary

    • Shares in Sphere 3D sold off on valuation concerns.
    • While these valuation concerns are justified, they're also one-sided and backward looking and susceptible to surprises.
    • One such surprise arrived on Monday from take-over target Overland, suggesting the ever falling reveunes is coming to an end.
  • InvenSense Will Be Range Bound
    Fri, Aug. 1 INVN 15 Comments

    Summary

    • InvenSense is a very well run company.
    • Positive forces are market growth, good execution leading to market share gains.
    • But these are partly offset by the size of the required investments and price erosion.
    • We think therefore that InvenSense will be range bound for the forseeable future.
  • Has Destiny Media's Clipstream Product Failed?
       • Sat, Jul. 19 DSNY 11 Comments

    Summary

    • That is what an article today argued, we argue that this provides a particularly one-sided picture of Destiny Media in general, and Clipstream in particular.
    • PlayMPE, Destiny's other product, is the de-facto standard in sending pre-release music to customers and it's usage is fast growing.
    • Clipstream, the product for streaming media, hasn't properly launched as it's being taylored for different verticals in conjunction with users, it addresses a big and fast growing market opportunity.
    • You will never find out the many advantages of Clipstream by reading Keubiko's articles, while some rather irrelevant disadvantages are played up or unjustly ascribed to the technology.
  • Destiny's Shares Can Still Double
    Wed, Jul. 16 DSNY 19 Comments

    Summary

    • When Destiny's streaming media product Clipstream was launched, it wasn't ready and the share price took a hit.
    • Problems with ISP throttling video streams for some users and extensive tailoring the product to different categories of users is what caused the holdup.
    • But as these issues are getting solved one by one, we still think there is a bright future for this company.
    • From the levels here, we think the shares can double and recoup their losses by year-end.
  • Risk Is Back, It's The Euro, Stupid!
    Fri, Jul. 11 FXE, EUO, ERO 137 Comments

    Summary

    • All quiet on the Southern front? Not really, the euro induced destruction machine is still grinding.
    • It's important for investors to grasp exactly how this works, so here is a primer.
    • What are the main risks the situation derails? We'll discuss three.
  • The Virtual Reality Race Is On
    Mon, Jun. 16 MSFT, SNE, SSNLF 3 Comments

    Summary

    • VR headsets are finally emerging as a mass-market consumer product.
    • The possible applications are sheer endless and VR seems set to become a big market.
    • There are three early contenders on the hardware side, but the money is likely to be in the software side.
  • Hard Money, Soft Money And Asset Bubbles
    Fri, May. 23 92 Comments

    Summary

    • Should we raise interest rates to curb possible asset price bubbles?
    • Answers depend on who you ask. "Hard money" people say yes, "soft money" people say no.
    • So we'll look at the costs, benefits, and alternatives.
  • Sphere 3D Taking On The Software Virtualization World?
       • Tue, May. 20 ANY 32 Comments

    Summary

    • Sphere 3D promises it has a revolutionary product with the Glassware 2.0 virtualization platform.
    • The acquisition of Overland could provide it with the critical mass to propel this product into the market.
    • But the shares have already run up a lot and the company isn't without critics.
  • 3 Stocks On The Ropes Offer Big Value
    Sun, May. 11 SZYM, XXII, FENG 11 Comments

    Summary

    • While the market indexes are holding up, many stocks are in bear market territory.
    • We think some of the stocks that have been sold off heavily are due for a bounce.
    • We see fundamental value in FENG, XXII and SZYM at these sold-off levels.
  • Big Oil Under Serious Threat
    Fri, May. 9 CVX, RDS.A, XOM 692 Comments

    Summary

    • Oil majors face serious challenges, for decades, resource nationalization has kept them out of many of the cheapest fields.
    • They're struggling to replace existing reserves and production with new reserves and production.
    • Climate change could present them with a staggering $28 trillion bill.