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We bring you our Daily Intelligence Briefing courtesy of McAlinden Research Partners. The report is provided to Hedge Connection members for free. Below is snapshot, login to view the full report. Not a member? Join today. McAlinden Research Partners is currently offering a complimentary full month subscription of the DIB. Activate yours today by contacting hugh@mcalindenresearch.com |
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Daily Intelligence Briefing
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Identifying Change-Driven Investment Themes
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Each Daily Intelligence Briefing has five sections, explained here. Click the blue links to jump to the relevant section for more extensive coverage:
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Private Space Firms Set For a Banner Year in 2019
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SpaceX’s latest satellite launch, scheduled for this week, has drawn a huge amount of press over the last few weeks. However, there is so much more going on in the background as the private space industry in the US and beyond begins to mature and carve out different revenue-generating services that will define the industry going forward.
Additionally, the sector has become much more attractive to equity investors recently as a brand new ETF was launched last month, providing significant exposure to private space business.
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The growth of the private space industry has entered a new age as private space firms are beginning the large-scale deployments of their first major projects. Among these initiatives are huge webs of satellite networks, larger rockets, and custom-built nanosatellite units. New York-based venture capital firm Space Angels has said global space start-up investments totaled $2.97 billion last year.
Iridium Communications, a leading publicly-traded satellite communication company, has set the tone for a strong 2019 with their monumental first quarter earnings results. The company began to roll out new services based on its new satellite constellation it completed last year, and resulting revenue and profits were off to a faster start than expected. Iridium continued the double-digit advance it set during 2018. In fact, total service revenue increased 19% in the first quarter, easily outpacing the company’s full-year 2019 guidance for about an 8% rise, and total billable subscribers grew 16% year over year. This is the latest milestone in Iridium’s massive turnaround, following years of subpar results and falling share prices.
Iridium is only one example of the growing success across the broader private satellite industry, which is now seeing a number of other companies create similar satellite networks. This Wednesday, SpaceX is expected to conduct a launch of 60 satellites as the latest addition to their Starlink satellite internet constellation, designed to bring high speed internet to the entire planet by the mid-2020s. While this is the largest number of their own in-house satellites they’ve ever sent into orbit, SpaceX launched a record-breaking 64 satellites, mostly from customer companies who don’t have the capital to build their own rockets, back in December 2018. MRP has previously covered 3rd party satellite startups hitching rides from rocket building firms, sort of like Uber for satellites, which could become a very lucrative business model going forward. Especially since the Federal Communications Commission (FCC) has already approved licenses of three other companies — Telesat, LeoSat, and Kepler Communications — to put constellations of 117, 78, and 140 satellites into orbit, respectively. SpaceX has received approvals from the FCC to launch up to 12,000 satellites.
A handful of U.S. small-rocket companies are also developing launchers ahead of the expected boom. One of the biggest, Rocket Lab, has already put 25 satellites in orbit. Last month, the company expanded their services to include custom satellite construction that can be tailored to anyone’s low Earth orbit business needs. Such satellites are designed to launch to orbit on Rocket Lab’s Electron rocket, creating a streamlined mission to space. Often, satellite operators need to build a complex spacecraft just to house one specific sensor or camera that will gather data from space. Rocket Lab hopes to take care of the spacecraft manufacturing part, allowing customers to simply add their payload to an existing satellite design.
Rocket Lab’s concept is relatively similar to that of the CubeSat, a type of standardized satellite that companies, researchers, and universities have used to send their payloads into space. The CubeSat is a relatively small, box-shaped spacecraft, measuring a little less than 4 inches on all sides. The boxes can be stacked on top of each other to create larger models, which are typically the size of a cereal box. Small units like this are usually categorized as nanosatellites (weighing less than 22 pounds), and because they are so compact and cost-efficient, they drastically lower the barriers to entry in the satellite industry. Demand for these types of nanosatellites is expected to explode in the next few years.
It’s not only the US getting in on the burgeoning private space industry. China has been making strides to keep pace with the US in this second space race.
In early June, launch firm iSpace will attempt to become the first Chinese private company to place a satellite in orbit. The company hopes their Hyperbola-1 four-stage will be the one to finally reach a major breakthrough following failed launches by two Chinese competitors. If all goes as planned, iSpace is already plotting a maiden flight for Hyperbola-2, expected to be capable of lifting 1,900 kilograms to low earth orbit, after 2020. Last year, equity investment in China’s space start-ups reached 3.57 billion yuan ($533 million), a report by Beijing-based investor FutureAerospace shows, with a burst of financing in late 2018 that accounted for about 18% of global space start-up investments on the year. At least 35 private Chinese companies are working to produce more satellites.
For a long time, satellites and other private space technologies have been difficult to invest in since many of the companies are still privately held. But that changed this year, as the recently launched Procure Space ETF (UFO), comprised of 30 companies who are wholly or partly involved in the private space industry, is the first fund of its kind to simplify investing in the space. Roughly 80% of the constituents derive the majority of revenue from space businesses.
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Procure Space ETF vs S&P 500
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Iridium Communications Inc. vs Globalstar, Inc. vs Viasat, Inc.
vs Maxar Technologies Inc. vs Trimble Inc. vs S&P 500
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Source material for today’s market insight…
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Satellites
Elon Musk just showed off 60 of the first SpaceX satellites that could change the internet as we know it
Elon Musk just gave us the first look at his rocket company’s bold plan to bring ultra-high-speed internet to the entire world. These ” Starlink” satellites are named after Musk’s plans for a network of satellites orbiting in space.
If the iconoclastic entrepreneur meets his goals, internet users around the world could see internet speeds that are around 40 times faster, no matter where they live. Musk and Space X have not said how much they would charge for the service, Business Insider previously reported.
Musk also shared a game plan for SpaceX moving forward. To get minor internet coverage, “6 more launches of 60 [satellites are] needed,” Musk said, while moderate coverage would require 12. SpaceX has said it aims to have internet coverage available starting in 2020.
Read the full article from Business Insider +
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Satellites
China’s rocket start-ups go small in age of ‘shoebox’ satellites
LinkSpace, one of China’s 15-plus private rocket manufacturers is taking the first steps towards a new business model: sending tiny, inexpensive satellites into orbit at affordable prices.
Demand for these so-called nanosatellites — which weigh less than 10 kilogrammes (22 pounds) and are in some cases as small as a shoebox — is expected to explode in the next few years. And China’s rocket entrepreneurs reckon there is no better place to develop inexpensive launch vehicles than their home country.
In the near term, China envisions massive constellations of commercial satellites that can offer services ranging from high-speed internet for aircraft to tracking coal shipments. Universities conducting experiments and companies looking to offer remote-sensing and communication services are among the potential domestic customers for nanosatellites.
A handful of U.S. small-rocket companies are also developing launchers ahead of the expected boom. One of the biggest, Rocket Lab, has already put 25 satellites in orbit. No private company in China has done that yet. Since October, two — LandSpace and OneSpace — have tried but failed, illustrating the difficulties facing space start-ups everywhere.
Read the full article from Reuters +
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Private Space
Japan’s First Private Rocket Flies to Space
Interstellar Technologies, a Japanese private space firm, launched their Momo3 rocket from Hokkaido on Saturday May 4th. Momo3 burned its liquid fuel for two minutes and reached a height of 113.4 km (70.4 miles). After about 10 minutes of flight it splashed into the ocean. According to Takafumi Horie, the founder of Interstellar Technologies, the launch was a complete success.
The Momo3 rocket is relatively small. It’s 10 meters (33m ft.) long, 50cm (20 inches) in diameter, and weighs one ton. It’s dwarfed by other rockets developed privately, like the ones from SpaceX and Blue Origin, but that’s just fine. Interstellar Technologies has no plans to compete with those two companies. Interstellar’s goal is to deliver satellites to space cheaply. Interstellar Technologies’ next goal is to develop the rocket they’re calling ZERO. ZERO will be able to carry 100 kg (220 lbs.) to an altitude of 500 km.
Read the full article from University Today +
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Private Space
What’s Ailing India’s Rocketeers? The Subdued Indian Private Space Industry in ISRO’s Shadow
India’s private space startups seem to be stuck between a rock and a hard place. On the one hand is India’s national space agency ISRO, a behemoth whose contract doles provide vital sustenance to many startups. On the other is the increasingly commercialised side of this very same agency, which has now taken up a new and swanky commercial avatar as NewSpace India Ltd (NSIL), a somewhat indirect competitor-cum-contractor to the same startups.
Over the past few years, ISRO’s been involved in just about everything related to space in the country, from launching its heaviest satellite to building its smallest launch vehicle. However, this jack-of-all-trades act from the agency has left India’s space startups wondering where exactly they belong in the industry, particularly since the launch of NSIL in early March.
ISRO’s commercial exploits might have gotten the startup industry flustered, but Berlin Space Technologies’ Tom Segert believes that this push cannot be sustained and the mantle will ultimately fall to the shoulders of private industry.
While startups in the space sector have already made giant strides in recent years — from launching their own satellites to developing new and novel technologies — the need of the hour according to industry experts is clarity, of where they stand and what ISRO’s needs and ambitions are. With India’s much-awaited space policy on the way, this might just be the shot-in-the-arm the Indian space startups need to finally liftoff.
Read the full article from Firstpost +
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Markets →
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Dollar
Is US-China trade war starting to erode US dollar dominance?
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Economics & Trade →
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ASEAN THEME ALERT
ASEAN to gain most from trade war
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Politics & Policy →
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Cannabis
Cannabis Craze Faces Regulatory Changes, Including A Key Bill
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Services →
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Video Games THEME ALERT
Google Stadia: Why Cloud Gaming Won’t Kill the Console Any Time Soon
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Plant-Based
Capitalism, Red in Tooth and Claw, Is Going Vegan
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Manufacturing & Logistics →
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Satellites
Elon Musk just showed off 60 of the first SpaceX satellites that could change the internet as we know it
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Satellites
China’s rocket start-ups go small in age of ‘shoebox’ satellites
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Private Space
Japan’s First Private Rocket Flies to Space
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Private Space
What’s Ailing India’s Rocketeers? The Subdued Indian Private Space Industry in ISRO’s Shadow
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Technology →
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Applications
Apple Loses at U.S. Supreme Court on iPhone App Antitrust Suit
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Transportation →
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Autos THEME ALERT
Another “Tesla Killer” Missing In Action — Volkswagen Group Falls Short
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Autos THEME ALERT
GM, Ford Fall As U.S. Trade Wars Add To Worsening China Sales
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Commodities →
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Oil THEME ALERT
New Middle East Proxy War Could Jolt Oil Prices
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Energy & Environment →
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Solar THEME ALERT
As Solar Loans Start to Dominate, Loan Providers See Increasing Value in Installer Networks
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Biotechnology & Healthcare →
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Pharma THEME ALERT
Opioid Maker Insys Plunges on Warning of Possible Bankruptcy
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Pharma THEME ALERT
States Bring Price Fixing Suit Against Generic Drug Makers
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Endnote →
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F&B
Milk’s Massive American Decline; Almond Milk Is The Biggest Alternative To Dairy
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April 25, 2019
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The Facts Changed (For Now) →
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Between a slowdown in inflation, a sharp decline in treasury yields, and a short-lived bear market, investors have undoubtedly felt a huge swing in momentum; and they’re not alone, as the Federal Reserve now seems set in neutral until further notice. While some have had their own theories for why the FOMC voters, chiefly Chairman Jerome Powell, has such a radical and resolute change of heart, the answer may be just as simple as raw data.
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Select a theme to see when and why we added it. Also included is a link to all recent Market Insight reports we’ve written about that theme, allowing you to track its progress.
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Chinese Yuan Weakens to 4-1/2-Month Low
The Chinese offshore yuan, which trades outside the mainland, dropped to as low as 6.91 against the dollar on Monday, its weakest level since December 24th, after Beijing announced it will impose tariffs on $60 billion worth of US goods, following Washington’s tariff hike on $200 billion worth of Chinese goods last week.
Click here to access the data +
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Oil Prices Rise on Supply Concerns
Crude oil prices surged as much as 2.5% to $63.2 a barrel on Monday, on rising worries regarding Middle East oil supply, after the Saudi energy minister Khalid al-Falih said that two Saudi oil tankers were among vessels that had been sabotaged off the coast of the United Arab Emirates on Sunday. Brent crude oil added 2.7% to $72.3 a barrel around 09:00 New York time.
Click here to access the data +
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Soybean Prices Slump To Over 10-Year Low
Soybean prices fell to $7.89 a bushel Monday morning, hitting the lowest level since December 2008, on renewed concerns over oversupply and a prolonged trade war between Washington and Beijing. The US Department of Agriculture´s forecast for bigger-than-expected domestic supplies of soybeans this year while demand from China may drop if higher tariffs are to be imposed.
Click here to access the data +
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MARKET INSIGHT UPDATES: SUMMARIES
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Dollar
Is US-China trade war starting to erode US dollar dominance?
The contemplation by Asian finance leaders to add the Chinese and Japanese currencies to a regional foreign reserves buffer fund is the latest sign that the trade war is causing countries to slowly move away from dependence on the US dollar.
Their consideration, analysts said, could be underpinned by expectations of the shift in world consumption patterns and corporate investments away from a globalised trading system and towards a system centred on the three large regions – the US, the European Union and China – that operate differently.
The 10 members of the Association of Southeast Asian Nations plus China, Japan, and South Korea, together known as “Asean+3”, were reported earlier this month to be considering including the yuan and the yen to their Chiang Mai Initiative Multilateralisation (CMIM) scheme, a framework for multicurrency swap arrangements.
The leaders of Asean+3 said with the region facing threats from trade protectionism and reduced external demand, concrete measures needed to be taken to improve procedures and institutional arrangements of the finance process to foster regional integration and sustainable development.
Read the full article from South China Morning Post +
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ASEAN
ASEAN to gain most from trade war
Alarm bells are ringing across the globe as the United States (US)-China trade war continues to brew, and while the International Monetary Fund (IMF) has warned that a full-blown trade war would weaken the global economy, it may not be all bad news for ASEAN.
China is ASEAN’s single largest trading partner, but the US is an important economic and strategic partner as well and its growth and spending power has been critical to driving worldwide trade.
With increasing tariffs, goods produced in Southeast Asia are now more attractive to US consumers. In a poll of over 800 business leaders at the Refinitiv ASEAN Regulatory Summit in Singapore last week, it was found that trade tensions between the US and China will have the greatest influence on ASEAN businesses in the next two years.
ASEAN’s Free Trade Agreement (FTA) with China, and the increased economic integration brought on by China’s expansion of its Belt and Road Initiative (BRI) into the region, is sure to strengthen bilateral trade and connectivity in the face of the trade war – especially with several Southeast Asian nations providing raw materials vital for China’s re-exports to the rest of the world.
Read the full article from The ASEAN Post +
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Cannabis
Cannabis Craze Faces Regulatory Changes, Including A Key Bill
Cannabis stocks took off in 2018, but the euphoria quickly faded, echoing the sudden rise and fall of Bitcoin. Despite the current difficulties, cannabis is a long-term growth opportunity, even in the face of regulatory hurdles.
At the Las Vegas SALT conference, Ron Geffner of Sadis & Goldberg, and the CEO of 14th Round, Trent Overholt, discussed navigating the new frontier of cannabis investing. Sadis & Goldberg is a New York law firm that focuses on financial services. 14th Round is a design and technology company that claims to be “building the best brands in cannabis.”
The current regulatory environment is tough because it is a patchwork. Every state has different regulations. Meanwhile, the federal government looms in the background. “We see the challenges of the biggest and best operators, and even they are struggling to operate with this patchwork of regulations,” Trent said at the conference, which features key figures from business and government.
Many investors focus on the marijuana growers. The big players in the growers area are Canopy Growth (CGC), Tilray (TLRY), and Aurora Cannabis (ACB).
Read the full article from Investor’s Business Daily +
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Video Games
Google Stadia: Why Cloud Gaming Won’t Kill the Console Any Time Soon
Cloud gaming services have the potential to let anyone with a smartphone or tablet play games that once required hundreds or even thousands of dollars worth of hardware. But the consoleless gaming revolution won’t reach everyone: Platforms like Stadia and xCloud can only function seamlessly if users have access to fast and stable broadband internet speeds.
Internet speeds vary wildly from state-to-state in the United States, and a drop in performance will result in lag even in single-player games running on cloud services. For this reason, Jelle Kooistra — the Head of Analytics at video game industry analytics firm Newzoo — tells Inverse that he sees products like Stadia existing in harmony with consoles in the immediate future.
“Cloud gaming will not replace console, or ‘box’, gaming any time soon,” he said. “Rather, they will live alongside each other, with two different pitches to potential consumers. We do not see cloud gaming overtaking local download games in the next five years.”
Instead, both arrangements will remain appealing, though they will likely target district categories of gamers. On one hand, you’ll have traditional users who aren’t scared away by expensive hardware and on the other, you’ll have the emerging market of mobile gamers.
Read the full article from Inverse +
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Plant-Based
Capitalism, Red in Tooth and Claw, Is Going Vegan
The Economist dubbed 2019 “The Year of the Vegan” in its edition detailing world trends for this year. “Where millennials lead, business and governments will follow,” the magazine said. And just as the youth-driven movement to save the planet has pushed environmental, social and governance concerns to the top of the finance industry’s agenda, asset managers are about to start feeling the heat about the food industry’s contribution to climate change.
Beyond Advisors, which is based in Jersey, has registered with the U.S. Securities and Exchange Commission to launch a Vegan Climate exchange-traded fund. The ETF will be tied to a proprietary index which is based on the Solactive U.S. Large Cap Index, but excludes “any stocks whose activities are incompatible with a vegan and climate-conscious approach to investing.” So Tyson Foods Inc., the top U.S. meat processor, features in the benchmark index but is barred from the derivative.
So far this year, the Vegan index has delivered a total return of about 18%, which is three percentage points better than either the Solactive index or the S&P 500 index. Over a longer time horizon, its outperformance is even more marked.
Read the full article from Bloomberg +
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Manufacturing & Logistics
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Satellites
Elon Musk just showed off 60 of the first SpaceX satellites that could change the internet as we know it
Elon Musk just gave us the first look at his rocket company’s bold plan to bring ultra-high-speed internet to the entire world. These ” Starlink” satellites are named after Musk’s plans for a network of satellites orbiting in space.
If the iconoclastic entrepreneur meets his goals, internet users around the world could see internet speeds that are around 40 times faster, no matter where they live. Musk and Space X have not said how much they would charge for the service, Business Insider previously reported.
Musk also shared a game plan for SpaceX moving forward. To get minor internet coverage, “6 more launches of 60 [satellites are] needed,” Musk said, while moderate coverage would require 12. SpaceX has said it aims to have internet coverage available starting in 2020.
Read the full article from Business Insider +
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Satellites
China’s rocket start-ups go small in age of ‘shoebox’ satellites
LinkSpace, one of China’s 15-plus private rocket manufacturers is taking the first steps towards a new business model: sending tiny, inexpensive satellites into orbit at affordable prices.
Demand for these so-called nanosatellites — which weigh less than 10 kilogrammes (22 pounds) and are in some cases as small as a shoebox — is expected to explode in the next few years. And China’s rocket entrepreneurs reckon there is no better place to develop inexpensive launch vehicles than their home country.
In the near term, China envisions massive constellations of commercial satellites that can offer services ranging from high-speed internet for aircraft to tracking coal shipments. Universities conducting experiments and companies looking to offer remote-sensing and communication services are among the potential domestic customers for nanosatellites.
A handful of U.S. small-rocket companies are also developing launchers ahead of the expected boom. One of the biggest, Rocket Lab, has already put 25 satellites in orbit. No private company in China has done that yet. Since October, two — LandSpace and OneSpace — have tried but failed, illustrating the difficulties facing space start-ups everywhere.
Read the full article from Reuters +
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Private Space
Japan’s First Private Rocket Flies to Space
Interstellar Technologies, a Japanese private space firm, launched their Momo3 rocket from Hokkaido on Saturday May 4th. Momo3 burned its liquid fuel for two minutes and reached a height of 113.4 km (70.4 miles). After about 10 minutes of flight it splashed into the ocean. According to Takafumi Horie, the founder of Interstellar Technologies, the launch was a complete success.
The Momo3 rocket is relatively small. It’s 10 meters (33m ft.) long, 50cm (20 inches) in diameter, and weighs one ton. It’s dwarfed by other rockets developed privately, like the ones from SpaceX and Blue Origin, but that’s just fine. Interstellar Technologies has no plans to compete with those two companies. Interstellar’s goal is to deliver satellites to space cheaply. Interstellar Technologies’ next goal is to develop the rocket they’re calling ZERO. ZERO will be able to carry 100 kg (220 lbs.) to an altitude of 500 km.
Read the full article from University Today +
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Private Space
What’s Ailing India’s Rocketeers? The Subdued Indian Private Space Industry in ISRO’s Shadow
India’s private space startups seem to be stuck between a rock and a hard place. On the one hand is India’s national space agency ISRO, a behemoth whose contract doles provide vital sustenance to many startups. On the other is the increasingly commercialised side of this very same agency, which has now taken up a new and swanky commercial avatar as NewSpace India Ltd (NSIL), a somewhat indirect competitor-cum-contractor to the same startups.
Over the past few years, ISRO’s been involved in just about everything related to space in the country, from launching its heaviest satellite to building its smallest launch vehicle. However, this jack-of-all-trades act from the agency has left India’s space startups wondering where exactly they belong in the industry, particularly since the launch of NSIL in early March.
ISRO’s commercial exploits might have gotten the startup industry flustered, but Berlin Space Technologies’ Tom Segert believes that this push cannot be sustained and the mantle will ultimately fall to the shoulders of private industry.
While startups in the space sector have already made giant strides in recent years — from launching their own satellites to developing new and novel technologies — the need of the hour according to industry experts is clarity, of where they stand and what ISRO’s needs and ambitions are. With India’s much-awaited space policy on the way, this might just be the shot-in-the-arm the Indian space startups need to finally liftoff.
Read the full article from Firstpost +
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Applications
Apple Loses at U.S. Supreme Court on iPhone App Antitrust Suit
Consumers can press ahead with a lawsuit that accuses Apple Inc. of using its market dominance to artificially inflate prices at its App Store, the U.S. Supreme Court ruled. The 5-4 decision Monday could add to pressure the company faces to cut the 30% commission it charges on app sales. Lawyers pressing the case have said they will seek hundreds of millions of dollars on behalf of overpaying consumers.
Apple contended the lawsuit was barred under a 1977 Supreme Court ruling that said only direct purchasers of a product can collect damages for overpricing under federal antitrust law. That decision was designed in part to keep companies from having to pay twice for the same misconduct. Justice Brett Kavanaugh, joining the court’s liberal wing in the majority, said App Store customers meet that test because they buy directly from Apple.
Apple said it is “confident we will prevail when the facts are presented and that the App Store is not a monopoly by any metric.” The company said 84% of the apps there are free. “We’re proud to have created the safest, most secure and trusted platform for
customers and a great business opportunity for all developers around the world,” the company said.
Mark Rifkin, one of the lawyers pressing the suit, called the ruling “a major victory for consumers in an increasingly consumer-unfriendly environment.”
Read the full article from Bloomberg +
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| There is much more to this report! McAlinden Research Partners offers Hedge Connection members weekly access to the Daily Intelligence Briefing research for free – click here to view. (You must be logged in first). Not a member? Join today. McAlinden Research Partners is currently offering a complimentary full month subscription of the DIB. Activate yours today by contacting hugh@mcalindenresearch.com |
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