Wednesday, January 12, 2011

Mini-flash dip

Not many noticed it because the markets rebounded sharply yesterday but there was a brief moment yesterday that felt like May 2010.

The markets can get interesting when the computers decide not to play nice. The talk was that a large market order hit to sell futures in one block and that created the downdraft.

Another cautionary tale about racing into the "green industrial revolution" comes to us from Massachusetts.

"Evergreen Solar took $58 million to open a factory in Massachusetts for solar panel manufacturing in 2008. Yesterday they announced they were closing the plant because they can't compete with overseas manufacturers.

"Evergreen Solar Inc., which received $58 million in state aid to open a factory in 2008 at the former military base in Devens, announced today it would shut the plant and let go 800 workers by the end of this quarter.

The solar-panel plant is a cornerstone of Governor Deval Patrick's efforts to make Massachusetts a hub for the emerging clean-energy industry.

But Evergreen has been struggling in face of weak prices and competition from cheaper operations in China, where the government has offered solar companies generous subsidies to locate there. Evergreen itself has a partnership with a company based in China and previously announced plans to shift some work to the overseas location. "

I'm generally a proponent of new energy technologies, but I think they should be market driven innovations and not based on who can get the largest state or federal aid package.

When coupled with a local story about a high school that couldn't buy a windmill with funds granted from the American Reinvestment and Recovery Act because they could find a suitable product made in the US, I start wondering if the green revolution has already passed us by.

A couple of positive data points yesterday:

* Diesel fuel index jumped again back to it's highest levels since May 2010
* Rail traffic index rebounded as well (vs. 2009) but remains at much lower levels than 2006/07.

Further evidence that the ADP employment data was just white noise.

* Small business optimism declined in December. If you remember the bulk of the jobs reported on last week's ADP report were small business jobs (270k of 292k reported) however, small businesses don't seem too excited about their prospects going forward so the odds that they are driving a hiring boom just doesn't seem realistic.

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