The odds of Bernie Sanders winning the Democratic primary hit an all-time high on Thursday as former Vice President Joe Biden continues to plummet, according to online betting market PredictIt.
Uber Jumps After Beating Expectations, Despite $8.5 Billion Full Year Loss
Having plunged to an all time low after reporting its dismal Q3 earnings which included a massive loss and yet another consecutive quarter of negative EBITDA, Uber managed to stage an impressive recovery in the past three months alongside the rest of the tech sector, rising from $26 to $37. As a result investors were eagerly anticipating the car hailer’s Q4 earnings to see if the rebound was justified.
With that in mind, moments ago Uber reported earnings that beat across the board even as active users actually trailed expectations modestly (111MM vs 113.4MM), and despite CEO Khosrowshani saying that the era of growth at all costs is “over”, Uber lost a record $8.5 billion for the full year 2019.
Gross bookings $18.13 billion, beating the estimate $18.03 billion
Total ridesharing bookings $13.51 billion, beating the estimate $13.50 billion
Uber Eats bookings $4.37 billion, beating the estimate $4.21 billion
GAAP Revenue $4.069 billion, beating the estimate of $4.06BN
Adjusted net revenue $3.73 billion beating the estimate $3.70 billion
Adjusted loss per share 64c, beating the estimate loss/share 65c
Of course, all of that has to be considered against the flipside, namely that the $1.1BN net loss in Q4 meant that the company lost a whopping $8.5 billion for the full year, propelled by $4.6 billion in stock based compensation in 2019 following the company’s IPO.
The company also reported that Q4 monthly active platform consumers 111 million, up 22% Y/Y but missing the estimate of 113.4 million. Also concerning is that even as revenues increased 27%, the Net Loss went in the other direction, and increased by 24% to $1.1 billion, which however was also just better than the $1.15 billion expected.
In short, the top and bottom line beat across, with adjusted EBITDA loss $615 million also coming in modestly above the expected loss of $712.9 million, and 25% stronger than the $817MM EBITDA a year ago.
The not so good news: Uber’s self-driving car program (as well as other research projects) saw losses grow to $130 million in the fourth quarter, up 24% from a year before, which may explain why we hear less about the program these days (if not at Tesla). As Bloomberg notes, Uber was likely “trying to cut costs amid skepticism that self-driving cars will revolutionize the company’s business model. But adjusted losses are growing in that category, as they are in eats, freight and other bets. The rides business is driving margin improvement.”
Commenting on the results, Uber CEO Dara Khosrowshani said that the company is now on the path to profitability in 2021:
“2019 was a transformational year for Uber and I’m gratified by our progress, steadily delivering against the commitments we’ve made to our shareholders on our path to profitability. We recognize that the era of growth at all costs is over. In a world where investors increasingly demand not just growth, but profitable growth, we are well-positioned to win through continuous innovation, excellent execution, and the unrivaled scale of our global platform.”
However, the biggest concern is that despite the sizable improvement in revenue, the company’s adjusted Ebitda loss of $615 million was still staggering, and while it was a modest improvement quarterly, the company has never reported a positive EBITDA quarter in its history yet.
Said otherwise, Uber is forced to continue to provide subsidies to its drivers, which means that even as revenue grows and the company burns cash to capture market share, losses refuse to turn to profits, as shown in the chart below which demonstrates just how sticky negative EBITDA has become. In short, the business refuses to scale, and with Lyft growing with every quarter, it is debatable if and when the company will ever achieve profitability.
The chart above also explains why CEO Dara said that “We recognize that the era of growth at all costs is over.” So does that mean that the company will now retrench until its generates positive EBITDA as backlash against the idiotic WeWork model grows? We will find out in the coming quarters, when the company has vowed it will turn profitable. Good luck.
Following earnings, the stock initially dipped, then rebounded and is now taking out the highs.
If you’ve been watching our Youtube video series on the Wuhan Coronavirus (2019nCoV) pandemic, you know that it’s time to prepare.
Yes, we can always hope that the latest unconfirmed potential treatment marks an actual turning point (i.e. treating patients with HIV protease inhibitor drugs) . But it’s much better to be safe than sorry.
You’re probably reading this because you tend to think critically, and you trust your own judgment. Weirdly, that sets you apart from the masses.
And so here you are. Not because you’re weird, but because it’s weird that common sense and prudent caution are so uncommon.
For a whole host of reasons that extend well beyond this emerging pandemic, we think being prepared is a selfless and prudent thing to do. Everyone should seek to be as resilient as possible. Our book Prosper!covers this in much greater detail. It encourages readers to build capital.
Yes, build up your financial capital. But don’t ignore social, knowledge, time, material, living, cultural and emotional capital. If you have depth in each of these, you will be truly wealthy, happy and fulfilled — no matter what the universe throws your way.
A pandemic is a hard kick in the pants that will propel many people to finally begin preparing. If you’re one of them, don’t ignore this important call to action.
For those who are already in good shape — Congratulations! Use this opportunity to re-evaluate your planning, inventory your preps, and then improve upon both if needed.
What We Can Say Publicly & What We Can’t
As with our coverage of the Fukushima nuclear disaster back in 2011, we believe it is our duty to make our gifts of sleuthing, clarifying, and decoding freely available to the world. That’s what we’ve done in the past, and we’re doing it in spades now — releasing at least one video every day for the past 13 days, keeping the public updated on the evolving coronavirus threat.
But there’s certain content that we cannot put out into the public realm.
Some of it can put a target on our back for the media to use in accusing us of being “alarmists” or “fearmongers”.
Other content may not be sufficiently proven, but we feel is important to consider and monitor as more data comes in. But it’s too half-baked to put out to a public audience where some folks might accept it as gospel simply because we shared it.
Often, we just go deeper into a subject than the general public has any interest in going. But our insight-hungry subscribers value this greatly. One thing Peak Prosperity subscribers share in common is that we’re all curious, committed life-long learners.
Cutting to the chase: subscriptions are how Adam and I support and run this site. Without our premium subscribers there would be no site at all.
Google is a monopoly and shares less and less advertising revenue with the content creators that use its platform. The advertising check Peak Prosperity receives are really so tiny as to be laughable. There’s no possible way to support this site via ad revenue. If we relied on ad revenue — of which the monthly check could buy us a nice dinner and little else — this would become a hobby site. Adam and I would have to earn a living other ways, and maybe write a single article once of twice as month as we could get to it. The PeakProsperity.com experience would be vastly different from the daily publishing programming we have, not to mention the even more valuable vibrant community of intelligent thinkers that is fostered here.
I feel odd having to spell this out. But you’d be surprised how many people decry that we have a revenue model that funds this site’s existence. Some of these critics are journalists, too; which is odd to me, because they’re in the same business — except a parent company cuts their paycheck.
Denying Ammunition To The Haters
In fast-moving situations like the coronavirus outbreak, the unknowns outweigh the knowns. Quite often the most useful and most actionable material is in the ‘unknowns.’
This is where our super-power comes into play: sifting through vast piles of snippets and fragments and assembling them into a coherent (if still incomplete) picture. One with actionable insights to help you make important life decisions.
Sometimes we simply have to avoid handing weapons to our enemies. Early, fast-changing information can (and often is) taken out of context to try to “shoot the messenger”. Throughout this pandemic so far, the vast majority of attention we’ve gotten from the established media has accused us of whipping up fear or being opportunists.
Not a single one of these critics has yet sought to engage in debate on the data we’ve provided in any of our writings or videos to argue “here’s something you got wrong.”
Why not? Because they have no interest in whether we have the facts right or wrong.
Instead, they’re interested in pushing a narrative that says “don’t worry, everything is just fine”. In their eyes, our sin is that we happen to think some of the facts ARE indeed worrying. Or at least too important to simply take on faith. It’s the oldest trick in the book – when you can’t beat the message, attack the messenger.
Just last night, my Wikipedia page, up for more than a decade, was deleted by Wikipedia’s editors. I guess if you feel that shooting the messenger isn’t enough, try to expunge him from history.
Again, this is all just part of the territory. Like the trolls who sometimes show up in this site’s comments section, armed with the latest talking points (“no worse than the flu!”) and seeking to swamp or derail the conversation.
Behind our paywall, there are no trolls. Well, maybe once in a blue moon, but we have a rapid and inspiring tribal antibody response that detects and ejects such entrants, so they don’t last long. Which means we’re free to engage in very open and intelligent wide-ranging conversations.
In our brand new report for our premium subscribers, Adam and I share our own personal preparations for the coronavirus which — for reasons of not arming our critics with more ammunition for “fear mongering” charges, and for our family’s personal safety, and given the fact that what works for us may not be appropriate for everyone — are not things we’re willing to broadcast to the public.
Finally, we’ve learned that when we recommend specific actions that can have an actual impact on supplies, we shoulder an ethical responsibility. We trust our subscribers to avoid hoarding and be otherwise responsible in their purchases, only securing what they need and thereby also being in position to support others should things become dicey.
On that note, let’s review this passage from our book Prosper! because it’s important framing for everything that comes next:
Selfless Not Selfish
Another objection we hear to the prospect of preparing and becoming more resilient is that those actions could be seen as being selfish. Instead we see them as being selfless. Those who are not prepared when an emergency strikes are a drain on critical resources, while those who are prepared can be of assistance.
To be among those who can be in a position to render assistance, or at least need none of their own, means that your prior acts of preparation have selflessly removed you from the minus column and placed you on the plus side.
The first steps towards preparedness usually involve addressing your own needs or those of your loved ones, but many people then go beyond that and prepare for others who may not be able to do so, or have not done so, or maybe even will not do so.
But let us put an important qualifier on that; preparing before a crisis hits is responsible and selfless, but trying to accumulate necessary items during a crisis is an act of hoarding. We do not and never will advocate hoarding. Responsible preparations begin long before any trouble appears. Anything else stands a good chance of making things worse, not better.
The news has been full of stories of how people behave when scarcity strikes and they are generally not pretty. People in Boston fought over bottled water just hours after a water main broke in 2010. Nasty fights, too. In Venezuela, as of the writing of this book, desperate people are attempting to buy anything and everything that might remain in the stores as their national currency devalues by the day. This is bringing forth all sorts of government-mandated counter measures that make it impossible for many families to buy essential items.
We mentioned earlier that time may well be your most valuable asset in becoming resilient. Be aware that many things that are easily available now may be difficult to obtain later. Now, before any big crises have hit, it’s very easy to pick up the phone, or click a mouse button, and have the big brown truck of happiness roll up to your doorstep a few days later. Everything you could ever want to buy is currently available and stores are abundantly stocked in most countries. However, we can imagine a large number of possible futures where such easy access to consumer goods and desired items is either much more difficult or impossible.
The Time To Prepare Is *NOW*
It’s time to begin preparing. Well, honestly, given the demonstrated threat of the Wuhan coronavirus, it’s past time — which means it’s time to begin preparing responsibly (no hoarding of items already in short supply like face masks, please).
This is especially true if you live in a country with substandard health care or a weak hospital infrastructure.
There’s room for hope that this pandemic will be limited by aggressive containment efforts. A vaccine at some point is highly likely.
But there’s no guarantee either will happen. Or even if they do, that help will arrive before the virus hits your community.
The odds of the virus threat are more than sufficient to cause me to take prudent defensible precautions now, to follow the developing news like a hawk, and to advise people to prepare today should they soon need to remain at home for days to weeks during an outbreak.
We cover both what we’re prioritizing BEFORE the virus hits our towns, and what we plan to do AFTER it does.
For those who choose not to subscribe, for whatever reason, that’s fine. We’ll continue our daily work here scouring the world of news for you and issuing as many videos, articles and podcasts as we can to distill the key insights we feel are most important for you to know about this swiftly-unfolding situation.
Traders Buy Everything On Hopes That Virus “Contained” – Stocks, Bonds, Gold, & USD Jump
Stocks were bought with both hands and feet once again overnight, surging to new record highs because the virus is “contained”…
And, reportedly, this is the chart that many suggest shows that ‘peak virus’ has passed as the total number of virus cases shifts from exponential to quadratic…
However, what many do not fully understand about the chart is the policy change that China instigated, locking down homes and telling citizens to only come to hospital if they are severely sick… meaning there are plenty of cases locked up at home, afraid to leave the house as they have seen what happens in many of the leaked videos we see.
No matter that, investors, traders, and the machines bid for stocks, bonds, the dollar, precious metals, copper, and crude.
However, the buy-both-bonds-and-stocks trade has been going on all year (and bonds are outperforming)…
Source: Bloomberg
Chinese stocks shot up again with small-cap-tech in ChiNext leading the charge (up massively)…
Source: Bloomberg
European stocks also extended the week’s gains…
Source: Bloomberg
But US stocks were mixed today – all gapping higher at the open but with small caps and trannies lower…
Record closes for S&P, Dow, and Nasdaq
But everything still up large on the week…
Thanks to yet another short-squeeze (the biggest 4-day squeeze in 5 months)…
Source: Bloomberg
Casper IPO’d at 12, opened at $14.50, briefly popped.. then dropped…
Momo and Value resumed their trend after yesterday’s breakdown…
Source: Bloomberg
Cyclicals were flat today as defensives rallied…
Source: Bloomberg
Treasuries were mixed today with yields dropping at the long-end for the first time in 4 days (30Y -3bps, 2Y unch)…
Source: Bloomberg
30Y reversed across the virus gap…
Source: Bloomberg
The Dollar extended its spike above 2-month highs…
Source: Bloomberg
Yuan slipped lower…
Source: Bloomberg
Bitcoin rallied further today, testing $9850 intraday…
Source: Bloomberg
Precious metals rallied on the day but copper leads the week…
Source: Bloomberg
While stocks rallied, gold has been bid the last two days…
WTI ended higher but well off the highs after OPEC+ hopes faded…
Copper was up today but remains notably decoupled from stocks…
Source: Bloomberg
Finally, in case you hadn’t seen this before – we have shown numerous times in the last few years – the real way to make money in US equity markets is simple – Buy the close and sell the open…
Nightmare At Sea – More Than 7,000 Quarantined On Two Cruise Ships Amid Virus Outbreak
Thousands of people are trapped on two cruise ships where coronavirus is quickly spreading. Already, tests are coming back positive, with more expected in the coming days.
More than 7,300 people have been quarantined on two cruise liners, one off Japan and another off Hong Kong, for fears that the deadly virus has infected passengers and crew.
20 coronavirus infections have been confirmed on a cruise ship in Japan as thousands remain under quarantine on the vessel. pic.twitter.com/gHAKwlF5OE
A total of 3,700 passengers and workers are quarantined on Princess cruise ship, owned by Carnival Corporation & plc., which is moored off Yokohama, Japan.
Twenty passengers have already tested positive for coronavirus, with more expected to test positive in the coming days.
Infected passengers include three Americans, two Australians, seven Japanese, one from Taiwan, two Canadians, one New Zealander, and three Hong Kong citizens. One Filipino crew member is also sick, Carnival said in a statement.
Japan’s Health Ministry said a total of 20 had been infected with the deadly virus on the vessel. It said the rest of the passengers would remain in quarantine for two weeks.
The second ship is the World Dream, a cruise ship operated by Dream Cruises, currently moored in Hong Kong’s Victoria Harbor as a precautionary measure. All 4,000 passengers are undergoing testing after three former passengers tested positive for coronavirus.
Cruise ship under quarantine in #HongKong, tests for #coronavirus conducted as 30 crew members have fever
Edith Poon, a spokesperson for Genting Hong Kong Limited, the holding company that owns Dream Cruises, confirmed that 30 crew members had symptoms of the virus.
“We are currently waiting for the results to come in,” Poon told USA TODAY. “Upon availability of the results, we shall comply with the Department of Health’s instruction on the next step forward. Until then, as advised by the Department of Health, all passengers of the cruise ship are to remain on board.”
Last week, there was a false alarm aboard the Costa Smeralda, when a female Chinese passenger displayed symptoms of the deadly virus. The ship was in quarantine off the coast of Italy, while health officials conducted tests. It was later discovered she had the “common flu,” and the ship was allowed to embark on the rest of its journey.
Last October, the Federal Reserve relaunched quantitative easing. Of course, Fed Chairman Jerome Powell insists it’s not quantitative easing. But as Peter Schiff pointed out in a recent tweet, that debate is really just semantics.
The argument over whether the current Fed balance sheet expansion constitutes QE is pointless. QE was always just a euphemism for debt monetization. The Fed monetized debt in the past, its monetizing more debt in the present, and it will monetize even more debt in the future!”
A close look at what is going on at the Treasury Department and the Fed makes it pretty clear the central bank is, in fact, monetizing the debt.
Daniel Amerman is a CFA who closely follows on Treasury and Fed operations. In an article by economist Doug French at the Mises Wire, Amerman points out the link between the Fed and the Treasury crystal clear.
In just the last four months, the US government has spent $457 billion—almost half a trillion dollars—more than it has taken in. In that same time and using monetary creation, the Federal Reserve has created and put $457 billion in new cash into the financial system, either buying US Treasuries or funding the ownership of those Treasuries by others.
This looks a whole lot like debt monetization.
Here’s a little historical perspective.
In the early days of the Great Recession, Ben Bernanke assured Congress that the Fed was not monetizing debt. He said the difference between debt monetization and the Fed’s policy was that the central bank was not providing a permanent source of financing. He said the Treasurys would only remain on the Fed’s balance sheet temporarily. He assured Congress that once the crisis was over, the Federal Reserve would sell the bonds it bought during the emergency.
Of course, it never happened. It quickly aborted the hiking cycle and cute rates three times last year. Balance sheet reduction was on “autopilot” in 2018, but that reversed in 2019 as well.
Now, whether Ben Bernanke knew it wasn’t true and was lying, or if he was just mistaken, nobody but Ben Bernanke knows. But at the time, I said, ‘That’s not true.’ I said there is no way the Fed is going to be able to sell off these securities — that this is indeed debt monetization. Well, now we know for a fact.”
And now it looks like debt monetization has become a permanent fixture of the US economic system. Amerman summed it up.
The Federal Reserve is doing what no responsible central bank is supposed to do, and effectively funding the growth in the debt at well below free-market interest rates via monetary creation on a massive scale—without admitting that it is doing so…
This is all about funding the fast growing national debt at lower rates than what rational investors would accept in a free market, and the repo crisis was a symptom of that problem, not the cause.”
Amerman said that, in effect, the Fed is doing the same thing it did in 2008 — it’s backstopping the financial system and the US economy by effectively printing money out of thin air.
After almost 11 years of comparative calm and without repo market interventions, the Federal Reserve stopped the crisis in 2019 much as it had stopped the last major crisis in 2008, by creating new money on a massive scale and lending it to the banks and other financial entities that were at risk. In the process – the Federal Reserve effectively funded the growth in the United States national debt that week.”
French pointed out that a lot of Americans “believe this economy is rockin’ and rollin’. Look at the stock market. Look at the real estate market. Interest rates are low; unemployment is low. What’s not to like?”
Wall Street and Washington, DC, want to be happy, so the economists at the Eccles Building, while decreasing total repo loans, have doubled the total funding of the national debt. ‘It is the Fed’s purchase of Treasury obligations that is now that dominant source of cumulative deficit financing,’ writes Amerman. Retirees, receiving scant interest on their savings, are banking on living off the proceeds of selling financial assets. Amerman concludes, ‘The rapid growth of the national debt is also likely to become one of the biggest future threats to standards of living in retirement.’”
Chinese City Provokes Public Backlash By Stealing Shipment Of Facemasks
Here’s how bad the shortages of critical supplies like facemasks have gotten in China: A city with only eight confirmed virus cases has provoked an outpouring of public rage by stealing a shipment of facemasks bound for another city, which has many more patients infected with the virus.
The government of Dali City, situated in the southwest province of Yunnan, ordered the “emergency requisition”, according to state media reports. Hospitals, towns and cities across China have been scrambling to get their hands on whatever medical supplies they can as the outbreak drains resources, sparking a country-wide shortage as the number of confirmed cases nears 30,000 (with the real number still suspected of being much higher).
The masks stolen by Dali were on their way to the city of Chongqing. When Chongqing told Dali to give the masks back, the government replied that it was too late, and that the 598 masks had already been distributed to its citizens.
That didn’t sit well with Chongqing, whose government pitched a fit, igniting the backlash on Chinese social media.
“Is that a thermometer in your pocket or are you just happy to see me?”
Shortages are particularly serious in Wuhan, the city with the largest number of cases.
The central government said on Saturday that Premier Li Keqiang, the official charged with overseeing the government’s response to the outbreak, had asked the EU to help China source more masks. The US has reportedly sent supplies as well.
“The market can remain irrational longer than you can remain solvent.”
That has always been true, as is the inverse:
“The market can remain solvent as long as you remain irrational.”
And today we live in a world where:
“The market can remain irrational as long as both *you* and *solvency* are irrational.“
You, the provider of end-demand?! Who cares if you actually buy a product or not?! Solvency? Who needs worry about that?! Who needs to make money from doing business?! Pah!
In our world it doesn’t matter what the creaking geopolitical architecture says; what the tattered socio-economic fabric says; what the economic fundamentals say; or if a company actually makes any money or not. Even natural disasters like a killer virus or the potential collapse of civilization, if you take the ‘Greta’ case, aren’t important.
So say the joyous stock markets. And they must be right because they are all saying it, and I can’t turn on my TV or read the financial press without being reminded of how amazingly amazing said markets are by the functional modern equivalent of Soviet apparatchiks. Indicatively, I asked a friend working on the buy-side the other day how many times their global equity strategist had ever been bearish in their career to date. “Twice, for about five minutes,” was the response. I pointed out that one could just wear a T-shirt that said “Buy equities!” and it would do the same job. But this isn’t about rationality. As with the apparatchiks, it’s about controlling narrative.
All that matters today is that: 1) other people are buying, and; 2) other people are buying because a bunch of unelected technocrats have decided that nobody fails. If you are large enough that is. If you are small, that’s a whole different ballgame – let’s never speak of it again.
In China’s case, this is part of their economic system of course – Socialism with Chinese Characteristics. We all know the key role SOEs play. Yet in the West, this is a new and unrecognised development that one could say dates back to 2008-09, but more accurately started in 1987 even before the Wall came down and communism went under. The revolution arrived in more ways than one and nobody really noticed it (or those that did are ignored). The populism we see angrily calling for wealth redistribution is arguably because we already have institutional global socialism – for the benefit of the rich/asset holders. Asset-rich/income-poor, as we have been saying for years, and long before populism was suddenly ‘a thing’.
Against this institutional structure, just imagine what central banks are going to have to do when this current bubble bursts given where rates are now. Just imagine how much reverse repo is going to be needed. Trillions? Will anyone want to own anything except the safest of government bonds and the USD?
Or perhaps we need never have a market correction again. We can rapidly proceed to that “Dow 36,000!” rallying cry which I seem to recall was floating around just before everything went so horribly wrong back in the mists of time. And then “Dow 360,000!” Why not, indeed? Since when have the rich ever been any good at self-restraint when it comes to enriching themselves? Piketty would argue, “Never.”
Meanwhile, while ruminating on this backdrop please note that we have more deaths from coronavirus, taking us to 560 so far, and the only ‘good’ news being rumours of a potential vaccine in SIX MONTHS at the earliest (meaning all of 2020 is a write-off) and that the day-to-day increase in new cases was actually lower from Tuesday to Wednesday than had been the case until now. Providing that these data are accurate, of course: many sources have suggested that they are not exactly a gold standard – not that we have any kind of gold standard in anything anymore. Indeed, Virgin Australia has just cancelled all flights to Hong Kong, making it the third airline to do so; Hong Kong is quarantining all arrivals from China for 14 days; Shanghai is likely to suspend the upcoming F1 event; and Taiwan has banned all international cruise ships from docking; the list of firms being directly impacted by event cancellations or the outright closure of their stores or plants in China also continues to grow; and meanwhile, in the US we have a case in Wisconsin and 400 people under quarantine.
Of course, none of this matters. It’s just “local colour”. Let’s focus instead on China announcing tariff reductions from 10% to 5% and from 5% to 2.5% on USD75bn of US imports from 14 February, which are economically irrelevant at this stage of virtual lock-down, and should have already been fully priced-in when equity FX markets rallied on the back of the US-China trade deal.
We have the US ADP employment report coming in at a gangbusters nearly 300K – overlooking the fact that the y/y rate of jobs growth for the small business sector is now flat y/y, while construction and manufacturing are negative y/y. Of course, that doesn’t matter. It’s just “detail”.
Finally, we had US President Trump being acquitted, which genuinely is no surprise and doesn’t matter – it was inevitable endpoint markets stuck to fiercely through waves of “Trump is done!” CNN-ery over #Russiagate! and #Ukrainegate! and This-Is-The-End-of-Democracy, etc. On which note, back in Iowa, with 96% reporting Mayor Pete is 0.1% ahead of Bernie Sanders, ensuring he can claim the first caucus victory, albeit tying with him for 11 delegates each. Again there is an ironic inversion from the kind of 99.9% election results we were used to seeing under Socialism – and given the current talk about the 0.1% running the US. Joe Biden got just 15.8% of the vote and zero delegates mind you. But on to New Hampshire!
Data-wise, today already saw a hefty Aussie trade surplus of AUD5,223m, which won’t last when iron ore prices slump, and a slump in Aussie retail sales of -0.5% m/m vs -0.2% expected. In Q4 sales excluding inflation were somehow still up 0.5% vs. 0.3% expected, suggesting revisions or bug deflation. Oh dear, oh dear: perhaps targeting CoreLogic house prices over everything else doesn’t really work for the overall economy, RBA?
But what am I talking about? This is Incorrect Thinking which can see one sent to the market gulag. Buy stocks and houses with both hands, Comrades, and never, ever sell! Only then can we truly achieve Socialism!
Suspicions Fly After DNC Chair Calls For ‘Immediate Recanvass’ Of Iowa Caucus
DNC Chairman Tom Perez has called for an ‘immediate recanvass’ of the Iowa caucuses on Thursday after an app create by former Clinton and Obama staffers botched the count.
“Enough is enough,” tweeted Perez Thursday afternoon, via Politico. “In light of the problems that have emerged in the implementation of the delegate selection plan and in order to assure public confidence in the results, I am calling on the Iowa Democratic Party to immediately begin a recanvass.”
A recanvass is a review of the worksheets from each caucus site to ensure accuracy.
While former South Bend Mayor Pete Buttigieg claimed victory, he was virtually tied with Sen. Bernie Sanders (I-VT) at 26% with 97% of precincts reporting. According to the Associated Press, the race was too close to call.
The recount means that nobody will know exactly who won Iowa going into Friday night’s Democratic debate in New Hampshire, which holds its primary Tuesday.
Perez’s tweet has stoked controversy among many who recall how the DNC stacked the deck against Sanders in the 2016 election amid Hillary Clinton’s de-facto control over the organization.
Perez announcing an Iowa recanvas as it begins to look like Bernie will win is just… wow. I’m really starting to ask myself what they won’t do to stop Bernie from being the nominee.
whatever the hell a recanvas even is, you can guarantee it has more to do with the last 3% of pending caucus results than the reported 97% https://t.co/yqZvKuNGZH
Billionaire Paul Singer Goes Activist On SoftBank, Demands More Buybacks
When legendary hedge fund activist Paul Singer picks a target, he doesn’t usually lose. He has triumphed over governments – Argentina and the DRC – and swallowed up companies – Barnes & Noble. And now he’s setting his sights on a national champion of the world’s third-largest economy.
Though it has been weakened by a string of high-profile portfolio blowups (remember Zume, the robot-pizza company?), SoftBank remains one of Japan’s biggest and most prominent conglomerates, with operations spanning the worlds of tech, telecom and VC investing.
Paul Singer
Singer believes SoftBank is a good deal. He reportedly believes the company’s stock is undervalued thanks to the blowback from the WeWork IPO unraveling. SoftBank reportedly agreed with this sentiment, saying “our shares are deeply undervalued” on Thursday. But we suspect this is where any agreement between Singer and SoftBank Chairman Masayoshi Son end.
As WSJ reports, Elliott wants to make major changes at SoftBank to help boost profits. These include tightening up corporate governance, which would inevitable limit Masa’s influence over the company he founded. Among other things, Elliott wants SoftBank to increase its buybacks right away.
The discussions with the company’s leadership have focused on ways to improve its corporate governance. This includes a call for more transparency and better management of investment decisions at its $100 billion Vision Fund, according to the people. Elliott has pushed for SoftBank to buy back $10 billion to $20 billion in shares and help close a yawning gap between the company’s market value and the value of stakes in companies in which it has invested.
“We are in complete agreement that our shares are deeply undervalued by public investors. SoftBank welcomes feedback from fellow shareholders,” said a SoftBank spokeswoman.
“Elliott has engaged privately with SoftBank’s leadership and is working constructively on solutions to help SoftBank materially and sustainably reduce its discount to intrinsic value,” said an Elliott spokeswoman.
SoftBank’s failures over the past year have reportedly angered many inside the company who blamed Masa for recklessly endangering the company (and their performance-linked compensation).
We suspect Singer will exploit these divisions to help implement his vision for SoftBank – whatever that vision may be. Right now, SoftBank is reportedly one of Elliott’s largest bets, with the firm’s position constituting roughly 3% of SoftBank’s market cap at current prices. Senior Elliott personnel have met with SoftBank management.
The market has spoken: SoftBank ADRs were up 10%+ on the news that Singer is about to walk into the thunderdome with Masa.
However, we’d advise Singer to exercise caution. The Japanese government doesn’t appreciate it when foreigners try to toy with its flagship corporate titans. If Singer isn’t careful, he might soon find himself sitting in Carlos Ghosn’s old cell.
