NFLX Soars After Big Subscriber Beat, Erases Q2 Losses (But Cuts EPS Outlook)

Netflix shares are up 20% after-hours, entirely erasing the losses post Q2 earnings after smashing expectations for Q3 subscriber growth.

  • 3Q total streaming net change +6.96 million, estimate +5.09 million

So that is two quarters in a row that they massively mis-estimated their subscriber growth.

And raising their estimates for Q4:

  • Sees 4Q total streaming net change +9.40 million vs a prior estimate +7.18 million (consisting of international streaming net change +7.60 million, estimate +5.54 million and U.S. streaming net change +1.80 million, estimate +1.64 million)

However, Netflix also warns that in Q4 its operating margin will dip to 5% from 7.5% in the year ago quarter. Hastings says the drop is due to the timing of content spend and a higher mix of original films in Q4 of 2018.

Netflix also cut its 4Q EPS estimate to 23c from a pervious estimate 50c (range 29c to 89c) (Bloomberg data)

Additionally, Netflix sees Free Cashflow closer to -$3B Than to -$4B for 2018 (and next year’s negative Free Cashflow roughly the same as 2018).

Netflix didn’t specify how much money it will spend on programming next year, but it did say it has spent $6.9 billion so far this year. That means the company is on pace to surpass its previous forecast (of $7 billion to $8 billion). And, we note that 3Q streaming content obligations were $18.6 billion.

In the shareholder letter, Netflix addresses its negative free cash flow outlook:

“We recognize we are making huge cash investments in content, and we want to assure our investors that we have the same high confidence in the underlying economics as our cash investments in the past. These investments we see as very likely to help us to keep our revenue and operating profits growing for a very long time ahead.”

Under the hood, operating income is expected to slow as is revenue growth and US contribution profit.

 

And just like that – all Q2 earnings disappointment losses are gone…

Will the market keep ignoring the EPS cut by morning?

via RSS https://ift.tt/2CMzMNf Tyler Durden

China & Japan Dump Treasuries As Dollar’s Reserve Status Slumps To 5 Year Lows

Treasury International Capital flows showed Brazil the biggest buyer of Treasurys in August (followed by Ireland and France), but it was China and ‘ally’ Japan that dumped the most Treasurys in the month…

Brazil is Steve Mnuchin’s best friend…

As China reduced their holdings of US Treasurys for the 3rd straight month…

 

Japan flipped to a seller again in August back to the lowest holdings since October 2011…

 

And while the Saudis were buying in August…

 

the broad trend among other majors has been selling…

 

All of which has driven the USDollar’s share of global central bank reserve to its lowest since 2013

And, according to economist Zach Pandl at Goldman Sachs, Washington’s aggressive policy against Moscow could be the biggest driver behind the recent fall of the dollar’s share of global central-bank reserves, who noted that Russia’s Central Bank sold some $85 billion of its $150 billion holding of the US assets from April through June after the US Treasury Department announced new sanctions on Russian businessmen, companies and government officials.

At the beginning of April, as RT reports, Washington expanded its anti-Russian sanction list, including seven Russian tycoons, 12 companies and 17 senior government officials over alleged meddling in the 2016 US presidential election, and according to Pandl, the co-head of global FX and emerging-market strategy, the US policy of unilateral tariff hikes and sanctions is putting at risk the greenback that is still dominating the global currency reserves.

“The Central Bank of Russia likely sold a large portion of its dollar-denominated assets, and perhaps all of its US Treasuries held by US custodians, and transferred them to euro-denominated and yuan-denominated bonds in the second quarter,” the economist said.

“This would account for more than half of the decline in the share of dollar reserves during the quarter.”

According to the recent data revealed by the International Monetary Fund, share of the US national currency in the global central-bank reserves declined to 62.3 percent in the second quarter with holdings in the euro, yen and yuan gained as a share of allocated reserves.

“Sanction risk appears to explain a significant portion of the observed decline,” the analyst said.

“The dollar’s share of reserve assets could decline further if other large reserve holders were to make similar changes as the Central Bank of Russia over time.”

Remember, nothing last forever…

 

via RSS https://ift.tt/2RUBP6o Tyler Durden

Stocks Soar On Biggest Short-Squeeze Since Trump’s Election

500 Dow points – what else is there (forget the 2000 point drop last week!!)

Before we get started on how bullish the US equity rebound must be… consider this – today is the biggest short-squeeze day since Nov 2016’s post-Trump election rebound…

 

With “Most Shorted” Stocks soaring off last week’s lows…

 

Sparking a panic-bid in Small Caps and Trannies…

 

Before you get too excited – look how dismal volume was today…

 

All the majors bounced off key technical levels…Small Caps remain below their 200DMA…

 

The Dow erased over 50% of last week’s plunge… (but is still well down from the early October highs)

 

In October, it’s still a sea of red led by Small Caps and Dow is least loser…

 

The big banks soared today. Since earnings began, Morgan Stanley is up 5.6% but JPMorgan is unchanged…

 

But BlackRock tumbled as Institutional investors dumped out of equities…

 

FANG Stocks retraced Fib 38.2% of October’s ugliness…

 

While VIX has slumped back from its spike highs, it remains inverted for the 7th day in a row…

 

China stocks were down again overnight…

 

But Europe continued its incessant bid…led by Italy.

 

While stocks soared, bonds were also marginally bid… were RP funds reloading today?

 

With yields pushing back to unchanged on the week…

 

With 10Y remaining in a tight range…

 

Aggregating Stock and Bond returns today was the best day since Feb 6th… (as both stocks and bonds rallied)

 

The Dollar Index broke briefly below 95 but ended unchanged…

 

PBOC fixed Yuan higher overnight and offshore yuan rallied modestly…

 

EM FX soared led by Peso, Lira, and Rand today…

 

Cryptocurrencies were modestly higher on the day

 

PMs faded and WTI gained on the day…

 

Gold ended unchanged and silver modestly lower…

 

 

via RSS https://ift.tt/2pY5gHW Tyler Durden

Boston Dynamics Tries To Calm Fears Over Robot Uprising With Twerking Robo-Dog

Nobody will expect the robot uprising when it happens, especially after Japanese-owned Boston Dynamics dazzles us with twerking, moonwalking robo-dogs of death designed to win us over with their dance routines. 

In fact, if you see one dancing it might be best to just run… 

And while we’re all distracted by dancing robo-dogs, Boston Dynamics’ humanoid robot, Atlas, will undoubtedly use its new parkour skills to flank crowds of mesmerized onlookers before hidden chain guns emerge from its arms to cull the herd. 

Even Jeff Bezos may need to think twice before deploying his own private army of robo-reapers… after all, who knows what they’re going to do once they become sentient? 

Jeff Bezos confidently struts with robot dog at his side

The need for a portable EMP has never been greater. 

via RSS https://ift.tt/2NIyi7O Tyler Durden

“I Think I Can Beat Her”: Lindsey Graham Taking DNA Test To Challenge Elizabeth Warren 

Senator Lindsey Graham (R-SC) seems to have a newfound “Trumpian” swagger of late, all starting with his fiery speech during Justice Kavanaugh’s confirmation – and culminating in several recent clips of the South Carolina Senator giving Democrats what for. 

On Tuesday, Graham “2.0” told Fox & Friends that he plans to take a DNA test to see if he has more Native American DNA than Senator Elizabeth Warren (D-MA). Warren has claimed to be Native American for decades – and was identified by Harvard Law as a “woman of color” – which promoted her as a diversity hire with a “minority background,” prompting Trump to refer to her as “Pocahontas.” 

I’m going to take a DNA test,” said Graham, adding: “I’ve been told my grandmother was part Cherokee Indian. It may all just be talk.” 

He says that he’ll announce the results of his test on the show when they come in, joking “This is my Trump moment. This is reality TV.” 

I think I can beat her,” Graham said, in reference to Warren’s fumbled announcement which revealed that she’s a mere 1/1024th Native American – around half of the average white person. 

Following Warren’s announcement, her critics began ridiculing her for her “grande reveal” intended to disprove President Trump – who said he would donate $1 million to charity if she could prove that she was Native American. 

During a July 5 rally in Montana, Trump said: “I’m going to get one of those little [DNA testing] kits and in the middle of the debate, when she proclaims she’s of Indian heritage… And we will say, ‘I will give you a million dollars, paid for by Trump, to your favorite charity, if you take the test and it shows you’re an Indian.’ And we’ll see what she does. I have a feeling she will say no, but we will hold it for the debates.”

When asked what he thought of Warren’s DNA test, Trump said “who cares” – while denying that he offered $1 million, adding “I didn’t say that… you better read it again.” 

Trump slammed Warren over Twitter Tuesday, tweeting: “Pocahontas (the bad version), sometimes referred to as Elizabeth Warren, is getting slammed. She took a bogus DNA test and it showed that she may be 1/1024, far less than the average American. Now Cherokee Nation denies her, “DNA test is useless.” Even they don’t want her. Phony!” 

Trump then said: “Now that her claims of being of Indian heritage have turned out to be a scam and a lie, Elizabeth Warren should apologize for perpetrating this fraud against the American Public. Harvard called her “a person of color” (amazing con), and would not have taken her otherwise!”  

Cherokee Nation issued a statement on Monday, claiming that Warren’s announcement “makes a mockery out of DNA tests and its legitimate uses while also dishonoring legitimate tribal governments and their citizens, who ancestors are well documented and whose heritage is prove. Senator Warren is undermining tribal interests with her continued claims of tribal heritage.

President Trump jumped on that too, tweeting: “Thank you to the Cherokee Nation for revealing that Elizabeth Warren, sometimes referred to as Pocahontas, is a complete and total Fraud!” 

via RSS https://ift.tt/2AdM9PQ Tyler Durden

Hungarian Central Bank Stuns, Announces 10-Fold Jump In Gold Reserves

Submitted by Ronan Manly, Bullionstar.com,

In one of the most profound developments in the central bank gold market for a long time, the Hungarian National Bank, Hungary’s central bank, has just announced a 10 fold jump in its monetary gold holdings. The central bank, known as Magyar Nemzeti Bank (MNB) in Hungarian, made the announcement in Budapest, Hungary’s capital.

The details of Hungary’s dramatic new gold purchase are as follows:

  • Before this month, Hungary’s central bank held 3.10 tonnes of gold.

  • During the first two weeks of October, the Hungarian National Bank purchased 28.4 tonnes of gold.

  • This gold purchase raised the central bank’s gold holdings from 3.1 tonnes to 31.5 tonnes, i.e. a 1000% or 10-fold increase.

  • The Hungarian central bank had not altered its gold reserves since 1986, i.e. 32 years ago.

  • The 28.4 tonnes of gold was purchased in ‘physical form’, and ‘its repatriation has already taken place‘ to Hungary.

  • Interestingly, Hungary now holds the same amount of gold as it held 70 years ago.

Some of the newly purchased gold bars of the Hungarian central bank. This gold has also been repatriated to Hungary.

In conjunction with today’s announcement in Budapest, the Hungarian National Bank put together a very interesting press release on its website (in Hungarian), which I have translated and edited, and which I think is worth reading in its entirety. Therefore, I have replicated it below, adding some bold and underlining in places. The press release is as follows:

“Budapest, October 16, 2018 – In view of the long-term national and economic strategy goals, the Monetary Council of the National Bank of Hungary has decided to increase the gold reserves of the country.

As a result, in October 2018 the Bank’s precious metal holdings were raised from the previous 3.10 tonnes to 31.5 tonnes, a tenfold increase.

This is the first time that the Hungarian National Bank has bought gold since 1986.

Following the substantial increase in the Bank’s gold reserves in physical form, its repatriation has already taken place. The possession of precious metal within the country is in line with international trends, supports financial stability and strengthens market confidence in Hungary.

In keeping with the historical role of gold, gold remains one of the safest instruments in the world, and, even under normal market conditions, provides a stability and confidence-building function.

With current holdings of 31.5 tonnes gold reserves, valued at approximately $ 1.24 billion, this size of holdings approaches the historical level that was held by our country at the time of the “golden train”. Within the overall international reserves of the Bank, the share of gold reserves has now risen to 4.4%, which corresponds to the average of non-euro area Central and Eastern European countries.

The role of gold reserves in the nation and in the nation’s economy strategy is becoming more and more appreciated while both the possession and the increase of nations’ precious metals holdings appears to be decisive international trends.

This gold purchase process, based on the strategic decision of the Hungarian National Bank, has increased the domestic gold reserves to 31.5 tonnes. The raising of the gold reserve and the returning of the gold in physical form to Hungary took place in the first half of October 2018.

Increasing and repatriating gold reserves can be considered a significant step in economic history. Since the founding of the Hungarian National Bank in 1924, gold reserves have been maintained, but the stock of that gold has fluctuated considerably over the decades, depending on the purpose of why it was held.

At the end of World War II, Hungary received some 30 tonnes of gold bars and gold coins on the MNB’s legendary “gold train” in the Spital am Pyhrn in Austria. This amount was fully returned to the country after the war while providing cover for the introduction of the new currency of the country, the Forint, thus supporting financial consolidation and the stabilization of the post-war Hungarian economy.

At the end of the eighties, Hungary’s gold reserves, driven by short-term investment objectives, fluctuated between 40 and 50 tons and then, at the time of the change of regime (between 1989 and 1992), the ruling central bank executives decided to reduce to a minimum level of about 3.1 tons, which was the level at the end of September 2018.

With the decision of the MNB today in October 2018, the holdings of 31.5 tonnes of gold reserves is now the same as the level of the stabilization period of 1946.

Gold reserves are held for short-term investment and / or long-term stability purposes by national central banks. The current decision of the Hungarian National Bank was led by the goal of stability, and there are no investment concerns behind the holding of gold reserves.

Gold is not only for extreme market environments, structural changes in the international financial system, and deeper geopolitical crises. Gold also has a confidence-building effect in normal times, that is, gold can play a role in stabilizing and defending.  

Gold is still considered to be one of the world’s safest assets, whose characteristics can be attributed to gold’s unique properties such as finite supply of physical gold, and lack of credit and counterparty risk given that gold is not a claim against a specific partner or country.

Over the past few years, more and more countries have decided to continue to play a decisive role in the use of gold as a traditional reserve asset, and have raised their gold reserves. This course of action was followed by Poland [a neighbor of Hungary], in spite of the fact that Poland had already one of the highest gold reserves in the region.

When raising domestic gold reserves to 31.5 tonnes, the MNB also paid attention to the international and regional role played by gold in central bank reserves. As a result, the Hungarian gold reserve have now increased to 4.4% which is in line with average international reserve ratio for gold for the Central Eastern European region central banks. This move from the end of the international rankings to the middle of the rankings has progressed, both in terms of size and proportion of gold reserves.

On the occasion of the announcement, the National Bank of Hungary has also published a “Golden Book”, which gives an insight into decisive historical periods of Hungary’s gold, such as centuries of golden coins, the rescue of our national treasures by gold trains, and the recent homecoming of the country’s gold reserves.”  [end of press release]

Note that Hungary is a member of the European Union (EU), and therefore the Hungarian National Bank is a member of the European System of Central Banks (ESCB). However, as Hungary is not a member of the Eurozone and does not use the Euro, the Hungarian National Bank is not a member central bank of the European Central Bank (ECB). With Hungary recently under attack from the European Parliament in September, the timing of this new gold purchase by Hungary’s central bank in early October is very interesting, to say the least.

Magyar Nemzeti Bank (MNB)

Poland, Austria, Germany, Netherlands, and now Hungary

In addition to this new Hungarian gold purchase, Reuters is reporting that updated data from the IMF shows that Poland continued to increase its gold purchases in September 2018, raising its gold reserve holdings by 4.4 tonnes during the month to 117 tonnes. This follows similar gold purchases that the Polish central bank made in the summer, when the bank bought two tonnes of gold in July and seven tonnes of gold in August.

With almost all of Poland’s gold held at the Bank of England, a relevant question now is how long before Poland also sees fit to repatriate its gold in physical form away from the fractionally-backed LBMA controlled gold trading centre of London. Another of Hungary’s close neighbors, Austria, has itself spent the last 3 years repatriating 140 tonnes of its gold from the Bank of England in London and has nearly completed this repatriation operation now.

Add to this the high-profile Germany Bundesbank gold repatriation program in recent years, and a similar gold repatriation exercise from the Netherlands central bank, and the trend is clear: central banks in Europe have been flocking to shore up their international reserves with gold, because, as in the words of the Hungarian central bank “Gold is still considered to be one of the world’s safest assets”.

via RSS https://ift.tt/2Eqfc7a Tyler Durden

Trump: Saudi Prince “Totally Denied” Knowledge Of Khashoggi Killing, Promised “Complete” Investigation

While Saudi Crown Prince Mohammad bin Salman was meeting with Secretary of State Mike Pompeo in Riyadh..

Pomp

…The two apparently conferenced in the big boss back in Washington to discuss the ongoing diplomatic crisis that has resulted from the murder of Saudi journalist Jamal Khashoggi at the Saudi’s consulate in Istanbul in what was the first conversation between the prince and Trump since the crisis broke out two weeks ago. Trump had previously spoken with KSA’s aging nominal leader, King Salman. Following the conversation, Trump tweeted Tuesday afternoon that he had spoken with MbS during the prince’s meeting with Pompeo, and that MbS had “totally denied” having any knowledge of the killing that is believed to have taken place inside the consulate. Furthermore, MbS told Trump that he had “already opened” and “would rapidly expand” an investigation into the incident, with Trump concluding by promising that “answers would be forthcoming shortly.”

 

The New York Times on Tuesday published a story explaining why the Trump Administration has been so cautious in its response to the killings. Per the story, the US had been depending on Saudi Arabia to increase oil production as part of a plot to sideline Iranian exports after the US reimposes sanctions on Iran on Nov. 4. While the two countries have a mutual interest in hobbling the Iranian oil industry, the Saudis also have leverage to screw over the US and mitigate the impact of its sanctions. Trump’s tweet also followed reports that the Saudis had undertaken the first retaliation against a Western company over executives abandoning its “Davos in the Desert” by pulling a deal with Virgin Hyperloop. Media reports have suggested that the Saudis intend to blame the killing of Khashoggi on “rogue operatives” who had been sent to the embassy to detain or interrogate Khashoggi.

via RSS https://ift.tt/2NIeph7 Tyler Durden

Is A Year-End Rally Still Possible?

Authored by Lance Roberts via RealInvestmentAdvice.com,

For the last few months, we have repeatedly warned about the mounting risks which were being ignored by an increasingly overly complacent, overly exuberant market. Doug Kass had a good compilation of those concerns on Friday:

  • The Fed Chairman seemed more hawkish in tone recently

  • Rising interest rates provide an alternative to stocks and reduce the value of long-dated assets.

  • Higher inflation (input costs) will pressure corporate margins and profitability.

  • A pivot in global monetary policy towards constraint from easing.

  • Policy risks.

  • Midterm election uncertainties.

  • Fiscal policy that has trickled up (not trickling down).

  • Our Administration’s trade policy and (as expressed in my missives this week) reversing the post-WWII liberal order holds multiple social and economic risks.

  • Increasingly leveraged public and private sectors.

  • A leveraged and dangerously weak European banking system who’s left-hand side of the balance sheet is loaded with overvalued assets (like sovereign debt).

  • Submerging emerging markets vulnerable to large U.S. dollar-denominated debt that will be difficult to pay off.

  • China’s economy is faltering – and its financial system is too leveraged.

  • Investor complacency – not a soul in the business media (save the Perma Bears) has warned of a large market markdown since the January highs. 

Of course, the sell-off last week was simply more evidence of the influence of “algos gone wild” when technical levels are broken and the robots all hit the “sell” button at the same time. It was also further acknowledgment of the lack of liquidity due to the surge in ETF issuance which has now created a massive amount of overlap risk in the markets.

When the market goes down, passive fund managers will be forced to sell stocks in order to track the index. This selling will force the market down further and force more selling by the passive managers. This dynamic will feed on itself and accelerate the market crash.” – James Rickards

The same was noted by portfolio manager Frank Holmes as well:

“Nevertheless, the seismic shift into indexing has come with some unexpected consequences, including price distortion. This isn’t just the second largest bubble of the past four decades. E-commerce is also vastly overrepresented in equity indices, meaning extraordinary amounts of money are flowing into a very small number of stocks relative to the broader market. Apple alone is featured in almost 210 indices, according to Vincent Deluard, macro-strategist at INTL FCStone.

If there’s a rush to the exit, in other words, the selloff would cut through a significant swath of index investors unawares. – Frank Holmes

Due to massive amounts of Central Bank interventions, combined with low interest rates, investors have been trained to “buy the dips” and disregard everything else. As Frank noted, that bullish mantra has now led to the “second largest bubble in four decades.” 

(If you consider the amount of debt and leverage that has been piled on – I would argue this is likely the largest bubble ever as it encompasses so many different asset classes at the same time.)

So, is this time different? Should we just “buy the dip” and keep ignoring everything else? 

I am not so sure.

As I noted this past weekend, the technical backdrop to the market has changed for the worse. To wit:

“With the understanding the economic and fundamental background may not be supportive for higher asset prices heading into 2019, the market is also sending a very different technical signal as well. As I showed on Thursdaythis is the FIRST time the market has broken the bullish trend line that began in 2016.

As shown below, that break of the bullish trend pulls in a new dynamic of potential market action over the next several months which is more akin to a market topping process than the continuation of the previous bullish trend.”

Given the short-term OVERSOLD condition of the market, we want to use rallies to rebalance risks in portfolios.

#1 – A rally back to the bullish trend line will be used to reduce risk (ie. raise cash) in portfolios by selling lagging positions and rebalancing risk in winning positions. Rule: sell losers and let winners run. 

We fully expect an initial rally to fail as investors caught in the sell-off will be looking for an opportunity to sell. However, if that sell-off fails to hold support at the recent lows it will suggest a bigger corrective action is in process. We will be looking to reduce equity risk further, raise cash, evaluate portfolio allocation models. 

#2– If the sell-off following a failed rally holds support at the recent lows, and turns up, such will suggest a rally back to either the January highs or all-time highs. NOTE: A rally back to all-time highs following a corrective pullback will again retest the underside of the bullish trend line from the 2016 lows. Such remains a ‘bearish’ backdrop from equity risk going into 2019 where economic and earnings data is expected to slow further. We will use any rally back to those levels to reduce risk as noted in #1.

#3– If the rally from the recent lows fails at the January highs we will again use that opportunity to reduce equity risk and rebalance portfolio allocations.”

The chart below pulls that analysis back to the 2015-2016 correction where you can see the trend more clearly.

The nominal “new highs” in 2015 were not confirmed by a strengthening cumulative advance-decline line which suggested a correction was likely. The same non-confirmation was also evident with the most recent nominal new highs in September. As noted above, the break below the bullish trend line, combined with the downside break of the consolidation from the January highs, changes the entire tenor of the market heading into the end of the year.

When we switch from weekly to daily analysis, we can update our ongoing “pathway analysis” which we have been producing each week since January. The following chart is updated through Monday’s close.

No matter how many different paths I trace out, the possibilities of the market rallying back to new all-time highs this year have been greatly reduced. As noted, all four possibilities continue to suggest a broader topping pattern in place through the end of this year.

Pathway #1: The most bullish outcome would be from a strong earnings season, combined with a pickup in economic activity from the two most recent Hurricanes, which pushes markets back to resistance near all-time highs. While this is certainly entirely possible, there is a tremendous amount of technical damage to overcome between current levels and that high point. (10%)

Pathway #2a: The market rallies from current levels to the January high. Again, this would likely be fueled by a stronger than expected earnings season and a pickup in economic activity. However, the run to the January highs is capped by that resistance but the market finds support at the 62% Fibonacci retracement level just below. (30%) 

Pathway #2b: The most feasible rally from current oversold levels is back to the 50% Fibonacci retracement of the recent decline. The market gets back to very overbought conditions and the market begins to trade between the 200-dma and/or the 32% Fibonacci retracement level. (30%)

Pathway #3: The biggest concern, given the technical deterioration, the threat of weaker economic and earnings growth, and the possibility of a Mid-term election upset, is a rally back to the 32% Fibonacci retracement level which coincides with the previous resistance at the May highs. A failure at the point would likely lead to a sell-off that pushes the markets back to retest last week’s intra-day lows.  Lower lows become a real threat. (30%)

Here is the bottom line:

While a year-end rally is certainly feasible, the probability of the markets setting new highs has been markedly reduced. 

As I have repeatedly discussed over the last several weeks, prudent portfolio management practices reduce inherent portfolio risk thereby increasing the odds of long-term success. Any rally that occurs over the next few days from the current levels SHOULD be used as a “sellable rally” to rebalance portfolios and related risk. These practices align with our most basic investment rules/philosophies as noted above.

  • Sell positions that simply are not working. If they are not working in a strongly rising market, they will hurt you more when the market falls. Investment Rule: Cut losers short.

  • Trim winning positions back to original portfolio weightings. This allows you to harvest profits but remain invested in positions that are working. Investment Rule: Let winners run.

  • Retain cash raised from sales for opportunities to purchase investments later at a better price. Investment Rule: Sell High, Buy Low

Remember, we can ALWAYS add money back into the markets once the evidence of the continuation of a bull market is available.

Until then, we are going to err on the side of caution.

via RSS https://ift.tt/2pVSSbi Tyler Durden

Saudi Retaliates, Pulls HyperLoop Funding As Silicon Valley Startups Quake

Anybody who understands the temperament of Mohammad bin Salman probably suspected that the Saudi Crown Prince wasn’t just going to throw his hands up in despair when confronted by the embarrassing wave of cancellations by Western business executives whom he had enlisted to attend his Future Investment Initiative – better known as “Davos in the Desert.” And just hours after a bevy of banking executives became the latest group to publicly state that they would be skipping the conference, the Saudis have struck back with what the Financial Times described as “the first concrete retaliation by Saudi to the wave of Western executives deciding not to attend FII and criticising Saudi over Mr Khashoggi’s case.”

Saudi Arabia has pulled a planned deal with Virgin Hyperloop One after Sir Richard Branson said early last week that he would temporarily cut ties with the kingdom until more details about the death of regime insider-turned-critic Jamal Khashoggi – whose Oct. 2 murder at the hands of Saudi agents inside the kingdom’s consulate in Istanbul has sparked a diplomatic crisis with global implications – have been unearthed.

Saudi

News of the retaliation is breaking with a slight delay, as the FT’s anonymous sources said that the Saudis and Virgin had been  planning to sign a deal for a new feasibility study at a ceremony during the FII. However, within hours of Branson saying he would back away from the Saudis (he is a minority shareholder in the Virgin hyperloop project) the kingdom sent Hyperloop a notice disinviting them from the conference – effectively killing a deal that had been the result of more than 18 months of careful negotiations with the Saudi transportation ministry.

Fortunately for Hyperloop, Saudi Arabia isn’t the only game in town. In fact, Virgin Hyperloop has more than half a dozen feasibility studies under way from Dubai to Texas and Ohio. The company is also conducting more advanced studies in India, but has yet to pursue a construction contract.

SV

MbS visited Virgin Galactic during his tour of Silicon Valley earlier this year. He declared at the time that bringing a Hyperloop to Saudi Arabia could be an important “catalyst for change”.

Crown Prince Mohammed bin Salman in March visited the Virgin Galactic base during his US tour, where he was shown a Hyperloop “pod” painted in the colours of the Saudi flag. Prince Mohammed at the time said the transport system could be a catalyst for change in the kingdom.

The technology, originally conceived by Elon Musk, envisions pods running at speeds of up to 700 miles per hour through vacuum tubes, potentially cutting travel times from Riyadh to Jeddah from 10 hours to 76 minutes.

Virgin Hyperloop One, which is also backed by Dubai Ports operator DP World, still needs to get the financial funding needed to bring the technology out of the realm of science fiction.

Hyperloop executives have tried to revive talks despite the controversy, but their attempts have been rebuffed.

Company executives, who are trying to re-engage with the Saudi government, have been told not to attend the event, the people said. Virgin Hyperloop One, which declined to comment on its business relationship with the kingdom, confirmed that it would not be attending the conference.

The Hyperloop fiasco is just the latest sign that Silicon Valley has a ‘Saudi Arabia problem’ – as the New York Times characterized it in a recent op-ed. But the diplomatic crisis ignited by the extrajudicial killing of Saudi journalist Jamal Khashoggi has inspired some intrepid journalists at the Wall Street Journal to take a closer look at the kingdom’s relationships and investments in the US tech industry. And as it turns out, for a place that holds itself up as a bastion of progressive values, the Bay Area’s dependence on investments from a medieval theocracy where women were only just granted the right to drive is somewhat surprising. The Kingdom, according to a WSJ analysis, is the single largest investor in Silicon Valley startups, either through its sovereign wealth fund, its investment in the Softbank Vision Fund, or some other entity. Since mid-2016, Saudi has directed some $11 billion to US startups, most notably in Uber.

This gives the kingdom plenty of latitude to inflict pain on the US via a channel that has nothing to do with oil prices. The only question now is whom will the kingdom retaliate against next?

 

via RSS https://ift.tt/2EoV1X3 Tyler Durden

Pat Buchanan Asks “Should The US-Saudi Alliance Be Saved?”

Authored by Patrick Buchanan via The Unz Review,

Over the weekend Donald Trump warned of “severe punishment” if an investigation concludes that a Saudi hit team murdered Washington Post columnist Jamal Khashoggi in the Saudi consulate in Istanbul.

Riyadh then counter-threatened, reminding us that, as the world’s largest oil exporter, Saudi Arabia “plays an impactful and active role in the global economy.”

Message: Sanction us, and we may just sanction you.

Some of us yet recall how President Nixon’s rescue of Israel in the 1973 Yom Kippur War triggered a Saudi oil embargo that led to months of long gas lines in the United States, and contributed to Nixon’s fall.

Yesterday, a week after Jared Kushner had been assured by his friend Crown Prince Mohammed bin Salman that Khashoggi walked out of the consulate, Trump put through a call to King Salman himself.

According to a Trump tweet, the king denied “any knowledge of whatever may have happened ‘to our Saudi Arabian citizen.’”

Trump said he was “immediately” sending Secretary of State Mike Pompeo to Riyadh to meet with the king on the crisis. The confrontation is escalating. Crown Prince Mohammed and King Salman have both now put their nation’s honor and credibility on the line.

Both are saying that what the Turks claim they can prove — Khashoggi was tortured and murdered in the consulate, cut up, and his body parts flown to Saudi Arabia — is a lie.

For Trump and the U.S., this appears a classic case of the claims of international morality clashing with the claims of national interest.

The archetype occurred in the mid-1870s when Ottoman Turks perpetrated a slaughter of Bulgarian Christians under their rule.

Former Prime Minister William Gladstone set Britain ablaze with a pamphlet titled, “The Bulgarian Horrors and the Question of the East,” calling for the expulsion of the Turks from Europe.

Prime Minister Benjamin Disraeli and Queen Victoria were apoplectic. For they were relying on the Turks to block the encroachment of Czarist Russia into the Eastern Balkans and down to the Turkish Straits.

Disraeli prevailed. The Brits put morality on the shelf.

For the U.S., morality and interests collided when FDR recognized the Bolshevik regime of Joseph Stalin in 1933, even as Stalin’s agents were starving to death millions of Ukrainian peasants and landowners.

Foreign policy moralists also took a holiday to cheer Nixon for flying to Peking and toasting Mao Zedong, even as Chairman Mao’s Red Guards were carrying out the national pogrom known as the Cultural Revolution.

Questions arise: If Khashoggi was assassinated and the order came from the royal family, does that make the Saudis morally unacceptable to us as allies or partners in the Middle East? And if it does, how do we justify our Cold War ties to autocrats such as Chile’s Gen. Pinochet, South Korea’s Gen. Park Chung-hee, the Philippines’ Ferdinand Marcos, or the Shah of Iran?

How did Franklin Roosevelt handle such associations? “He may be an SOB,” FDR said of one Caribbean dictator, “but he’s our SOB.”

During World War II, when the Germans uncovered in the Katyn Forest a vast gravesite containing the remains of thousands from Poland’s officer corps, dating to Stalin’s occupation, Poles in Britain came to Prime Minister Churchill to ask for an investigation.

Churchill, for whom Stalin was by now an indispensable ally, replied dismissively: “There is no use prowling round the three-year-old graves of Smolensk.”

Nor is it only during wartime that the U.S. has associated with authoritarians with repellent human rights records.

The U.S. maintains a treaty alliance with the Philippines of President Rodrigo Duterte, who has approved the extrajudicial killing of drug dealers, thousands of whom have been murdered.

Gen. el-Sissi came to power in Cairo in a military coup that ousted an elected government headed by a leader of the Muslim Brotherhood, who is, along with thousands of Brotherhood members, now in prison.

Since the coup attempt in NATO ally Turkey in 2017, President Recep Erdogan has imprisoned thousands, including more journalists than any country on earth.

Last week came reports that China has arrested the head of Interpol, and has indeed been operating an archipelago of re-education camps in its west to purge the ethnic and religious beliefs of the Uighur people.

As for Saudi Arabia, members of Congress are said to be readying sanctions to impose on the Saudi regime if it is proven Khashoggi was killed on royal orders.

However, which would be a greater violation of human rights: the sanctioned killing of a political enemy of the regime or 10,000 dead Yemenis, including women and children, and millions facing malnutrition and starvation in a Saudi war of aggression being fought with the complicity and cooperation of the United States?

Rather than resist Congress’ proposed sanctions, President Trump might take this opportunity to begin a long withdrawal from decades of entanglement in Mideast wars that have availed us nothing and cost us greatly.

via RSS https://ift.tt/2ykjkzY Tyler Durden