Tag: finance

Once the family/gang has carved out their turf, they then turn to controlling and exploiting the resoruces (either natural or human) inside of it. How different is today’s President-Congress-Governor-Mayor-Worker relationship to the mafia’s boss-soldiers-associates model?

 

Is it simply ironic that the term “bankster” has become so ingrained? As Santiago Capital’s Brent Johnson explains in this brief presentation… if you can keep your mind open, today’s business leaders and politicians are no different as they run protection, extortion, control the flow of ‘drugs’, and manage ‘crime’.

 

 

Is it possible, he asks, that we are all collectivley empathizing and sympathizing (and in many cases defending) the very system and the very people that are holding us captive?

 

via Zero Hedge http://ift.tt/1nOOLDL Tyler Durden

After being rebuffed by SnapChat last year to the tune of $3 billion, Facebook decided that growth at any price was all that matters by blowing more than 5 times as much on the purchase of privately-owned WhatsApp. For $16 billion ($4bn cash and $12bn stock), Facebook gets 320 million active WhatsApp users at a whopping $50 per user. Why whopping? Because a few days ago Rakuten bought Viber's 300 million users for $900 million, or about $3 a pop, and about ten times less than what Facebook just paid. Not surprisingly FB shareholders are not happy. The company, which allows users to send messages over the web for free (as opposed to traditional text messages which most Telcos are now offering for free also) "is on a path to connect 1 billion people," Zuckerberg said, adding that they are "adding 1 million people per day…" It seems, as we noted previously, that the real bubble is in private markets not public.

The WhatsApp response:

Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us.

 

Today we are announcing a partnership with Facebook that will allow us to continue on that simple mission. Doing this will give WhatsApp the flexibility to grow and expand, while giving me, Brian, and the rest of our team more time to focus on building a communications service that’s as fast, affordable and personal as possible.

 

Here’s what will change for you, our users: nothing.

 

WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

 

On a personal note, Brian and I couldn’t be more proud to be part of a small team of people who, in just under five years, built a communication service that now supports over 450 million monthly active users worldwide and over 320 million daily active users. They have helped re-define and revolutionize communication for the 21st century, and we couldn’t be more grateful.

 

Our team has always believed that neither cost and distance should ever prevent people from connecting with their friends and loved ones, and won’t rest until everyone, everywhere is empowered with that opportunity. We want to thank all of our users and everybody in our lives for making this next chapter possible, and for joining us as we continue on this very special journey.

Based on the valuations below, it is no wonder shareholders are selling…

 

As we noted previously, the real dot-com bubble is just outside the public view…

While the world of speculative capital is focused intently on the Twitter and Facebook #Ref/0 fundamental valuations in the publicly-traded equity markets, as the WSJ illustrates, the real dot-com 2.0 bubble is occurring in the private markets. Today there are more than 30 companies in the US, Europe, and China that are valued at $1 billion or more by venture-captal firms and the club is becoming less exclusive as venture capitalists (in their ever growing speculative fervor) funnel large sums of capital into start-ups.

 

Click image for interactive and sortable WSJ infographic

 

 

In summary:

A few days ago Rakuten bought Viber for $900 million. Viber has 300 million users… $3 per user

And today Facebook bought WhatsApp for $16bn; WhatsApp has 320 million active users… $50 per user!

via Zero Hedge http://ift.tt/1fhRYee Tyler Durden

Submitted by Simon Black of Sovereign Man blog,

It’s pretty ironic that I have two visitors right now in my home– one from Ukraine and the other from Thailand.

Both of their countries are in the midst of chaotic turmoil right now, characterized by riots and violent clashes between protestors and police.

It reminds me of the old quote from Louis XVI upon being informed in 1789 that the French people had stormed the Bastille. The King asked, “Is it a revolt?”

“No, sire,” the duke replied, “It is a revolution.”

People in both of these countries have reached their breaking points. In Ukraine especially, economic conditions have deteriorated in almost spectacular form.

History is packed with examples of how people rise up in the streets whenever economic conditions deteriorate.

The French Revolution in 1789 is one famous example; the French people finally reached their breaking points after nearly starving to death.

The 2011 Egyptian Revolution and entire Arab Spring movement is a similar example.

In fact, a 2011 study from the New England Complex Systems Institute showed a clear statistical correlation between social unrest and (specifically) food prices. The higher food prices get, the greater the chances of riots and revolution.

This is not a condition exclusive to the developing world; it is a fundamental human trait to provide for one’s family.

And while human beings will take a lot of crap from their governments– stupid regulations, higher taxes, erosion of freedom, and even inflation– the moment that a man is no longer able to put food on the table for his family, revolution foments.

Europe and the US are not immune to this. And with deteriorating wealth gaps, 50%+ youth unemployment, unchecked government power, and a system that disproportionately favors the elite, the conditions are ripe.

The main difference is that Westerners have been brainwashed into believing that the civilized people voice their grievances in a voting booth rather than doing battle in the streets.

It’s a false premise. Unfortunately, so is violent revolution.

As my dictionary so perfectly defines, “revolution” has two meanings.

First, it can denote an overthrow of a sitting government, whether violent or ‘bloodless’.

But in celestial terms, ‘revolution’ denotes a complete orbit around a fixed axis. In other words, after one revolution, you end up right back where you started.

So whether violent or non-violent, or whether in a voting booth or on the streets, revolutions put a country right back where it started.

In the French revolution, people traded an absolute monarch in Louis the XVI for a genocidal dictator in Robespierre for a military dictator in Napoleon.

In 1917, the Russians traded Tsarist autocracy for Communist autocracy.

In 2011, Egyptians traded Hosni Mubarak for Mohamad Hussein Tantawi (who subsequently suspended the Constitution), for Mohamed Morsi (who as President awarded himself unlimited powers), for yet another coup d’etat.

All of this is because of a knee-jerk reaction– ‘if our country is having major problems, we should throw the bums out and let the man on the white horse take over.’

This creates a never-ending cycle in which the fundamental problems perpetuate.

It’s not about any single person or group of people. It is the system itself that needs changing.

In our system we award a tiny elite with the power to kill, steal, wage war, educate our children, and conjure unlimited quantities of paper money out of thin air.

This is just plain silly. And antiquated. We’re not living in the Middle Ages anymore where we need kings to tell us what to do, knights to keep the peace, and serfs to do all the work (and enrich the nobles).

Yet this is not too far from the system we have today.

The real answer is within ourselves. As Ron Paul told our audience in Santiago last year, become less dependent on the government and more self-reliant:

 

This idea is beginning to resonate with more and more people who are increasingly disgusted with the system… and all parties.

With our modern technology, transportation, and access to information, we have all the tools available to do this.

via Zero Hedge http://ift.tt/1jIvyDa Tyler Durden

Submitted by Simon Black of Sovereign Man blog,

It’s pretty ironic that I have two visitors right now in my home– one from Ukraine and the other from Thailand.

Both of their countries are in the midst of chaotic turmoil right now, characterized by riots and violent clashes between protestors and police.

It reminds me of the old quote from Louis XVI upon being informed in 1789 that the French people had stormed the Bastille. The King asked, “Is it a revolt?”

“No, sire,” the duke replied, “It is a revolution.”

People in both of these countries have reached their breaking points. In Ukraine especially, economic conditions have deteriorated in almost spectacular form.

History is packed with examples of how people rise up in the streets whenever economic conditions deteriorate.

The French Revolution in 1789 is one famous example; the French people finally reached their breaking points after nearly starving to death.

The 2011 Egyptian Revolution and entire Arab Spring movement is a similar example.

In fact, a 2011 study from the New England Complex Systems Institute showed a clear statistical correlation between social unrest and (specifically) food prices. The higher food prices get, the greater the chances of riots and revolution.

This is not a condition exclusive to the developing world; it is a fundamental human trait to provide for one’s family.

And while human beings will take a lot of crap from their governments– stupid regulations, higher taxes, erosion of freedom, and even inflation– the moment that a man is no longer able to put food on the table for his family, revolution foments.

Europe and the US are not immune to this. And with deteriorating wealth gaps, 50%+ youth unemployment, unchecked government power, and a system that disproportionately favors the elite, the conditions are ripe.

The main difference is that Westerners have been brainwashed into believing that the civilized people voice their grievances in a voting booth rather than doing battle in the streets.

It’s a false premise. Unfortunately, so is violent revolution.

As my dictionary so perfectly defines, “revolution” has two meanings.

First, it can denote an overthrow of a sitting government, whether violent or ‘bloodless’.

But in celestial terms, ‘revolution’ denotes a complete orbit around a fixed axis. In other words, after one revolution, you end up right back where you started.

So whether violent or non-violent, or whether in a voting booth or on the streets, revolutions put a country right back where it started.

In the French revolution, people traded an absolute monarch in Louis the XVI for a genocidal dictator in Robespierre for a military dictator in Napoleon.

In 1917, the Russians traded Tsarist autocracy for Communist autocracy.

In 2011, Egyptians traded Hosni Mubarak for Mohamad Hussein Tantawi (who subsequently suspended the Constitution), for Mohamed Morsi (who as President awarded himself unlimited powers), for yet another coup d’etat.

All of this is because of a knee-jerk reaction– ‘if our country is having major problems, we should throw the bums out and let the man on the white horse take over.’

This creates a never-ending cycle in which the fundamental problems perpetuate.

It’s not about any single person or group of people. It is the system itself that needs changing.

In our system we award a tiny elite with the power to kill, steal, wage war, educate our children, and conjure unlimited quantities of paper money out of thin air.

This is just plain silly. And antiquated. We’re not living in the Middle Ages anymore where we need kings to tell us what to do, knights to keep the peace, and serfs to do all the work (and enrich the nobles).

Yet this is not too far from the system we have today.

The real answer is within ourselves. As Ron Paul told our audience in Santiago last year, become less dependent on the government and more self-reliant:

 

This idea is beginning to resonate with more and more people who are increasingly disgusted with the system… and all parties.

With our modern technology, transportation, and access to information, we have all the tools available to do this.

via Zero Hedge http://ift.tt/1jIvyDa Tyler Durden

The reason why Tesla is soaring currently after hours, is because this momo story stock just unveiled the next chapter of its carefully spun story. To wit:

The first Model S deliveries to China are scheduled for this spring. We plan to make substantial investments in China this year as we add new stores, service centers and a Supercharger network. Already, the Beijing store is our largest and most active retail location in the world.

…

We expect to deliver over 35,000 Model S vehicles in 2014, representing a 55+% increase over 2013. Production is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year as we expand our factory capacity and address supplier bottlenecks. Battery cell supply will continue to constrain our production in the first half of the year, but will improve significantly in the second half of 2014.

 

First quarter production is expected to be about 7,400 vehicles, which is significantly higher than the prior quarter production of 6,587 cars. However, as the number of cars in transit to Europe and Asia must grow substantially to support those markets, we plan to deliver approximately 6,400 vehicles in Q1. Deliveries will grow dramatically in future quarters as the logistics pipeline fills.

 

This year, we expect automotive gross margin to increase to about 28% (non-GAAP and GAAP) in Q4 through a series of small design improvements, better supplier prices and economies of scale. Q1 gross margin should increase very slightly from Q4. For the remainder of the year, gross margin should improve at a faster pace.

…

Very shortly, we will be ready to share more information about the Tesla Gigafactory. This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three years. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery packs.

In other words: lots of bleary eyed optimism about the elimination of production bottlenecks in “the second half of 2014”, and that US consumers will be undeterred by new and some would say far “cooler” competitive EV offerings by such brands as BMW, and instead keep buying a car which roughly every month has to fight another flaming car PR disaster in the media. And of course China, because other luxury retailers have been doing so great in the country in recent months.

It remains to be seen just how much of this “story” pans out. In the meantime, we focus on the topic we touched on in November, namely the company’s desire to make up not only its EPS line as a non-GAAP line time (everyone else does it, so it must be ok), but that starting in Q2 2013, the company also announced non-GAAP revenues. Below are the thoughts of Bloomberg’s Jon Weil which we paraphrased at the time:

Most companies that play the non-GAAP game goose their numbers by excluding expenses. Tesla does this, too. It backs out stock-based compensation, for example. But the biggest kick to its non-GAAP earnings comes from an increase in top-line revenue.

 

The company reported third-quarter non-GAAP revenue of $602.6 million, which was about 40 percent more than its GAAP revenue. It achieved such a boost by transforming $171.2 million of liabilities into sales.

 

Here’s how it worked. In April, Tesla started a new financing program under which customers have the option to sell their vehicles back to the company after three years for guaranteed minimum amounts. The accounting rules say Tesla can’t recognize all of the revenue immediately in those instances and must account for such transactions as leases. So after Tesla takes customers’ cash, it records liabilities for “deferred revenue” and “resale value guarantee” on its balance sheet.

 

Mahoney noted two main problems with including so much of those amounts in non-GAAP revenue. Some customers wouldn’t have chosen Tesla cars were it not for the financing program. So the non-GAAP revenue isn’t comparable to Tesla’s sales before the program began, and it may overstate the true growth and demand. Plus, by adding back the resale-value guarantee, the company “assumes that nobody is going to return the vehicle, for purposes of the non-GAAP revenue,” he said.

 

Lots of companies use gimmicky benchmarks in their earnings releases. What makes Tesla special is that it behaves as if it doesn’t know the proper way to present its non-GAAP numbers. In an ironic twist, two attorneys at Wilson Sonsini Goodrich & Rosati, which helped take Tesla public in 2010, penned a lengthy article in 2008 explaining the legal requirements and best practices for earnings releases; it’s still on the law firm’s website.

 

“GAAP comparison numbers in an earnings release must be set forth with equal or greater prominence to the non-GAAP numbers,” attorneys Steven Bochner and Richard Cameron Blake wrote. “For instance, if an issuer announces GAAP and non-GAAP earnings per share in its press release, it should report the GAAP earnings per share prior to the non-GAAP earnings per share.”

 

The bigger concern here should be what some investors call the “cockroach theory”: Where there is one problem, there probably are more. Tesla has disclosed compliance failures before. In March, its management concluded that Tesla’s ‘‘internal control over financial reporting was ineffective as of Dec. 31, 2012.’’ Its auditor, PricewaterhouseCoopers LLP, concurred. In a related matter, Tesla had to restate its cash-flow numbers for much of 2011 and 2012. In its latest quarterly report, filed last week, Tesla said its controls still weren’t effective as of Sept. 30.

And the conclusion:

None of these flubs has been especially damaging. Yet taken together, they suggest a company that lacks basic skills in accounting and disclosure, which could be a serious problem for a young manufacturer with a $17 billion stock-market value that loses money and trades for 9.5 times its revenue for the past four quarters. The next time Tesla messes up because of poor controls, the consequences could be worse.

 

As Tesla said in its latest annual report: ‘‘If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on the price of our common stock.’’

So while everyone else focuses on the seemingly infinite upside that a company which in a priced to perfection world will deliver 35,000 Model S cars (10,000 less than the number of F-150s Ford sold in January) , we care more about far simpler, grassroots concepts. Like unfudged revenues and earnings.

Here they are.

Revenues:

 

EPS:

 

In summary: non-GAAP P/E of 259x, and GAAP P/E of Div/0, as GAAP Market Cap/Sales is a “conservative” 12.4x. Good luck with that growth. You are going to need it.

via Zero Hedge http://ift.tt/1jdoVcu Tyler Durden

A glimmer of good news:

• *UKRAINE PROTEST CAMP WON’T BE STORMED TONIGHT, OPPOSITION SAYS
• *UKRAINE GOVT, OPPOSITION AGREE ON TRUCE, YANUKOVYCH SAYS
• *UKRAINE TALKS AIMED AT STOPPING BLOODSHED, YANUKOVYCH SAYS

Though sadly we have seen this before…

 

President of Ukraine Viktor Yanukovych held a meeting with Chairman of the Verkhovna Rada of Ukraine Volodymyr Rybak and members of the Working Group on the Settlement of Political Crisis.

The meeting was attended by Head of the Presidential Administration of Ukraine Andriy Kliuyev, First Deputy Head of the Presidential Administration of Ukraine Andriy Portnov, Acting Minister of Justice Olena Lukash and leaders of opposition parties Arseniy Yatsenyuk, Vitali Klitschko, Oleh Tiahnybok.

Following the meeting, the parties declared:

1. Truce
2. Beginning of negotiations aimed at cessation of bloodshed and stabilization of the situation in the country for the sake of civil peace.

via Zero Hedge http://ift.tt/1nOBnPZ Tyler Durden

The last week or two appeared to be dominated by hope that the transitory weakness in data was weather-related, the recovery was all good, and that the Fed would un-taper to give it a helping hand just in case… Today's FOMC minutes made it clear the latter was not the case and today's macro data made it clear this weakness is not just the weather. With US macro data at six-month lows, the last 2 days saw credit and equity protection markets well bid – even as underlying stocks surged back to unchanged on the year. However, between Fed talking-heads and the FOMC minutes, hope faded… stocks tumbled, credit widened, Treasury yields surged higher, the USD jumped, and precious metals were slammed into the red on the week. Volume – surprise surprise – was the highest in over a week.

 

Not a pretty day as not even the inflamous JKPY carry trade could hold us back…

 

What did VIX know?

 

And What did Credit know?

 

Gold and Silver were pushe dnotablyu lowerr (even as Oil surged

 

Bond yields surged back to almost unchanged on the week…

 

Charts: Bloomberg

Bonus Chart: US Macro at six-month lows…

 

via Zero Hedge http://ift.tt/1fhDVoM Tyler Durden

With inventories of unsold cars at or near record highs and the Big 3 up to their old tricks of channel-stuffing (as we have vociferously exposed), it seems time has run out for the US manufacturing renaissance. The 'if we build cars, they will come and buy them' mentality has hit a literal wall as not only are dealers bloated with stock, the buyers have dried up. As the following chart shows, the average number of days it takes to sell a car in the US has surged recently after 9 months of improvement. This is the worst (slowest) pace of sales since August 2009. Not what the 'recovery' faithful wanted to hear…

Not a great sign for US consumption…

(h/t @TomOrlik)

 

And of course, with channels stuffed at almost record levels…

Confused why the various US manufacturing indices have been on a tear in the past few months? Perhaps the fact that GM dealer lots are so full of cars they just couldn't wait for even more deliveries has something to do with it. Which is also why in addition to reporting sales numbers for November that were largely in line with expectations, amounting to 212,060 (even if total Chevy Volts sold YTD of 20.7K were -0.6% less than in the same period in 2012), or 13.7% more than last year (estimated called for 13.% increase), of which a whopping 51,705 was in the form of "channel stuffed" units to be parked on dealer lots.

 

In fact, as the chart below shows, in the past three months, GM channel stuffing has exploded and soared by 150K units (the most ever for a 3 month period) from 628.6K to 779.5K. This represents the second highest amount of channel stuffing and is lower only compared to the 788.2K units "stuffed" exactly one year ago.

 

 

 

Next, price cuts, more allowances, lower subprime acceptance standards? Anyone else feel deja vu all over again?

via Zero Hedge http://ift.tt/1gH8ip2 Tyler Durden

With inventories of unsold cars at or near record highs and the Big 3 up to their old tricks of channel-stuffing (as we have vociferously exposed), it seems time has run out for the US manufacturing renaissance. The 'if we build cars, they will come and buy them' mentality has hit a literal wall as not only are dealers bloated with stock, the buyers have dried up. As the following chart shows, the average number of days it takes to sell a car in the US has surged recently after 9 months of improvement. This is the worst (slowest) pace of sales since August 2009. Not what the 'recovery' faithful wanted to hear…

Not a great sign for US consumption…

(h/t @TomOrlik)

 

And of course, with channels stuffed at almost record levels…

Confused why the various US manufacturing indices have been on a tear in the past few months? Perhaps the fact that GM dealer lots are so full of cars they just couldn't wait for even more deliveries has something to do with it. Which is also why in addition to reporting sales numbers for November that were largely in line with expectations, amounting to 212,060 (even if total Chevy Volts sold YTD of 20.7K were -0.6% less than in the same period in 2012), or 13.7% more than last year (estimated called for 13.% increase), of which a whopping 51,705 was in the form of "channel stuffed" units to be parked on dealer lots.

 

In fact, as the chart below shows, in the past three months, GM channel stuffing has exploded and soared by 150K units (the most ever for a 3 month period) from 628.6K to 779.5K. This represents the second highest amount of channel stuffing and is lower only compared to the 788.2K units "stuffed" exactly one year ago.

 

 

 

Next, price cuts, more allowances, lower subprime acceptance standards? Anyone else feel deja vu all over again?

via Zero Hedge http://ift.tt/1gH8ip2 Tyler Durden