Tag: finance

Bitcoin is up 8 days in a row, pushing back above gold, shaking off its 'fork' concerns and testing towards $1300 today as the SEC announces that it intends to review its decision to reject a bitcoin ETF proposed by the Winklevoss twins.

As previously reported by CoinDesk, the SEC shot down a bid by the Winklevoss brothers to get the ETF listed on the Bats BZX exchange in March. Specifically, the agency declined a rule change proposed by Bats that would have cleared the path for the ETF, citing a lack of market surveillance and regulation. Less than two weeks after the decision was handed down, Bats petitioned for a review – a move that the agency has now approved.

The SEC said yesterday that it had approved the petition, opening the door to further comment between now and 15th May. The agency said:

"Pursuant to Rule 431 of the Rules of Practice,11 BZX's petition for review of the Disapproval Order is granted. Further, the Commission hereby establishes that any party to the action or other person may file a written statement in support of or in opposition to the Disapproval Order on or before May 15, 2017."

The move comes weeks after the SEC rejected another bitcoin-tied ETF, proposed by SolidX, that would have listed on the NYSE Arca exchange if approved.

Full note below:

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With the barnburner rally in equities today, the just concluded TSY auction of $26 billion in 2Y paper could have been excused if it disappointed. It did not, in fact it may have been the strongest 2Y auction in years with some truly blistering results.

• The high yield of 1.280% stopped through the 1.284% When issued by 0.4bps, higher than the previous 6 auction average of 1.154%.
• The bid to cover of 2.85 was well above last month’s 2.727, the 6 month average of 2.66 and was the highest since May 2016.
• The internals were just as strong, with Directs taking down 11.4%, as Indirects took down 58.9% – the highest since June 2009 – leaving just 29.65% to primary dealers.

In summary: one of the strongest auctions in years, coming paradoxically at a time when everyone is flooding into stocks.

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Authored by Zainab Calcuttawala via OilPrice.com,

Alberta Premier Rachel Notley warned U.S. President Donald Trump that he would face the wrath of the northern nation’s many allies if the freshman president begins employing energy trade restrictions with Canada.

Notley is currently in China, negotiating her country’s trade policies with the Asian giant. She told reporters that she did not know what was meant by Trump’s comments about what Canada has done to its American neighbor with the energy, softwood lumber, and dairy industries.

"Canada, what they've done to our dairy farm workers, is a disgrace. It's a disgrace,” Trump said before signing a memorandum about investigation the national security implications of importing foreign steel.

Trump also criticized NAFTA in general, calling it a “disaster”, adding that that “included in there is lumber, timber, and energy. We’re going to have to get to the negotiating table with Canada very, very quickly”

"We're not exactly sure what it is he was referring to,'' Notley said in a conference call Monday, according to The Huffington Post.

 

"The leadership of the U.S. administration is going to find that they have a lot of their own stakeholders reminding them how much they need Canadian energy,'' she said.

Figures from 2016 show that 41 percent of all American crude imports, or 3.3 million barrels per day, came from Canada.

Trump has suggested ambiguous “very big changes” to the North American Free Trade Agreement (NAFTA), which strings together Mexico, Canada and the U.S. through a uniform tariff policy. Opponents of the trade bloc created by the 1994 deal say it caused the growth of the U.S. trade deficit with its northern and southern neighbors, along with considerable job losses.

The U.S. is the largest refining complex in the world, and Canada’s cheap heavy oil pricing relative to other competing crude grades in the West Coast and Gulf Coast has made a lot of profit for U.S. heavy oil refiners. If Canada is planning on exporting 890,000 barrels per day of crude oil to the large refining markets of the Asia Pacific with a preference for heavier crude oils, this will inevitably hurt U.S. heavy oil refiners that benefitted from refining cheap Canadian heavy crude.

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A tidal wave of inflation is rapidly moving through the financial system.

Most investors only pay attention to the Federal Reserve. And they are missing the BIG PICTURE for Central Bank monetary policy.

The Fed is tightening policy by hiking rates. But the rest of the world’s Central Banks are printing a combined $200 BILLION in QE every single month.

Yes, $200 billion. At a time when the financial system is out of crisis and the Fed’s put its own “print” button on “pause.”

This is an all-time record… greater even that the global money printing that occurred at the depth of the 2008 Crisis when Central banks were desperate to prop the system up.

Indeed, at $200 billion per month, we’re talking about an annualized pace of over $2 TRILLION in money printing every year.

If you don’t believe this will unleash inflation, consider that already in the US, inflation has exceeded the Fed’s targets on ALL FOUR of its measures.

Bear in mind, these are the “official” measures of inflation… the ones that don’t include things like food, or energy. When you account for the rise in the REAL cost of living in the US, REAL inflation in the US is closer to 6%.

And this is happening at a time when the Fed is hiking rates and NOT printing money.

If you don’t take my word for it, take a look at Gold priced in the $USD, Japanese Yen, Euro, and British Pound.  The precious metal has begun to break of to the upside in all major world currencies.

Gold “smells” what’s coming. It’s inflation. And smart investors are preparing for it now.

We offer a FREE Special Investment Report featuring a unique investment opportunity through which you can buy Gold at the absurdly cheap valuation of just $273 per ounce.

Less than 1 in 100,000 investors know about this opportunity. But the early birds have already seen double-digit returns in 2017 thus far.

To pick up a copy of our FREE Special Report, swing by:

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

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Nordstrom ($JWN), which canceled Ivanka Trump’s fashion line after their liberal customers complained, has decided to mock blue collar Americans by selling a pair of $425 jeans with fake mud!

The “Barracuda Straight Leg Jeans” which come with a “caked on muddy coating,” have already drawn heavy criticism:

It’s for the trust fund baby. It’s for the kid who inherits the millions of dollars, the kid who doesn’t want to work hard and wants to go into Nordstrom, pay a lot of money and act like they work -Ainsley Eardhardt, Fox & Friends

Described as “workwear” that “shows you’re not afraid to get down and dirty,” Dirty Jobs host Mike Rowe mocked the jeans “that look like they have been worn by someone with a dirty job… made for people won don’t”

The reviews on the Nordstrom website are outstanding…

So (liberal) Ivanka’s line is out because of her father’s politics, while “fake mud” jeans are in so trust fund babies can pretend to be the masculine version of their preferred gender.

The appropriation of work culture. https://t.co/ly8uIpL5yG

— Andy Swan (@AndySwan) April 25, 2017

Nordstrom ($JWN) has decided to mock blue collar Americans with “Fake Mud” jeans… ???? https://t.co/mIQajzeOsv http://pic.twitter.com/VSP25BN3OV

— ZeroPointNow (@ZeroPointNow) April 25, 2017

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David Einhorn may write in his latest quarterly letter to investors that “from a portfolio perspective, this quarter was a quiet one” but based on his activity the famous poker playing hedge fund manager was quite busy.

Among his various moves, Greenlight added a new position in Perrigo in the first quarter, after several large guidance cuts, and now sees the company’s earnings forecast as achievable. He also took a new long position in Conduent, as he believes the company as burdened with “underearning” contracts that it can renegotiate and exit. He also took a new long in unidentified European financial institution. On the other side, Greenlight closed shorts in Signet Jewelers, LyondelBasell, and RPC and also closed out shorts in three Canadian banks at a loss after oil and credit loss thesis didn’t “sufficiently” materialize.

Einhorn said he still likes Apple, which is a “superior company that still trades for less than a market multiple” while trimming his short position in Rite Aid after initially expecting deal with Walgreens to close at $9-share with FTC approval, and is watching the RAD situation “carefully” as original thinking was incorrect.

Performance wise, the fund returned 1.3% in Q1, underperforming the S&P’s 6.1% rise. “Apple (AAPL), Chemours (CC) and gold were the biggest winners; the bubble basket, Rite Aid (RAD), and a short position in Tesla (TSLA) were the biggest losers.” And as he admits, “”It was a difficult quarter to be short the bubble basket, and TSLA in particular.“

One day, TSLA will fall, but not yet.

Below are some of the notable highlights from the letter, presented below.

“It was a difficult quarter to be short the bubble basket, and TSLA in particular. Perhaps as the prospects for tax reform have dimmed, the market has regained enthusiasm for profitless companies that aren’t at risk of paying taxes. A number of these stocks are back in full-blown momentum mode. Analysts continue to raise “target prices” which the market treats as news.”

 

“The bulls explain that traditional valuation metrics no longer apply to certain stocks. The longs are confident that everyone else who holds these stocks understands the dynamic and won’t sell either. With holders reluctant to sell, the stocks can only go up – seemingly to infinity and beyond. We have seen this before. It’s painful for the shorts, as the TSLA CEO has been happy to remind everyone via Twitter.”

 

“There was no catalyst that we know of that burst the dot-com bubble in March 2000, and we don’t have a particular catalyst in mind here. That said, the top will be the top, and it’s hard to predict when it will happen. Notably, a number of bubble stocks advanced despite missed expectations and/or falling estimates. The basket is sized appropriately with the understanding that twice a silly price isn’t twice as silly. In due time, we expect these bubbles to pop.”

 

“Our longs were profitable, though they went up a bit less than the market. Our shorts generated losses but added alpha, and gold gave us a small profit in macro. Apple (AAPL), Chemours (CC) and gold were the biggest winners; the bubble basket, Rite Aid (RAD), and a short position in Tesla (TSLA) were the biggest losers.”

 

“Gold rose over 8% to start the year. Nothing significant happened here (the White House columns are not gold yet); gold simply reversed a portion of the post-election decline it suffered last quarter. Gold remains a long-term position with a thesis that global fiscal and monetary policies remain very risky.”

Finally, Einhorn had some comments on the recent activist foray into GM:

While it was quiet on the portfolio front, we made more noise than usual (and more than we’d like) by making public our idea for General Motors Company (GM) to unlock tens of billions of dollars of shareholder value. As a general matter, we prefer to avoid public activism. The last time we did this was with AAPL in 2013 after owning the stock for three years. This is a similar situation; we had owned GM shares for years before advancing our idea to management.

We know this is a tough fight. Fortunately, the math is on our side (if GM does what we suggest, we believe the stock will go up a lot) and the ultimate decision will be made by our fellow shareholders. We believe others recognize that the stock is deeply undervalued and when shareholders grasp the math and the extent of GM’s behavior, they will vote with their wallets and for needed change at the Board level.

* * *

Full letter below:

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With officials calling Saudi deputy crown prince bin Salman's $2 trillion estimate of Saudi Aramco valuation as "unrealistic and mind blowing," OilPrice.com's Cyril Widdershoven notes the primary discussion taking place is the overall level of transparency offered by Aramco’s leadership, which is supported by the Saudi government.

Saudi Aramco’s IPO, slated to raise between $100 billion and $400 billion from a 5 percent stake in the company, will continue to make headlines until its launch. Lately, discussions on the valuation of Aramco have been intense, and the jury is still out regarding an exact price. Aramco’s IPO will be a game-changer, propelling the world’s largest National Oil Company (NOC) into a league of its own on the financial markets. The current market capitalization estimates of $1-2 trillion are based on valuations of Aramco’s hydrocarbon reserves carried out by independent consultants. These estimates put the giant oil company far ahead of any other publicly owned company. Two major questions remain to be answered however, one of which has been largely ignored by the mainstream media.

The primary discussion taking place is the overall level of transparency offered by Aramco’s leadership, which is supported by the Saudi government. After several days of attending the GCC Petroleum Media Forum (GCCPMF) in Abu Dhabi, attended by all GCC ministers of oil, including Saudi minister Khalid Al Falih, and a long list of government advisors, the issue of transparency has yet to be solved. Gulf oil ministers and CEOs still hold a very conservative idea about financial and operational transparency. There have been minor attempts by Aramco, ADNOC, and QP to open more data and insights to the financial world and media, but the world’s largest oil company remains far from transparent. When asked about the Aramco IPO and Saudi Vision 2030, the respective Saudi officials, including Khalid Al Falih, only produced basic media statements, already largely published in the Arab and global media outlets. Even the fact that the Forum was also meant to present a new OPEC-Abu Dhabi based data outlet, no real new information on reserves, production figures, or investment cycles were presented. Analysts still need to rely on figures presented by the existing outlets, OPEC-IEA-EIA-EIF.

Aramco’s IPO still falls short when it comes to accurately representing the level of reserves, operational figures, and income that we are used to when assessing international oil companies (IOCs) or independents. Yes, Aramco has increased its insights into what many consider the Holy Grail of the oil sector, aka Saudi Arabia’s oil and gas reserves (P1-P3-P5), but a lot still needs to be done to gain the same level of confidence as analysts can have with Exxon, Shell, BP, Apache, Tullow or Statoil. The lack of criticism by international media or analysts in regard to the Aramco IPO is startling. Most analysts have simply duplicated the assessments of Gaffney, Cline, and Associates, part of Baker Hughes and Dallas-based DeGolyer and MacNaughton, which have been published by Aramco itself.

Questions still remain on the real facts and figures. Ongoing criticism by the U.S. Securities Exchange Commission (SEC) on the reserves reporting of IOCs, such as Exxon, should be a cause for skepticism in the market related to the overall positive reporting currently in place. Until now, no real insights have been given on the depletion rate of Saudi Aramco’s fields, especially the Al Ghawar field. Taking unofficial assessments, such as a report by Simmons & Simmons years ago, decline on most Saudi producing fields could be above average. Without these insights and facts, it should be a major point of concern for investors assessing the IPO.

At the same time, there is an even more critical issue which is rarely addressed. Saudi Aramco, as an NOC, is fully integrated into the geopolitical and financial discussions of the Kingdom. At present, Aramco’s production and export strategies are 100 percent linked to the Kingdom’s overall geopolitical aspirations. As one analyst stated years ago, the Kingdom’s power in the world totally depends on its crude oil reserves and production figures. Even while Saudi deputy crown prince Mohammed bin Salman’s Saudi Vision 2030 is trying to diversify the nation’s economy for the era beyond oil, Riyadh’s geopolitical impact will depend on its crude oil potential through the next 40-50 years. The set-up of the Aramco IPO should be assessed against this backdrop. Offering 5 percent of Aramco doesn’t mean that the company will change into an (N)IOC. The majority shareholder is still the Kingdom itself, even though the ownership will officially be transferred to the Saudi Public Investment Fund – a 100 percent state-owned and regulated sovereign wealth fund (SWF).

Playing devil’s advocate; by offering a 5 percent stake in Aramco, Riyadh is not offering a say in the company, its operations, or an insight into its reserves potential. The only strategy currently in place is using the vast international interest for Aramco as leverage to access financial markets to counter the current use of Saudi’s vast international financial holdings. This strategy is working, and for this Mohammed bin Salman needs to receive full credit. The Saudis will not offer any real say in the operational and strategic decision-making process of Aramco, especially as it is the main geopolitical power instrument the Kingdom holds at present. In stark contrast to IOCs or independents, where minority shareholders can and will demand a say in the future of their investments, Aramco’s future will very much remain in the hands of Riyadh.

For shareholders used to investments in companies that are solely focused on setting up structures to increase ROI, shareholder value, or dividends, the Aramco IPO will be a difficult nut to crack. When assessing the value of your multibillion investment in the IPO, how are you going to assess future return on investments or dividends if your majority shareholder is not only interested in return on investments (financially) but also has a geopolitical interest? How are you going to deal with Saudi Aramco’s unilateral decision to play the oil market according to Riyadh’s unilateral political decisions? Investors will need to be fully intertwined with the inner-circle of the royals to predict and assess possible changes in Saudi strategy before it hits the market. At present, most of the investors showing an interest have an immense lack of knowledge of Saudi politics, power-structures, or even energy strategies. This situation doesn’t bode well. 

Saudi Aramco’s IPO will be a market shaker of unknown proportion. Its overall financial impact will be immense as, whatever the outcome of the specific IPO, the Kingdom is already using its leverage to gain access to new investments. The Asia trip by King Salman last month is one of the clearest results of the IPO’s leverage build up. Most deals in China, India, and Indonesia were linked to Aramco, aimed at building bridges between Asian investors and the Saudi NOC. More interesting, however, will be the decisions of international financial institutions, knowing that they will not have any say in the future of the company. The Kingdom will never allow Aramco’s strategy to be changed by ‘normal’ global financial indicators. Aramco’s IPO is already being used as a political instrument of the Kingdom. Increased investments in Aramco or the Kingdom will be strategically placed by Riyadh to mitigate perceived geopolitical and economic risks.

Investors should be aware that Aramco’s price settings or production volumes will not change from the pre-IPO era when entering the IPO market. Saudi oil is, at present, the only sword in the armament of the Kingdom, mainly to be used to support the country’s interests. ROI or dividends will hold little to no importance if the survival of the Kingdom’s ruling structure is being threatened.

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What may be the most controversial annual shareholder meeting in Wells Fargo history, in which the board is seeking re-election after last year’s misselling scandal, devolved into a screaming match on Tuesday morning and was briefly halted following interruptions by angry shareholders as the bank’s chairman and chief executive tried to calm nerves ahead of a vote that could oust the majority of its board.

According to Reuters, at least one shareholder was ejected and the meeting went into recess after he made what Chairman Stephen Sanger called a “physical approach” toward a board member. Others were escorted out and the meeting was interrupted several times as investors demanded answers related to the bank having created as many as 2.1 million unauthorized accounts in customers’ names without their permission.

“You’re saying we’re out of order. Wells Fargo has been out of order for years!” the first angry shareholder said, before being ejected. Board Chairman Sanger and Chief Executive Tim Sloan repeatedly asked him to sit down because he was out of order, and then called a recess, only to have other shareholders stand and shout.

The meeting is unusual in that a dozen of Wells Fargo’s 15 directors on the ballot, who have come under fire after it was discovered that employees in its retail banking business had been creating accounts under customer’s names without their knowledge for years, face a rare negative recommendations from Institutional Shareholder Services (ISS). The influential proxy adviser argued that the group, including Chairman Stephen Sanger, failed in their oversight duties, although Wells Fargo’s top investor Berkshire Hathaway has already voted in favor of the bank’s board. According to the WSJ the board is expected to remain having clinched a majority of the votes.

Wells Fargo’s guidelines require that directors offer to resign if they fail to receive a majority of votes cast. But in practice, directors who win with less than 80 percent support should consider exiting the board, said Charles Elson, a University of Delaware expert on corporate governance, Reuters notes. “If they’re below 80 (percent) I’d say they have a lot of soul-searching to do,” he said.

The bank’s board and management have said steps taken to fix problems and punish employees responsible for abuses show there is now strong oversight, and that directors nominated deserve to be elected. But the public firestorm that hammered its shares and led to the resignation of then-Chairman and Chief Executive John Stumpf last year was not forgotten. They repeated those messages on Tuesday.

 

“It’s been a busy seven months but we are focused on making things right,” Sloan said.

At most S&P 500 companies, director support averages around 95 percent of votes cast, according to pay consulting firm Semler Brossy. Typically a recommendation from ISS that investors vote “against” a director will reduce the support they receive by an average of 17 to 18 percentage points.

Should Wells Fargo directors win narrow majorities – between 50 to 80 percent of votes cast – the board would have to decide whether to accept any individual director’s resignation. University of Pennsylvania law professor Jill Fisch said a likely outcome, in the event of a close vote, would be for the board to bring in fresh faces over a period of months or longer. “From a business perspective that may be the best response you could make,” she said. “You don’t want the whole leadership to be in flux.”

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Below looks at a long-term chart of the US Dollar, that was shared on 12/30/16. This chart highlighted that King Dollar was facing two long term resistance lines, at the 104 zone. (See Post Here). Joe Friday was pointing out this was a rare test of resistance and could be the price zone, where a major top could take place.

CLICK ON CHART TO ENLARGE

Since Joe Friday pointed out this resistance zone, King$ has declined around 5%, which could be a good reason that Gold, Silver and Mining stocks have done very well so far this year. Below looks at an update on the price action of the US$.

CLICK ON CHART TO ENLARGE

Line (1) has been support and resistance over the past 20-years. US$ hit the underside of this 20-year resistance line at (2), near the 104 zone highlighted in the top chart, where it stopped on a dime. Since hitting resistance line (1), it has declined around 5% and is back below two key Fibonacci levels.

King$ is now testing 3-year rising support at (3). A break of support at (3), could cause more selling pressure to come forward, causing the US$ to further weaken. The Power of the Pattern feels the US$ has to close on a weekly basis below the 93 level, before strong selling pressure would take place. If the 93 level would be taken out to the downside, suspect metals would attract buyers.

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Former national security adviser Michael Flynn likely broke the law by failing to disclose foreign income he earned from Russia and Turkey, the heads of the House Oversight Committee said Tuesday.

As The Washington Post reports, committee chairman Jason Chaffetz (R-Utah) and ranking member Elijah Cummings (D-Md.) said they believe Flynn neither received permission nor fully disclosed income he earned for a speaking engagement in Russia and lobbying activities on behalf of Turkey when he applied to reinstate his security clearance, after viewing two classified memos and Flynn's disclosure form in a private briefing Tuesday morning.

"Personally I see no evidence or no data to support the notion that General Flynn complied with the law," Chaffetz told reporters following the briefing.

 

"He was supposed to get permission, he was supposed to report it, and he didn't," Cummings said.

Chaffetz confirmed that Flynn had failed to reveal the more than $45,000 he was paid to speak at a 2015 gala for RT, the Kremlin-run TV network, as well as the money he was paid by an air freight company and a cybersecurity firm with direct connections to Russia. Chaffetz added that the White House had refused to provide his committee with information and documents related to Flynn's security clearance and payments from organizations tied to the Russian and Turkish governments. The committee made six requests, and the White House cited reasons it could not comply with each of them, Cummings said.

One has to wonder about the Trump team's vetting process and perhaps more notable is that now that Cheffetz is not running for re-election, he has nothing to fear from political fallout from the White House or GOP in general.

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