Tag: finance

Following today’s surprising SEC charge that alleged Phil Mickelson violated securities laws and illegally profited from insider trading to the tune of almost $1 million, here is the response his lawyers just sent out.

The SEC has now completed its investigation into that investment and has concluded that Phil Mickelson did not engage in any wrongdoing. The SEC has filed a civil complaint against certain individuals, including an acquaintance of Phil’s, but that complaint does not assert that Phil Mickelson violated the securities laws in any way. On that point, Phil feels vindicated. At the same time, however, Phil has no desire to benefit from any transaction that the SEC sees as questionable.

 

Accordingly, he has entered into an agreement with the SEC under which he will return all the money he made on that 2012 investment. Phil understands and deeply respects the high professional and ethical standards that the companies he represents expect of their employees, associates and of Phil himself. He subscribes to the same values and regrets any appearance that, on this occasion, he fell short. He takes full responsibility for the decisions and associations that led him to becoming part of this investigation.

 

As he moves forward, Phil remains committed to demonstrating that he fully shares the same values as the companies he represents. He very much appreciates that they have determined to continue their sponsorship agreements with him. He is pleased that this matter is over, and he will have no further comment.”

So the message here is that all it takes to avoid any prosecution in such cases is simply to repay any illegal inside trading profits and move on with your life. Oh, being a world famous golfer helps.

via http://ift.tt/1qwy8EH Tyler Durden

Submitted by Pater Tenebrarum via Acting-Man.com,

Presidential Duties

We recently stumbled upon an image in one of the more obscure corners of the intertubes which we felt we had to share with our readers. It provides us with a nice metaphor for the meaningfulness of government activity. First, here is a look at the picture – just quietly contemplate it for while and let it work its magic on you:

Yes, these two gentlemen are actually watering a tree in the middle of a downpour…

You may have noticed that the two gentlemen with the watering cans have two living umbrella-holders at their disposal. Obviously, they must be VIPs of some sort.

The tree getting victimized in the picture is actually a young fir, and one must fear that it will drown. Small firs do of course need water if they want to become big firs, but there can be too much of a good thing, and this may well be such a case.

We thought we’d never see anyone watering plants during a rainstorm while exuding such a solemn sense of duty. Normally one would expect such people to exhibit a somewhat more maniacal demeanor. This goes to show that there’s a first time for everything.

We were of course wondering who and what exactly we were looking at, and it turns out that the two gentlemen are Gurbanguly Berdimuhamedov, the president of Turkmenistan, and Belarusian president Alexander Lukashenko, in the process of planting (and evidently, right away drowning) a fir at the Alley of Honored Guests near the Palace of Independence in Minsk.

Free Advice

We want to take this opportunity to dispense some free advice to the fathers of the young fir: it is probably not necessary to water plants while it is raining, as rain is reportedly quite wet all by itself (step out from underneath the umbrella next time, and you will see what we mean).

Still, the presidents have to be commended for not shirking their planting duties in the face of inclement weather, and we want to thank them for providing us with this moving image. And of course, we wish the fir all the best.

via http://ift.tt/1U1ANRh Tyler Durden

Following yesterday’s surprisingly hawkish minutes, the market held on to hope that either vice Chair Fischer, or former Goldmanite Bill “edible ipads” Dudley would provide at least some dovish counter to a Fed that suddenly has taken out all the wind from the market’s sails. That did not happen earlier when Fischer refused to comment on monetary policy, while moments ago Bill Dudley deliver “Opening Remarks at the Economic Press Briefing on the U.S. Economy in a Snapshot” in which he repeated the broken record  that the Fed remains data-dependent, adding that it is “important” for market participants and public to follow data along with FOMC and “to understand how we are likely to interpret and react” to it.

In other words, Dudley was looking at the reflexive relationship between the Fed and the market we showed several days ago…

… and is begging the market to stop selling off any time the Fed hints at tightening.

Of course, that will never happen, because not only does the market no longer discount any Fed-independent future, but is increasingly aware the Fed itself has no idea what is going on, and the moment the mere hint of more tightening emerges, everything is sold.

As Bloomberg adds, Dudley is the only Fed president with permanent vote on policy, has never dissented on FOMC decision.

“When asked about the trajectory for the monetary policy stance, I always point out that it is data dependent,” Dudley says in text of remarks Thursday at press briefing in New York. Data close to Fed’s expectations “have little additional impact” on central bank’s forecast; data that deviates significantly “can lead to more significant revisions” of forecast.

He added that the FOMC “calibrates” its monetary policy stance to achieve price stability and maximum sustainable employment, while taking into account forecast.

Transmission of monetary policy to economy through many channels “works best” when central bank is transparent about its strategy; in this case, market participants/public “understand and can anticipate actions by the central bank.”

Translation, the Fed has finally figured out the “Nightmarish merry-go-round” we profiled first earlier this week.

Finally, and confirming that the market clearly ignored everything Dudley said, the S&P just hit intraday lows following this headline:

• DUDLEY: JUNE IS DEFINITELY A LIVE MEETING
• DUDLEY: QUITE PLEASED WITH MARKET’S JUNE-JULY VIEWS

Definitely live…. until the “economy” slides back under 2,000 of course, something the “economy” knows very well.

via http://ift.tt/1U1znGh Tyler Durden

Submitted by Nick Cunningham of Oilprice.com

Greek Pipeline Breakthrough To Challenge Russian Gas Dominance

After years of debate, political jockeying and acrimony, a major pipeline project to bring natural gas to Southern Europe has broken ground.

The Trans-Adriatic Pipeline (TAP) will connect the Caspian Sea to European markets, providing Europe with another large source of natural gas that will help the continent diversify away from Russia. The route begins at the Caspian Sea in Azerbaijan, where the South Caucuses Pipeline will carry Caspian gas from the large Shah Deniz-2 gas field, delivering it to the border with Turkey. From Turkey the gas will tie into the Trans Anatolian Pipeline (TANAP), which will take the gas across Turkey to the border with Greece where it will meet up with the aforementioned Trans-Adriatic Pipeline. The Caspian gas will then travel through TAP across Greece, beneath the Adriatic Sea and onto Italy.

South Caucuses Pipeline to TANAP to TAP

The TAP route

The pipeline projects are part of what is often referred to as the “Southern Corridor” for European gas. For years Europe has pressed for a gas pipeline through the southern corridor that would offer it an alternative to Russian gas. But TAP was not always an inevitability – before the consortium of companies took up the project, the European Union favored the Nabucco Pipeline, which instead of sending Caspian gas to Italy, would have resulted in a pipeline snaking its way through the Balkans to Central Europe

And back when Nabucco was in vogue, Russia pushed hard for its own route through Southern Europe. The so-called South Stream Pipeline would have sent Russian gas beneath the Black Sea to Bulgaria. European regulators worked hard to derail that pipeline on anti-competition grounds. Shortly after the death of South Stream, and following in the wake of Russia’s standoff with Europe over its incursion into Ukraine, Russia pushed the “Turkish Stream” project, which would have sent Russian gas to Turkey and then onto Southern Europe. But the project was more of an idea than a reality, and due to a set of differences between Russia and Turkey, not the least of which was the cost of the pipeline and how it would be paid for, the project never really went anywhere.

The complexity of pipeline politics and the web of pipeline routes can be confusing, but suffice it to say the Turkish-Greece-Italy route has won out, through the TANAP and TAP pipelines. On May 17, TAP broke ground in Thessaloniki, Greece. Construction will take several years, but when the $45 billion project is completed in 2020, it will deliver 10 billion cubic meters per year of natural gas from the Caspian Sea to Europe.

Greek Prime Minister Alexis Tsipras was in attendance for the groundbreaking event, as were top officials from Georgia, Azerbaijan, Albania, the EU and even the U.S. State Department. Each have their own reasons for supporting the project. The project developers – BP, the Azerbaijan state-owned oil company SOCAR, and others – obviously have direct profit motives in mind. The national governments see economic opportunities through construction and transit fees. For Greece, in particular, the EU sees TAP as providing an economic stimulus to the indebted nation at a time when debt negotiations continue to torment both sides.

From the perspective of the U.S. government, TAP will reduce Europe’s dependence on and vulnerability to Russia; in essence, it is a major geopolitical victory. U.S. Secretary of State John Kerry, in a congratulatory letter to Greece’s Prime Minister, said that TAP is a “prime example of infrastructure that enhances European energy security.”

Diversity of supply has become one of Europe’s key energy security objectives, along with building an “energy union” between EU member states.

“A single European energy market will allow us to increase our security of supply by allowing energy to flow freely across our borders,” European Commission Vice President for Energy Union Maros Sefovi said at the ceremony. “It will allow us to better negotiate with our external partners, given that the EU is the largest energy importer in the world.”

via http://ift.tt/1TpIWyJ Tyler Durden

Having denied any investigation as "inflammatory and speculative" when the Phil Mickelson insider-trading brouhaha initialy erupted two years ago, it appears the golfer's lawyers may have to shift from the "deny deny deny" defense to "let's make a deal."  Having been unable to pin anything on Wall Street insider Carl Icahn, Vegas sports gambler Billy Walters, and pro-golfer Mickelson with regard their trading in Clorox (during Icahn's takeover bid); the SEC has arrested Walters and announced criminal charges against Dean Foods' Chairman Thomas Davis (who stepped down after suspicions of leaking insider tips) and after generating nearly $1million in profits from the Dean Foods trading tip Phil Mickelson is charged with insider trading and wilb be forced to disgorge ill-gotten gains.

Two yesars ago, the denials were quick to come…

"We do not know of any investigation," Mr. Icahn said on Friday. "We are always very careful to observe all legal requirements in all of our activities." The suggestion that he was involved in improper trading, he said, was "inflammatory and speculative."

 

…

 

"Phil is not the target of any investigation. Period," said a lawyer for Mr. Mickelson,

 

…

 

When asked to comment about the investigation, Mr. Walters, reached by phone on Friday, said, "I don't have any comment about anything," and then hung up.

Today, Mickelson's lawyers are aggressively providing no comment as it appears he was unable to dodge another bullet for his day-trading prowess.

As NYTimes Dealbook reports, Federal authorities announced criminal charges on Thursday against the former chairman of Dean Foods and a high-rolling sports gambler with ties to prominent athletes and corporate executives, a surprising escalation of a long-running insider-trading investigation.

William T. Walters, often considered the most successful sports bettor in the country, was arrested by the F.B.I. in Las Vegas on Wednesday. Thomas C. Davis, the former chairman of Dean Foods who stepped down last year after being suspected of leaking insider tips to Mr. Walters, also faces charges.

 

…

 

Preet Bharara, the United States attorney in Manhattan, who led a sweeping crackdown on insider trading, lamented “a potential bonanza for friends and family of rich people.”

 

But in charging Mr. Walters and Mr. Davis with securities fraud, his office is sending a message to Wall Street and beyond that these cases can still be made. The charges could also become a test case in just how far prosecutors can go in the wake of the appellate court ruling.

 

…

 

Mr. Walters’s lawyer said his client had done nothing wrong. “Bill Walters is a true American success story, whose extraordinary accomplishments as a lawful sports gambler have been widely recognized and lauded,” the lawyer, Barry Berke, said in a statement. “Mr. Walters and his counsel look forward to his day in court where it will be shown that the prosecutors’ accusations are based on erroneous assumptions, speculative theories and false finger-pointing.”

 

Early in the investigation, federal authorities also looked at what role, if any, the billionaire investor Carl C. Icahn may have had in sharing information with Mr. Walters about the consumer products company Clorox. Mr. Icahn was mounting a takeover bid for Clorox.

But that aspect of the investigation did not bear fruit, and Mr. Icahn is not suspected of wrongdoing.

Mr. Walters’s case bridges the world of sports and finance. In the course of the investigation, federal authorities examined trades not just by Mr. Walters, but by some of his friends, including the golfer Phil Mickelson.

Mr. Mickelson, a three-time winner of the Masters golf tournament and one of the country’s highest-earning athletes, has not been accused of wrongdoing. Nor is there any indication that he will be charged.

 

But on at least two occasions, the F.B.I. contacted Mr. Mickelson, partly to seek his cooperation against Mr. Walters, people briefed on the investigation have previously said. Once, agents approached him on a golf course.

However, while NYTimes claims no charges, MarketWatch reports golfer Phil Mickelson on Thursday was charged with insider trading, in connection with a case where two others are facing criminal charges.

Mickelson was charged with insider trading by the Securities and Exchange Commission due to an alleged tip he received from gambler William “Billy” Walters, who got information from former Dean Foods chairman  Thomas Davis.

 

The SEC said that Walters called, and then sent text messages, to Mickelson, who then bought a $2.4 million position in three accounts he controlled. Those securities “dwarfed” Mickelson’s other holdings, which were collectively valued at less than $250,000, the SEC said. Mickelson had not been a frequent trader and these were his first ever Dean Foods purchases, the SEC said. Mickelson made a profit of approximately $931,000 from the stock he held for about a week.

 

The Justice Department alleges Davis provided material non-public information to Walters, who is also charged in a separate indictment, about Dean Foods earnings results, outlook and the spinoff of Whitewave-Alpro, a Dean subsidiary.

As The SEC writes (full charge document below), The Walters Group, Nature Development, and Mickelson received the gains described above as part of, and as a consequence of, the securities law violations by Defendants Walters and Davis described above, under circumstances in which it is not just, equitable, or conscionable for them to retain the funds.

By reason of the foregoing, The Walters Group, Nature Development, and Mickelson have been unjustly enriched and must disgorge the amount of their ill-gotten gains.

via http://ift.tt/1Troi2v Tyler Durden

Once again a late-day miracle VIXtermination-driven bounce “off the lows” is erased on heavy volume selling. With the S&P breaking key technical levels, only Dow Transports remains in the green (up less than 1%) for the year now as Fed speakers pile on the hawkish tone…

via http://ift.tt/1qwmz0b Tyler Durden

In what many considered to be a flagrantly criminal abuse of investment bank “restricted lists”, yesterday Goldman underwrote a $2 billion equity offering for Tesla (to find its amusing expansion strategy) just hours after Goldman upgraded the stock to a Buy.

We have done our best to alert the regulators…

Hey @SEC_News here it is in terms even you can understand http://pic.twitter.com/Yprw3GZDMm

— zerohedge (@zerohedge) May 18, 2016

Hey @GoldmanSachs do you use restricted lists and was Tesla on it?

— zerohedge (@zerohedge) May 18, 2016

… however we are confident the regulators are paid far better to remain unalerted.

So for those curious what Goldman’s research analyst who upgraded Tesla, Patrick Archambault, had to say about this “odd, very odd coincidence”, here it is straight from the mouth of the horse which obviously remains stabled safely on the other side of the Chinese wall located at 200 West. 

Commentary: Tesla announces equity offering and provides further details on Model 3 reservations 

 

News

After the close on May 18, Tesla announced a 6.8mn primary share offering. The offering includes a greenshoe option which, if exercised, would increase the number of shares sold to approximately 8.2mn. Based on the May 18 closing price of $211.17, this would result in a total value of $1.4bn for the offering, or $1.7bn if the greenshoe option is exercised. In addition, Elon Musk, CEO, will sell 2.8mn shares to satisfy tax implications from exercising 5.5mn in stock options that expire at year-end. The company noted that Mr. Musk also plans to donate 1.2mn shares to charity and that the net result of these actions will be to increase his holdings to 31.1mn shares from 29.6mn. All said, based on the latest closing share price and including the primary offering, greenshoe, and Mr. Musk’s sale, the total size of the transactions would be $2.3bn.

In the preliminary prospectus, the company also provided an update on Model 3 reservations and announced that it had 373k deposits as of May 15, 2016. This is net of 8k (approx. 2% of total) in customer cancelations and 4.2k (approx. 1% of total) reservations deemed to be duplicates. 

 

Implications

 

Adjusting for the announced transaction and the supplemental stock options outstanding, and for restricted stock units (RSU) information, our EPS estimates would be unchanged for 2016-2017. Including the greenshoe, our 2016-2017 EPS estimates would decline by less than 1% on average.

 

Our take

 

We maintain our Buy rating and EPS estimates following the announcement. Additionally, our 6-month price target of $250 remains unchanged, derived from five probability-weighted automotive scenarios plus stationary storage optionality, all of which embed a 20% cost of capital. While the announced capital raise of $1.4bn (or $1.7bn with the greenshoe) is ultimately higher than our $1bn estimate, after factoring in the updated supplemental RSU and option information, dilution to our estimates would be immaterial. Consistent with our previously published research (see Putting in our reservation for the Model 3; upgrading TSLA to Buy, May 18) we believe the funding level is adequate for the Tesla Model 3 roll-out. The reservations of 373k are in line with the company’s recent comments of “approaching 400k”, though they imply slowing growth (even adding back the cancellation and duplicates) as reservations had already hit 325k one week after the Model 3 unveil.

 

Risks: Decline in overall investor sentiment impacting the appetite for concept stocks, further delays in the Model X production ramp which could force a guidance reduction as well as exacerbate FCF burn, and higher-than-forecast operating expenses and/or capex investments.

Actually the biggest risk factor, and what is most hilarious about this whole incident is that in the Goldman upgrade, which was clearly rushed, and in which Goldman itself admitted there is a two-thirds likelihood the stock will plunge to $125 or lower and the only upside is due to a “key man provision” and a ridiculous thesis that Musk alone is worth tens of billions in market cap (somehow excluding tens of billions in taxpayer grants)…

…  is that all those who bought TSLA on the Goldman report (and/or Goldman stock offering) will actually read it.

via http://ift.tt/1TrmhDz Tyler Durden

For Caterpillar, the great recession was bad, for about 19 months. In May 2010, after declining sharply for just under two years, CAT posted it first positive global retail sales comps and never looked back… until December 2012 when comp sales once again turned negative and have been negative ever since. For the past 41 months!

The breakdown showed that contrary to popular opinion, there has been no pick up in demand for heavy industrial machinery anywhere around the globe.

• Caterpillar global 3-mo. retail machine sales down 12% vs March 13% fall, Feb. down 21%
• North America machine sales down 11% after falling 8% in March
• Asia/Pacific sales April down 10% after falling 14% in March
• Latam sales April down 37% after falling 34%
• EAME (Europe, Africa, Middle East) sales April down 6% after falling 8%
• Power systems sales: April down 34% after falling 41%

And a quick comment from Axiom’s Gordon Johnson who reminds us that CAT’s sales guidance implies a rebound in the second half, yet North America sales are worsening.

While some modest improvements were observed (i.e., the declines in Asia/Pac slights moderated in Resource Industries & were up for a second straight month in Construction), declines in North America look to be deepening in both Construction & Resources.

 

This seems to be a bad start for a company guiding to a back-end loaded rebound in 2016 sales.

Don’t worry Gordon: there are always millions in buybacks to fix anything “bad”

via http://ift.tt/1TJ4PGy Tyler Durden

Riksbank Deputy Governor Cecilia Skingsley asked an interesting question: “If monetary policy seems to have lost its magic touch, what can central banks do?”

In a speech summarized on the Riksbank website, Skingsley had some interesting things to say about the efficacy of NIRP, central banks playing follow the leader, and the use of helicopter money as being a viable path forward for central banks.

Skingsley acknowledges that despite negative interest rates and other monetary policy stimulation, inflation is far below target in many countries. The central banker of course doesn’t mention that central banks have lost their collective ability to influence the real economy through rates (a concept that as Eric Peters pointed out, isn’t able to be understood by central bankers), instead the best thing the deputy governor could come up with for a reason is that everyone is doing it. Also of note, the fact that no mention of Sweden’s exploding housing prices is mentioned in the inflation discussion is troubling.

Despite negative interest rates and other monetary policy stimulation, inflation is far below target in many countries. Scope for monetary policy seems, quite simply, to be shrinking. The most important reason for this is probably the low global level of interest rates, which has led several central banks to choose unconventional methods with the aim of stimulating the economy and meeting their inflation targets.

Another interesting comment from Skingsley: that central banks are now just playing follow the leader. As the ECB buys everything in sight in its efforts to push rates negative, other central banks need to follow suit or risk, gasp, a strong currency.

But there may arise situations in which these countries’ central banks become highly dependent on the actions of larger central banks. Developments in Sweden in recent years provide an example of this. In light of low inflation and inflation expectations that exhibited a falling trend for a time, it has been important to avoid an excessively rapid appreciation of the krona. In this context, it has been vital to follow the ECB’s policy, with its comprehensive asset purchases and other measures.

And in the most critical part of the speech, Skingsley says that everyone needs to prepare themselves for new monetary policy, as the policy that everyone is accustomed to won’t be able to work in the future. What is that new policy? Helicopter money of course.

Now that Swedish inflation is starting to approach the target, it may be time to think about the conditions for monetary policy over a longer perspective, according to Skingsley. If it has become more difficult to conduct monetary policy, what can the Riksbank and other central banks do?

Skingsley says that it will not be possible, in the future, to conduct monetary policy in the way and with the impact we have previously been accustomed to. And this is something for which we need to prepare ourselves. She notes that, alongside cutting the policy rate to below zero and purchasing securities, so-called helicopter money could provide a hypothetical path to take to increase scope for monetary policy.

“It is probably something that should not be tried until other possibilities have been exhausted. However, considering the difficulties that are weighing many of the world’s economies down, I think that it is wise to discuss the different possibilities, without closing any doors,” says Skingsley.

We have little else to add to this, except that we have been warning that helicopter money will be coming to a central bank near you ever since inception: it is the terminal endgame of failed monetary policy which started with the Fed launch of QE1. Alas, when the “magic people” have run out of textbook ways to centrally plan the global economy, they have no choice but to eventually resort to bypassing all traditional methods and funding governments and businesses directly.

via http://ift.tt/1OBttHN Tyler Durden