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Showing posts from March, 2017

It used to be some kind of organized sport now its Tump

I've been in meetings all week with a number of Mexican companies, these are either initial meetings or early followups and the trend is amazing.  First off, Mexican meeting follow a very different process than do European or even Canadian meetings. The first topic is always to ascertain who the participants are in relation to Mexican society, its not so much a "pissing contest" rather its a way of having a social barometer -- the reason is that Mexican generally do not have an internet presence, a simple precaution in a country where ransom kidnaping are still an issue. So the first 10/15 minutes of a meeting is a who do you know and who you are, no su much work wise but within the Mexican society.  As a foreigner it can get relatively complicated, but that's part of the game.

What has changed is the after meeting conversations; it used to be about Football (the Rest of the World kind not the American kind) and who was doing what to whom!  As someone who is largely…

Trump crashes the market not so much

Nothing like failure to make you successful...not


The Freedom Caucus have got their man, and he's screwed!  The lack of effort in passing TrumpCare will make of Paul Ryan and President Trump "Freedom bitches!"  Nothing will pass congress without their support, and they know what they want:  To make government small enough so that it can be drowned in a bathtub (except for the military...).

This will be an intersting week, don't think that Ryan will last very long in his current job.  On the one side you've got the extremist that cannot be budged, they have gerrymandered their district so that they are unmovable and will continue their crazy talk, and on the other side you've got the moderates (as they are), that are squishy in their demands and needs.

Now the big one are trade reform and tax reform followed by the Wall and infrastructure projects.  We must not forget the April 29th deadline to increase the government obligation/ability to continue to pay its …

Health care reform not this year

Today is the day, where the GOP's healthcare reform was to meet's its "first" hurdle which is the house of representative -- a few minutes ago the vote was pulled with 33 no and 9 undecided.  33 no was the death march of the law.

How did this happen?  The GOP had seven years to figure something out, and the end result is a big fat failure?  This was the litmus test for Ryan and Trump and yet the whole thing was mismanaged from the start:


It was done in secretNone of the natural constituencies where included in the processIt was done very very fast (3 weeks instead of 14 months for ACA)It was almost impossible Bottom line the GOP has been lying to itself.  David Frum suggested, in 2009, that the GOP work with Obama to make a good law.  Instead the GOP lied. made up stuff (death panels) and exaggerated.  Trump who's ADHD made understanding the healthcare problem impossible jumped on the bandwagon of this disaster.
How will Trump pass his tax reform now?  He had limi…

Italexit? Odds are saying Yes!

Poll after poll in Italy are showing the five star movement (not a radical right wing group) ahead in the poll.  In fact, just 6 points shy of a majority in the Italian Parliament (majority is at 40%).  Taking all the anti-Europe political parties together and you get a 56% coalition.

Italy is the weak link in core Europe, with 12% of the zone's GDP (a grouping of 27 countries) an economy in tatters, with 12% unemployment, and 37% unemployment among those below 25.  A banking system reeling from accumulated bad debts:  One bank alone absorbed 110% of the Italian government "authorized" rescue fund for its entire banking network.  The sickest bank, Banca Monte dei Paschi de Siena had non performing loans in the range of 30% -- at the peak of the S&L crisis in the 1980s the American banking non-performing loans were less than 5%.  Other Italian banks are in the low double digits -- still not healthy, but better.

The Italian economy is uncompetitive and has no tools (a…

Owning up to being wrong!

Over the past few weeks the truth has been largely absent from the American political scene. The truth is what you want it to be; Illegal voters was the reason Trump lost the popular vote, Obama spied on Trump etc etc.

It is the new normal in a way that politicians will understand; Trumps' sin is that he's gone "full retard" -- politicians lie, its the nature of the beast! Policy is complicated and people want simple answers to complicated questions, and are impatient for results, they don't understand how government functions -- they probably don't understand how a company works either!

Most politicians will use "little lies" to make their supporters happy, the difference with Trump is that he has no check and balance -- he says that the number of Americans at the inauguration was greater than under Obama -- and he will not change his mind confronted with irrefutable evidence to the contrary. Its not that he's shameless he just doesn't care…

Doing the unexpected

Donald Trump has been president for slightly more than 7 weeks (has it only been seven weeks) and yet he has already filed papers to run for elections in 2020...it seems a little premature, but really is a brilliant move.  Donald Trump keeps on doing the unexpected, in a way that is redefining politics and policy:


By running his upcoming speech in Nashville as a political rally (financed by his campaign for re-election) he can choose who he admits, use it on TV ads, make it available to the network that will run it on prime time and show DJT in full glory with adoring fans -- while keeping protesters far away, ideally showing pictures of protesters attacking the police -- you know good stuff!  [and sell stuff to his adoring fans]Trump has repeatedly said that the current US government is only for those who voted Republicans (although Trumpcare seems to be more about giving to the 1% than anything else), and can be ignored by elected officials -- a clear break from the tradition that th…

The culture of hype: Another blizzard downgraded to a snowstorm

I don't really care about snow storms on the East coast, but I use it to illustrate a bizarre American phenomenon; the use of hyperbole for everyday mundane events.  It starts with giving it you 150% (which is patently impossible...) and goes all the way to 24 hour coverage on multiple channels about the upcoming blizzard -- that has now only going to be s snow storm, a good one for sure but really a typical heavy snow storm with anywhere between 15 and 20 cm of snow.  An inconvenience for sure but not the end of the world in the northwest.

24/7 news cycle has given birth to these kinds of hype over nothing.  The 24 hour coverage of something largely unimportant -- simply buy a bit of extra food, have a plan B if the power dies and keep your cell phone recharged -- oh and stay home Tuesday.  Instead we get this panic mode.  I first noticed this kind of hype for the year 2000 -- when suddenly all the computers were suppose to stop and the world come to an end -- no so much.  There …

Every punter says oil prices are on the rise: Oil hits $48/bbl -- lowest since September 2016

What the hell?

How could this be, punters, advisors, investment bankers all agreed commodity prices  in general and oil prices in particular are on the rise...its a brave new era for producers and exporters -- finally the world is back and demand is going through the roof, except not so much!

What happened?  Well energy is complicated, the world operates in a balance -- 30 days of physical reserves is about all we've got (seriously) this is a just in time business.  So the long term trend always gets hit by short term variations.

Global production over the past 12 months has risen by somewhat less than 1.5% per annum.  As the world market changes production becomes less energy intensive (maybe), but the reality is that the world is growing more slowly -- America Q4 GDP growth was around 1.9% (annualized) Europe is going nowhere fast (the GDP growth in Germany is overshadowed by the lack of growth in France, Italy, Spain (lets say 27 Euro members generated a total GDP growth of 1.2…

Trumpcare & the end of an era: RIP globalization

Well its seems that the GOP has finally put its big boy pants and created a bill to replace Obamacare -- it took more than 7 years to get a sense of what the GOP leadership is thinking, and its a huge disappointment.  In a sense, the good old boys of the GOP only want to do one thing its make the government smaller!  So the pieces are slowly coming together, its not going to work, but you understand where they are going.

First, they flip the benefits for healthcare from the most in need to those who don't need it.  Really, its a simple as that the tax credits are aimed squarely at the richer segment of the population, the block grant is a brilliant idea if you want to kill Medicaid.  BTW a fun fact, nearly 50% of all birth in the US are paid via medicaid...

It gets even worse, they so don't believe in their plans they've not even bothered to get diverse faction of the GOP commenting on their plans -- seriously, the bill went to committee and no changes were made.  Obviousl…

Trucker shortage? No a plan to allow driverless rigs

There are still articles on how America is running out of truckers -- and that its a huge problem, except its not a problem, if it was a problem salaries would rise to so that demand would clear. Trucking is one of those industry where the vast majority of participants are owner/operators and therefore free agents.

Salaries and cost are extremely well know, "industry" complains that there are not enough truckers, yet wages continue to fall... Therefore there are still too many truckers around, for if there was a shortage of supply prices would rise, and they don't.

What there is though is something different; there is a push to allow automatic rigs to "operate across the US", so to encourage the various authorities to allow self driving rigs you talk shortage and hope that politicians decided that "Well if people don't want to work, lets get robots to do the work" or words to that effect.

This has nothing to do with shortage of drivers, but every…

Law of unintended consequences III -- the Sugar trade wars (according to some)!

OK this morning it emerged that Mexico has "suspended all March sugar export to the US ".  The immediate reaction of those reading these article s(mostly zerohedge) was predictable because obviously they don't read...they just saw the title -- which was misleading.

What really happened:  Sugar trade between Mexico and the US is managed -- in order to maintain the US sugar production industry.  Anyway, the trade is managed in two ways:  (1) there is an absolute limit to the amount of sugar sold from Mexico, (2) these sales are "spread throughout the year".  What happened is that in the first quarter of 2017 too much sugar was sold to the US, Mexico has been trying to shift the cap (to reflect production) for some years, but has had no success.  In the past on an add hoc basis these caps were shifted by the appropriate US authorities.

The problem now is that new US administration has not replaced the group that can agreed to these add hoc changes in the sugar quo…

Trump, Congress and the American way of life

What an exiting weekend, turns out that instead of asking the NSA, CIA and FBI if President Obama had wire-taped his Trump Tower phones, the President decided to ask the question on Twitter, all this apparently borne out of a wet dream of Mark Levin a far (waco) right radio commentator, a repeated in Brietbart!

Now, based on Trump's "gut feeling" Congress wants to start an investigation...too busy to look into the allegation of Russian interference in the 2016 election process but stuff that Trump can ask directly from the NSA/CIA/CIA...that is something they have the time to investigate. Republican Congress have become the cheerleaders of the Trump administration, they are not a check and balance they are squarely in his corner.  Granted Congress has its hands full with the new healthcare legislation, to the left (the democrats) are not about to help Paul Ryan destroy Obamacare, to the right the Freedom Caucus wants no health care at all, free for all, cats, dogs every…

DB -- looking to raise new capital (Revisited)

The German banks had a terrible 2016 and 2017 is not shaping up to be any better.


For some reason after 2008 the ECB didn't encourage European banks to increase their capitalEqually, the ECB went out of its way in 2010/15 to buy distressed Greek debt at par (mostly from European banks, and insurance companies) a nice little German Banks did a headcount cut of 20% (both DB and Comerzbank) also in 2016DB's share price between 2008 (April) and today has gone from $121 all the way down to $21Just last week DB cut its bonus pool by 80% -- great for staff retention!
So early this morning rumors began circulating that DB was going to either issue new shares -- at the current price rather high dilution, OR IPO DB's Asset management business!  No wonder the stock tanked this morning.  DB Asset Management is the single most valuable asset of the company.  It has been completely free of any scandals, it is very well run and a profitable business for the group.  If this is true, it is…

Snap Chat at 25 (update)

Ok

I don't use SnapChat -- to be perfectly honest I don't really know what SnapChat is about considering that the whole thing is that you seem to be able to send inappropriate pictures that will disappear into the ether immediately (really).  Honestly, what's to stop a person who receives a snapchat from taking a picture and then posting it on...

Maybe the new generation has figures out that your Facebook pictures of you snogging some girl could come to haunt you many years later.  A suggestion, if you think the picture is inappropriate maybe it's best not to send it all!

Anyway, this morning SnapChat was launched on the NYSE with a price of about $17 per share, a nice one day boost of 47% to $25.16 this afternoon made everyone that got allocation in the IPO- happy.

Also this morning the market gave a target price of $10...mmmmh.

I've not looked at the annual report but something tells me that with a company that was valued at US$ 29 billion and is now worth US$42 …

Trump's State of the Union

The highlights:

(1)  Down with regulations!-- that may work, but then giving the right to industry to pollute -- are we back to rivers on fire.  After all the lack of regulations has been so good for China, maybe America should imitate.  Some of the finance regulations are pointless.  Not sure that killing the consumer protection bureau is such a hot idea.  Also not sure I buy the job-killing thing, America is near full employment now.

(2) Killing the TPP is good for the economy!:  not sure it was and it excluded China which seems to be idiotic anyway.  The jury is out on that one.  Those who remain in the TPP can still agree to something, but without China and America it's a little pointless

(3) Drugs is a real problem in America and we will do something about it!:  That's pie in the sky, for more than 40 years America has tried to eradicate drugs without success.  Drugs have never been cheaper.  This is a waste of time and effort filling the prisons for nothing, reform it li…