Posts Tagged ‘financing’

InterOil: What The InterOil Math Teaches Us

InterOil: What The InterOil Math Teaches Us

Courtesy of Roddy Boyd, THE FINANCIAL INVESTIGATOR

In the world of finance theory, a credible suggestion that you are being forced to raise cash at exorbitant rates or are internally valuing your assets sharply below where the market appears to value them is traditionally a death sentence for your share price. The reasons for this are straight forward enough: Investors hate desperation but not as much as they hate making an asset play and being wrong on the value of the assets.

Then there is InterOil.

A Cairns, Australia- and Houston, Tx-based oil and gas producer that has been touting in one form or another a potentially epic find in the wilds of Papua New Guinea for more than a decade now, it recently raised cash at exorbitant rates and appears to be internally valuing its assets way below what the market appears to think they are worth.

Yet all is well in the share price department.

The story is none too complicated: InterOil, a company whose shares are seemingly made of titanium, is paying rates for cash that only credit cards aimed at those with bad credit can obtain. Better still, the person pulling InterOil’s eyeballs out is its long-time sponsor and key investor, Clarion Finanz AG and its controversial chief, Carlo Civelli.

[Civelli’s record as a broker, investor and promoter of a series of often troubled energy enterprises drives skeptics somewhere north of berserk. He and InterOil have loudly proclaimed that he is little more than an investor and advisor, although the power dynamics of this picture would seem to indicate otherwise. When having your company feted at the NYSE, it is customary to have the CEO or the company’s founder/guiding spirit ring the bell at the opening. Civelli, in the picture, is the one reaching over to ring the opening bell.]

To call InterOil a battleground stock is to be droll. The dispute over the proper level of its valuation and prospects in every sense of the word is analogous to the sanguinary trench combat of the First World War’s Western Front. Short-sellerscritics and investigative reporters raise more and more questions about management disclosures and candor but the stock continues to enjoy robust support. To follow through on…
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Ponzi “Shark Loans” Fuel China’s Housing Bubble; Home Sales Plunge 44% in Xiamen; Bubble Busts in Tianjin

Ponzi "Shark Loans" Fuel China’s Housing Bubble; Home Sales Plunge 44% in Xiamen; Bubble Busts in Tianjin

Courtesy of Mish

BEIJING - JUNE 25: Salespeople sit unoccupied during the 2010 Beijing Summer Real Estate Trade Fair onJune 25, 2010 in Beijing, China. A new policy introduced in April restricts families from buying more than one additional home, and prevents non-local residents from buying an additional home unless they have worked in Beijing for more than a year. In the declining real estate market several new housing developments have seen no sales so far this month. (Photo by Feng Li/Getty Images)

China’s property bubble is now on the verge of collapse. Transaction volumes are significantly down and declining volume is how property bubbles always burst. In simple terms, the pool of greater fools eventually runs out.

In China’s case, the pool of fools is heavily involved in "loan shark" schemes where speculators hope property values rise fast enough to cover the interest.

Ponzi Loan Shark Operations Fuel Bubble 

Please consider The Secret Engine Behind China’s Housing Bubble- The Ponzi Shark Loan Finance

In this article we will show how the ponzi shark loan scheme works and why we think the regime in China will fall. Our research is based on sources INSIDE CHINA

This is how this Ponzi scheme works:

Local officials, [required by] the government to produce double digit GDP growth numbers, give real estate developers permits to build housing projects in return for bribes. They also get bribes in return for allowing the shark loan companies to operate under their jurisdiction. Some of them are active partners in shark loan businesses. Every scheme has a ring leader whose job is to collect money from all the participants in the Ponzi scheme. When some of these Ponzi schemes blow up, the party leaders always get bailed out first.

Most of the funds that are collected in this classic Ponzi finance go to local land purchases and real estate development. Part of the funds are used in order to pay back the rolling loan. The short term interest rate in this black market is very high and ranges between 20%-150% annual rate. The sources of the Ponzi funds are diverse, as ordinary citizens, banks with corrupted bank officials, and state enterprises play the game.

A reader wrote to us this email two weeks ago, which triggered our in depth research:

“My hometown is Zhejiang, now I live in shanghai, my sister pledged her home to bank, she lived in Hangzhou, she bought her home around 500,0000rmb five years ago, now her home worth 2 million RMB, so she can get huge loan from bank, she gave this loan to a shark loan company with 30% return every year, she has been doing and living on this for 4 years, she is a middle school


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Are the Losses of Fannie and Freddie Now “National Policy”?

Are the Losses of Fannie and Freddie Now "National Policy"?

Courtesy of Trader Mark, Fund My Mutual Fund 

fannie and freddieBarry Ritholtz and Dean Baker discuss a concept I’ve advanced – effectively Fannie and Freddie (or as we call them around here, FanFredron) are being run for loss to create a false housing economy via subsidization. They do put forth an additional point that I have not harped on as much: one added benefit of this ‘policy’ is our financial oligarchs win…. again.

If we ever do get back to a world where the private sector is truly a part of financing the housing market it is going to be mighty interesting to see what true mortgage rates will settle at, now that ‘strategic default’ is part of the American lexicon. The higher risks involved will create an increase in costs to every future mortgage due to this exciting new fad. But with government now supporting some 95%+ of all financing this is an issue that won’t face us for many years. Thankfully the government does not price in any risk and gleefully backs mortgages of almost any kind (still). Until some far in the future reform date, more below market rates offered by the 2 institutions that can gladly lose money forever – ponzi style.

(Amazing fact I heard the other day, Fannie Mae has lost more money the past 2 years than it made the previous 30 years. Chew on that for a moment before you move onto the next paragraph. Thankfully there is no such thing as a clawback in corporate America.)

6 minute video

 

The Senate on Tuesday rejected a Republican sponsored measure that would effectively cut off support to Fannie Mae and Freddie Mac in two years. The government-sponsored enterprises, now in conservatorship, have already cost the government about $145 billion.

And there’s no limit to how much more they can ask for for the next two years!

Fannie Mae lost $11.5 billion in the first quarter while Freddie Mac lost more…
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First, Let’s Kill the Angels

First, Let’s Kill the Angels

Cupid holding heart box of Valentine candy

Courtesy of John Mauldin 

First, Let’s Kill the Angels 
Equal Choice, Equal Access, Equal Opportunity 
Some Quick Thoughts on Goldman 
La Jolla and Dallas

When you draft a 1,300-page "financial reform" bill, various special interests get language tucked into the bill to help their agendas. However, the unintended consequences can be devastating. And the financial reform bill has more than a few such items. Today, we look briefly at a few innocent paragraphs that could simply kill the job-creation engine of the US. I know that a few Congressmen and even more staffers read my letter, so I hope that someone can fix this.The Wall Street Journal today noted that the bill, while flawed, keeps getting better with each revision. Let’s hope that’s the case here.

Then I’ll comment on the Goldman Sachs indictment. As we all know, there is never just one cockroach. This could be a much bigger story, and understanding some of the details may help you. As an aside, I was writing in late 2006 about the very Collateralized Debt Obligations that are now front and center. There is both more and less to the story than has come out so far. And I’ll speculate about how all this could have happened. Let’s jump right in.

First, Let’s Kill the Angels

I wrote about the Dodd bill and its problems last week. But a new problem has surfaced that has major implications for the US economy and our ability to grow it. For all intents and purposes, the bill will utterly devastate angel investing in the US. And as we will see, that is not hyperbole. For a Congress and administration that purports to be all about jobs, this section of the bill makes less than no sense. It is a job and innovation killer of the first order.

First, let’s look at a very important part of the US economic machine, the angel investing network. An angel investor, or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.

Angels typically invest their own funds, unlike venture capitalists, who manage the…
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ValueWalk

Gold Was Chemically Destined To Be Cash

By Frank Holmes. Originally published at ValueWalk.

I think most of you reading this right now are aware that gold is unlike any other metal, certainly any other element. It doesn’t play by the same rules as iron or tin or aluminum, and its value has nothing to do with its utility—or lack thereof. People valued the yellow metal for its beauty and malleability eons before they knew of its usefulness in conducting electricity or its chemical inertness.

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Chart School

Volatility on the Rise

Courtesy of Declan.

Today's losses look big on current charts but in a historic context, they weren't too severe. However, big red bars are not to be ignored and 'market leading' Small Caps have felt the full brunt of the selling from July which is bad news for the broader market.  Today's losses in the Russell 2000 undercut the 200-day MA leaving 1,345 as next support (of which I would not be too confident of it holding).


If the Russell 2000 gives up 1,350s then a drop to 1,150s could be on the cards. Things could get ugly if this scenario pl...

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Zero Hedge

Fed's Kaplan Admits Stock Valuations Are Elevated, But He's Not Worried For One Reason

Courtesy of ZeroHedge. View original post here.

There were two explicit warnings about stock market valuations in the latest Fed Minutes: first, the Fed warned that "vulnerabilities associated with asset valuation pressures had edged up from notable to elevated, as asset prices remained high or climbed further, risk spreads narrowed, and expected and actual volatility remained muted in a range of financial markets." Then, in an odd admission, the Fed said that "recent rises i...



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Phil's Favorites

Unexpectedly Weak Industrial Production Report Released Unexpectedly Early

Courtesy of Mish.

The Fed accidentally released its Industrial Production report a half hour early today.

IP was 0.2% with an Econoday consensus o 0.3. Manufacturing was a disaster, down 0.1% vs an Econoday consensus of +0.2%.

The Federal Reserve inadvertently released what is a weak July industrial production report about a 1/2 hour early this morning. Headline production rose 0.2 percent vs expectations for 0.3 percent with manufacturing output showing outright contraction, at minus 0.1 percent vs Ec...



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Insider Scoop

10 Stocks To Watch For August 17, 2017

Courtesy of Benzinga.

Related SMRT Earnings Scheduled For August 16, 2017 The Factors That Could Be Moving Short- And Long-Term Buyers ...

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Digital Currencies

Ukrainian Lawmakers Disclose $45 Million In Bitcoin Holdings

Courtesy of ZeroHedge. View original post here.

As Ukraine's crackdown on corruption continues, three lawmakers from Ukraine’s ruling party revealed this week that they own a combined $45 million in bitcoin, according to a report by RIA Novosti, a Russian foreign news service.

Their holdings came to light during mandatory financial disclosures by members of the Ukrainian parliament, part of an IMF-approved strategy to tamp down corruption in Ukraine. The country's democratic institutions, which were never very robust to begin with, have been further destabilized by...



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OpTrader

Swing trading portfolio - week of August 14th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

Editing human embryos with CRISPR is moving ahead - now's the time to work out the ethics

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

Editing human embryos with CRISPR is moving ahead – now's the time to work out the ethics

Courtesy of Jessica BergCase Western Reserve University

There’s still a way to go from editing single-cell embryos to a full-term ‘designer baby.’ ZEISS Microscopy, CC BY-SA

The announcement by researchers in Portland, Oregon that they’ve successfully modified the genetic m...



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Members' Corner

Why we need to act on climate change now

 

Why we need to act on climate change now

Interview with Jan Dash PhD, by Ilene Carrie, Editor at Phil’s Stock World

Jan Dash PhD is a physicist, an expert at quantitative finance and risk management, and a consultant at Bloomberg LP. In his thought-provoking book, Quantitative Finance and Risk Management, A Physicist's Approach, Jan devotes a chapter to climate change and its long-term systemic risk. In this article, Ilene interviews Jan regarding his thoughts on climate change and the way it can affect our futu...



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Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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