JIMBO'S STATEMENT OF THE DAY
If your going to pick up money in front of the steamroller make sure you pick up double eagles instead of dimes.
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There have been 29 items by Jimbo (Search limited from 18-October 16)
TREASURIES - THE GIFT THAT KEEPS ON GIVING
No not a GIFT to the bond holder - Its a GIFT to the BORROWER the US Government!!!!!!!!!!!
At 2% interest with 2% inflation and 0.5 tax you are giving away 5% of you capital whenever you buy a new 10 year bond.
And yet people are still buying them all the time!!!!!
Bond need to pay 3% to compensate for inflation and tax and that is with a NIL return for the time value of money,
Add in a decent 3% return for the time value of money and 10 year bonds should be returning 6%.
INTRODUCING THE MUNICIPAL SINGLE STATE SHORT ETF
Since we have single state municipal bond funds why not have single state municipal bond short ETF's
The Puerto Rico Bond short ETF
The Illinois Bond short ETF
The Conneticut Bond short ETF
I think this will be a growing theme from now on.
INTRODUCING A NEW ETF
First I introduced the Trump ETF
Then I introduced the Deep State ETF
Now I Introduce the Smart Trump/Deep State Arbitrage ETF
This ETF automatically arbitrages (by moving capital) between the Deep State and Trump ETF's depending on whether the news is positive or negative for Trump in any one week.
FANNIE MAE STOCK as A Politicical INDICATOR
As I have previously stated you can use the stock price of FANNIE MAE as a fairly good indicator of the Trump Vs Deep State battle.
Its been downhill since the election
Was November 2016 PEAK TRUMP???
ICELAND IS BOOMING
So Iceland lets all its banks go broke
So I presume the countiy should be in a permanent economic depresion
But the OECD says the economy is boominjg growth is 7% the fastest growing economy of all OECD economies!!!
Thats what happens when you get a decent debt reset,
Unlike say Grreece
No debt reswt there.
It saved its banks and is in a permanent depression.
Iceland is having the tourism boom greece should have had,
DEEP STATE MATHEMATICS FOR BEGINNERS
(or why politics matters to stocks)
Trump Vs Deep State
Recap and Release Vs no recap and release
Very significant Fannie and Freddie share price increases Vs Worthless Fannie and Freddie shares
FREDDIE, FANNIE AND THE DEEP STATE
is the Deep State a recap and release sort of guy????
I think not,
Is President Trump - I still think so
So the deep state vs the president is really recap and release vs status quo.
I notice that Bill Ackman has loaded up on Fannie and Freddie
Late to the party as always
He stayed too long at the Valeant Party = stayed long after it had ended and lost $4 billion.
The rule of parties states that you arive early and you depart early!!!!!
Sober and still in control of your faculties and capital.,
The way to have played Fannie and Freddie was to have loaded up on options in May 2016 and sold when Trump got elected
Because the Deep State counter attack could well win!!!
In which case Freddie and Fannie stock is worthless.
Indeed the Fannie and Freddie stock price is a good way of keeping the score between Trump and the Deep State.
If Bill wants a pharma stock try TEVA.
ETF SUGGESTION OF THE DAY
THE AMAZON RETAILER SHORT ETF.
Full of all the retailers Amazon is crushing right now.
Or perhaps a different name - something more sexy for marketing purposes.
How about the Amazon Anaconda ETF,
GM AND THE EINHORN PLAN
Now that I think about it the plan was to borrow more and buy back stock while maintianing the dividend.
Replacing the dimes in front of the streamroller with silver dollars to juice the stock.
Increasing the market reality price of the stock but at the same time decreasing its actual real reality price,
This would turn the stock in to a Coyote Cliff ETF candidate,
Here's some morning humor for you.
Well Jorma it created something never seen in the history of finance
The negative yield bond
Cant wait for the "negative yield mortgage".
Cant wait to take one out,
THE PASSIVE FUND MYTH EXPLODED
Jeffery Gundlach says passive investing does not exist
At the Ira Sohn comnference Jeffery said that passive investing does not exist
Jeffery is exactly correct.
Index investing is not passive investing - It is active rule based investing
The rule to buy stocks going up in value and sells stocks going down is a MOMENTUM rule.
No investment by its very nature can be passive
Indeed a large number of active fund managers are MORE PASSIVE in their investment strategies than the misnamed passive index funds.
And that (along with their higher management fees) explains to a great extent why the majority of active fund mangers under perfrorm the misnamed passive but in reality more active index fund managers
They stay in stocks which are going no where or are going down while the misnmamed passive but in reality active index fund managers are buying the stocks that are going up.
I.e index funds are in reality momentum funds.
But their achiles heel is that they ignore value.
One day value will catch up with index funds and it wont be pretty.
ONE EQUATION TO BIND THEM AND RULE THEM ALL
Quantitative easing PLUS leverage EQUAL the Direxion S&P 3X Bull ETF
This ETF has returned 27% per annum since being founded in 2008.
Says it all doesnt it.
Just front run the force (QE) with the most leverage possible (3 times) and just sit tight.
But what if the S&P falls 25% in a year
Then this ETF will have its first minus 100% year!!!!
This isnt picking up pennies in front of the steam roller
This is picking up gold eagles in front of the steam roller
I notice that Direxion has 6 out of the top 10 performing ETF's over 5 years
All 3X ETF's
GM - A COYOTE CLIFF CANDIDATE
GM has piled on debt over the last few years
Now 90 Billion.
Also has 21 Billion pension deficit - but with a realsitic earnings rate on the fund it could really be double that - more like 40 Billion.
Also I note at Yahoo finance that their interest bill is only $571 million in 2016
On a 90 billion debt it should be much larger than that????.
THE STRANGE CASE OF DAVID EINHORN AND GM
So after my post on GM David Einhorn jumps in and suggest two classes of stock.
Numbers suggest the two stocks will increase market cap by 38 Billion.
This will not happen.
Because while the dividend stock will be worth 20 the capital stock will adjust in value downward by a considerable amount.
My calculations suggest the capital pop of the two stocks together will be 20 Billion not 38 billion.
Because this looks like a tax minimisation exercise where the current non tax deductable "dividend" will now be a tax deductable interest payment by the company to the "shareholder/debtholders" of the dividend stock.
Value will be transferred from the taxpayers (tax saving by GM of $1 billion per annum) to the GM capital stock share holders.
The capitalised value of this value transfer is about $20 billlion.
Otherwise the idea holds no value to the shareholders.
Indeed this is very similar to the common/preference two class share structure that all the 19th century railroads had.
This is just a case of more capital structure arbitrage which I have posted on before. Substituting debt for capital to keep the stock pumped up.
Indeed GM has added vast amounts of debt over the past few years - now have 90 billion in debt.
NO LOVE IN THE AGE OF OLOV
The problem for active fund managers is that all their assets are over leveraged and over valued (OLOV).
For the 2/20 model this means they now make make all their money from the 2 and not the 20.
This means they still have nice income but also have lots of disgruntled investors.
This then means the income form the 2 starts to shrink as well as funds are pulled out by investors.
So then the hedge funds come back with 1 and 10 to try and keep the funds in the fund.
Their entire strategies become focused on retaining funds, and if they fail they close down
Because 1 is better than 0 even if its not 2.
The interesting case of China Huishan Dairy
Im sure whoever sold all the stock of this pump and dump scheme since September 2015 will be buying some nice overvalued houses in Vancouver soon.
Far from the gentle and loving reach of the Chinese government.
And those Chinese lenders left holding the bag.
Actually it looks like China would be a happy hunting ground for stocks to put into the COYOTE CLIFF ETF.
The interesting case of China Huishan Dairy
So the stock falls 85% in one day - $4 billion wiped out.
Carson Bloch says he doesnt know why?
Well let me offer a possible explanation why???
If you look at the stocks chart you can see fairly clearly that some one was supporting the stocks price since September 2015.
Some one has been keeping the stock pumped up since then.
Obviously they have run out of money to keep the stock pumped and the market reality price SUDDENLY ADJUSTED to the actual real reality price of the stock.
Was the pumper borrowing the money to keep the price pumped and the lender (possibly a chinese bank) said NO MORE!!!
Who sold stock between September 2015 and NOW at the high prices????
Whoever did was a winner of the Chinese new world.
WHAT ARE PUERTO RICO BONDS REALLY WORTH
Well you could say they are worth the market price 65 cents in the dollar
This is their market reality price.
Or you could try and determine the actual real reality price of the bonds i.e the discounted current market value of the actual cash flows that will be recieved in the future on these bonds.
But how do you determine this ....its impossible right?????
This information is simply not known.
Well the market is estimating these cash flows to come up with the current market prices.
But what if there is a better way....an alternative that is closer to the truth....to reality.
I suggest using an estimation of "capacity to pay" as an alternative measure.
Under this scenario as evidenced by the financial control boards usefully provided budget
The bonds are worth 30-40 cents on the dollar.
Considerably less than their current market prices.
Where is the Puerto RIco Bond Short EFT when you need it???
WHAT IS SEEN AND WHAT IS UNSEEN
GM looks awfully cheap at 6 times eanings and 5% dividend yield.
Very tempting - Until you see the unseen and hear the two words "PENSION DEFICIT" for whom the stock bells toll.
GM has 21 BILLION in unfunded pension liabilities.
But it could be even worse. What if the actuarial assumptions under which the current deficit is calculated are too generous and the earnings rate of the pensions funds in the future are lower than the current actuary determined earnings rates.
What if the pension deficits in time exceed the current market cap of GM.
The generous dividend feels very much like picking up pennies (or is that dimes?) in front of the steam roller.
JIMBO AWARD FOR CAPITAL RAISING
Goes to Deutche Bank
It will have raised 30 Billion euro in new capital since 2010 but only has a market capitalisation of 26 billion.
Thats capital destruction of a fairly high order.
CANT WAIT FOR THE TRUMP DUMPO
Can smell it comng now!!!!!!
This Trump rally is actually the perfect set up for the dumperama.
The normal santa rally has been deceptively and deceitfully labelled a Trump rally to give it extra strength and power.
Thankyou useful media idiots/shills you have done yourself proud.
Sucking in the suckers - weak hands
And setting up the perfect "Set Up" for a good Trump dump in January.
Merry xmas everyone
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