By Charley Grant
GameStop mania was a wake-up call, but now the capital markets have truly reached ludicrous mode.
Electric-car maker Tesla TSLA 1.31% said in a securities filing Monday that it has purchased $1.5 billion worth of bitcoin and that it expects to begin accepting payment in the cryptocurrency for its products in the future. Tesla shares and bitcoin both traded higher after the announcement. This follows social media posts by the auto maker’s influential boss, Elon Musk, that already had helped drive bitcoin’s price to a record. All told, the rally spurred by the announcement on Monday added more than $100 billion to bitcoin’s market value, while Tesla shares also rose yet again.
The investment is more than symbolic for the company, being equivalent to Tesla’s research-and-development tab for 2020. And while uniting two of the most popular investment themes under one roof is undoubtedly a winner today, the decision introduces even more risk to owning what is already one of the most speculative stocks of the current bull market.
As Tesla itself said in the filing, prices for digital assets such as bitcoin have been volatile in the past. Cryptocurrencies are a fairly recent development and their long-term adoption by consumers, investors and businesses is highly uncertain. That adds to the speculative fervor already gripping Tesla’s stock price in a feedback loop. Indeed, the manager of the most popular active fund recently, Cathie Wood of ARK Invest, has made big bets on both Tesla and a trust that owns bitcoin, fueling a record pace of inflows.
At a market value of about $800 billion, Tesla trades at about 6.5 times the combined value of Ford and General Motors, despite controlling a small fraction of the global auto market. And Tesla lately has been losing market share in Western Europe to competitors including Volkswagen, which has begun to compete aggressively in the electric category. The news of Tesla’s bitcoin investment eclipsed a negative headline for the company Monday about quality issues identified in the important Chinese market.
While digital assets are relatively new, a tour of financial history suggests similar speculative use of an industrial company’s funds aren’t—and they have ended badly. About a century ago, General Motors required a bailout due to the stock speculation activities of founder William Durant. In the 1980s, widespread corporate speculation on Japanese land prices helped drive a stock bubble that eventually collapsed.
Those cautionary tales aren’t likely to concern investors who are enjoying a giant stock-market party. But Tesla’s monetary experiment, coupled with the individual-investor-driven stock-market madness of recent weeks, should have investors concerned that the consequences of staying at the party too late will be worse than leaving early.
https://www.wsj.com/articles/tesla-and-bitcoin-what-could-possibly-go-wrong-11612797620
Elon Musk’s preoccupation with crypto has now been taken to its logical conclusion. It is as disconcerting as it is inevitable.
Tesla bought Bitcoin. It feels as if that sentence should properly begin with “Imagine if ...” and a wry chuckle. But no. Imagine no longer.
Tesla Inc.’s annual report disclosed the electric-car maker updated its investment policy last month and then bought $1.5 billion of the crypto. That news added roughly $5,000, or 14%, to said crypto on Monday morning, sending it to an all-time high. Tesla’s own stock rose about 3%, adding roughly $11 billion in market cap, because — well, probably because of this. I don’t know.
Tesla and Bitcoin are like two sides of the same, well, you know
Yet it’s hard to shake the feeling that it is just inadvisable to be (forgive me) crossing the memes like this. It’s as if the earth has shifted a billionth of a degree on its axis or we are approaching some singularity in the capital markets with Lovecraftian overtones.
Lovecraftian horror is a sub-genre of horror fiction which emphasizes the cosmic horror of the unknown (in some cases, unknowable). It is named after American author H. P. Lovecraft (1890–1937). Lovecraft refined this style of storytelling into his own mythos that involved a set of supernatural, pre-human, and extraterrestrial elements. His work was inspired by and similar to previous authors such as Edgar Allan Poe, Algernon Blackwood and Lord Dunsany. The hallmark of Lovecraft's work is cosmicism: the sense that ordinary life is a thin shell over a reality that is so alien and abstract in comparison that merely contemplating it would damage the sanity of the ordinary person.
Jim Chanos has been short Tesla Inc.’s stock for five long years. And although he’s reduced the size of the trade, he’s not done with it yet.
For the first four years, he says, it wasn’t such a bad short. The electric-vehicle maker’s stock wasn’t trouncing the market.
The last 12 months? That’s a different story, with Tesla climbing more than 700% and inflating its market capitalization to above half a trillion dollars. The company is now bigger than all but five members of the S&P 500 and will be added to the benchmark index later this month. Chanos has reduced the Tesla bet from the maximum short position of 5% of capital allowed at his hedge-fund firm Kynikos Associates.
“It’s been painful, clearly,” Chanos said in a Bloomberg “Front Row” interview.
WATCH: Kynikos Founder & President Jim Chanos discusses his “painful” short in Tesla Inc. and says people are doing really dumb things with their money.
Source: Bloomberg)
The famed short-seller continues to takes issue with Tesla’s business model and valuation. Some investors see it as an electric-vehicle company, others view it as an autonomous-vehicle company, while still others treat it as a clean-energy play.
“It’s whatever people want to believe Elon Musk is touting,” said Chanos, pointing out that Tesla’s five straight quarters of profit are due to sales of regulatory credits rather than cars. Tesla trades at about 900 times trailing earnings, and more than 150 times estimated earnings for the next four quarters.
“I’ve never met Elon Musk,” said Chanos. “I’ve never had a conversation with him.”
If they were to meet? “I’d say, ‘job well done so far,’” he said.
By contrast, 2020 has been a tough slog for Kynikos in its 35th year. The firm has a traditional long-short hedge fund where passive index funds provide most of the long exposure, allowing Chanos to focus on the short side. Kynikos also offers a fundamentally chosen short portfolio that serves as an insurance policy for investors who are long the market.
But after the Federal Reserve cut interest rates to record lows in March and made clear it will step in with more help if necessary, he said few investors are worrying about significant downside risk, much less see the need to actively protect against a rising stock market.
Retail investors also help keep share prices buoyant, Chanos said. While he said it’s easier than ever to find companies that look attractive to short, many bearish bets are just not working. The firm is usually correct on about two-thirds of its picks, but only one-third of its shorts are currently panning out.
“Right now, people are doing really dumb things with their money. It can go on for a while, and you can lose lots of poker hands to people that are doing dumb things with their money,” said Chanos. “But over time, I would hope that basically, if you’re playing properly, you’re going to come out ahead.”
The current market euphoria is also creating a “golden age of fraud” that will be exposed over time, he said. It’s a topic Chanos is well-versed in -- he teaches a financial fraud class at his alma mater Yale University and made his name betting against Enron Corp. in 2000 after spotting accounting maneuvers to hide losses at the energy trading company before its collapse.
What’s different this time, Chanos said, is that investors keep bidding up stock of companies with questionable financial statements until the firms themselves finally admit wrongdoing. Suspected or actual frauds currently make up 30% to 35% of Kynikos’ short portfolio versus the typical 10% to 15%.
Chanos spoke with Bloomberg in a wide-ranging interview, including his skepticism about International Business Machines Corp.
IBM, whose revenue has shrunk in seven of the last eight years, is one of Chanos’ biggest short positions. Chanos said IBM has mitigated its deterioration through “financial engineering” -- most recently with plans to spin off its legacy IT-services business.
“The dead giveaway to us that the spinoff is being done for financial engineering reasons was that they’re saying it’s going to take the better part of almost 18 months to do,” he said. “And that’s crazy.”
Representatives from Tesla did not respond to requests for comment. A spokesperson for IBM declined to comment.
Chanos said IBM is an anomaly in the industry because it’s large and shrinking at a time when most tech companies are growing. As for mega-cap names such as Apple Inc., Alphabet Inc. and Facebook Inc., “they’re very, very high return-on-capital businesses,” he said. “If they trade at 20 times cash flow or something like that in a market with low interest rates, that certainly might be an appropriate valuation.”
The SNA Emeraude was accompanied by support ship BSAM Seine for the passage, Defence Minister said
A French nuclear attack submarine was among two navy ships that recently conducted a patrol through the South China Sea, its defence minister announced, in a move likely to anger Beijing, which claims most of the strategic waters as its territory.
The SNA Emeraude was accompanied by support ship BSAM Seine for the passage, Defence Minister Florence Parly said on Twitter late Monday.
"This extraordinary patrol has just completed a passage in the South China Sea. A striking proof of the capacity of our French Navy to deploy far away and for a long time together with our Australian, American and Japanese strategic partners," she tweeted along with a picture of the two vessels at sea.
China lays claim to nearly all of the South China Sea while Taiwan, the Philippines, Brunei, Malaysia and Vietnam all also claim parts of the region, believed to hold valuable oil and gas deposits.
US warships occasionally carry out "freedom of navigation" missions through or close to waters claimed by Beijing to stress Washington's rejection of those claims.
The USS John S. McCain last week sailed near islands in the South China Sea claimed by Beijing and conducted a transit through the Taiwan Strait, prompting a warning from China.
NATO member France has exclusive economic zones in the Pacific around its overseas territories and has stressed the importance of defending freedom of navigation in the region.
"Why such a mission? To enrich our knowledge of this area and affirm that international law is the only rule that is valid, whatever the sea where we sail," Parly tweeted.
The French patrol comes after the inauguration of US President Joe Biden, who has underscored support for Washington's Asian allies after four chaotic years of the Donald Trump administration.
In April 2019, there was a naval incident in the Taiwan Strait when Chinese ships told the French frigate Vendemiaire to leave the waterway that separates the Chinese mainland and Taiwan, another sensitive area claimed by Beijing.
The number of vaccinations administered in and around Midland have surpassed 20,000, according to Midland Health statistics.
Midland Health reported that more than 1,000 have been administered every day but one going back to Jan. 22. That includes a one-day high of 2,442 on Jan. 29 and 1,230 at the Horseshoe on Monday. Heading into Monday, Midland Health officials were reporting 19,915 vaccinations provided.
SINGAPORE (Reuters) - China's offshore oil and gas major CNOOC Ltd has delivered Shenhai-1, a 53,000-tonne, 120-meter tall locally built semi-submersible production and storage platform to its deepsea gas project in the South China Sea, a state-owned media has reported.
That marks a key step for CNOOC to start producing from Lingshui 17-2, a large natural gas deposit about 1,500 meters below the sea surface, the state oil major's first fully-owned deepwater gas project, People's Daily said in a report late Monday.
Building of the massive facility of Shenhai-1, meaning deepsea, was completed at Chinese shipyard Yantai last month after 21 months of work that saw 4,000 workers working day and night during its peak construction period.
The platform is able to store a maximum 20,000 cubic meters of condensate, a very light oil that typically co-exists in a natural gas reservoir, CNOOC said earlier.
It took 18 days for the giant platform to sail 1,600 nautical miles from Yantai in east China to the site of the gasfield about 150 kilometers (93.21 miles)southeast of Hainan island, towed by three high-horsepower tug vessels.
CNOOC has aimed to start producing gas at Lingshui 17-2 in the second half of 2021, with annual production of 3 billion cubic meters, or about 1.6% of China's total domestic gas production.
Shenhai-1 can also be used for serving new gasfields like Lingshui 18-1 and Lingshui 25-1, the report added.
The future looks bright for solar and other renewable energy technology. FirstSolar, Enphase, and SunPower are among the renewable energy stocks that are benefiting from a new focus on climate change and green energy in the White House. Developers and plant owners expect the addition of utility-scale solar capacity to set a record by adding 15.4 gigawatts of capacity to the grid in 2021, up from about 12 gigawatts in 2020, according to the U.S. Energy Information Administration. The agency said solar power will account for the largest share of new capacity in 2021, exceeding wind power growth for the first time.
Solar Industry Magazine – January 26 According to a new Rocky Mountain Institute report, by 2030, renewable energy capacity in the U.S. will at least double and potentially grow by a factor of seven or higher. Rural communities, which host 99% of onshore wind and a growing share of utility-scale solar projects, stand to receive a sizeable boost to their local economies. Annual revenues from wind and solar projects could exceed $60 billion dollars by 2030 – on par with expected revenues from the top three U.S. agricultural commodities: corn, soy, and beef production.
When a company called Jonah Energy last year reported that it had become the first to be awarded a low-methane standard by the IES, it didn’t exactly steal the headlines. Yet the report was an early sign of a transformational trend looming over gas markets: methane certification. The Independent Energy Standards Corporation said last year it was expanding its TrustWell Responsible Gas program to include methane certification just as the gas - an indivisible part of natural gas production - started garnering more attention from media, environmentalists, and regulators alike.
In Europe, a non-profit organization was set up recently for the same purpose: MiQ is an independent certifier of methane emissions, which, according to senior advisor Georges Tijbosch, can help both gas producers and regulators.
Producers want to gain a competitive edge in an environment of intensifying competitions. They can do this by offering buyers cleaner, lower-emission gas, certified by an independent body such as MiQ or IES. Regulators, on the other hand, want stricter control of methane emissions but, to put it crudely, don’t know where to start. It’s a win-win for the industry and governments, according to Tijbosch.
Interestingly enough, it is also a win for buyers. Although it might sound counterintuitive at first, it appears that some gas traders would already prefer to pay a premium for gas that has been extracted with fewer methane emissions, Tijbosch told Oilprice. That’s despite a tight spending environment across the industry and it means a lot. It means the industry may be ready for the transformation that, Tijbosch says, will lead to a differentiated gas market.
The organic sector has been vehemently opposed to genetic technologies in the past, but Alex Smith, vocal anti-GM campaigner and chair of the FDF Organic Committee, said [that] he believed the tide of opinion on GE had now changed and approval was “inevitable”. Organic opposition to the technology could therefore leave the sector marginalized in future policy decisions.
Writing in The Grocer, the founder of Alara Wholefoods said: “I don’t see due diligence arguments working this time. I also don’t see the Daily Mail splashing new ‘Frankenfood’ headlines. Rather, if the organic sector overtly opposes gene editing it is likely to be demonised by the press and marginalized by policymakers.”
Smith has advocated a “hyper-pragmatic” position instead that “acknowledges the strength of the UK in this area, demonstrates we are not Luddites, and supports research and controlled introduction”.
While GM inserts foreign genes from other species into an organism’s genetic code, GE solely relies on genes from the same species. Advocates therefore claim the results are no different to those that could have occurred via natural breeding.
[Omsco’s Richard] Hampton warned, however, that the introduction of GE could damage the UK’s exports to regions such as the EU. Unlike the US, Brussels maintains an outright ban on both GM and GE. However, the European Commission is due to complete a study on GE’s future status by April 2021.
Pakistan’s rice exports remained subdued in the first half of the current fiscal year (1HFY21) due to low prices offered by India for non-basmati and issues of higher freight and shipments from October 2020 amid the Covid-19 pandemic.
The country’s overall rice export plunged by 10 per cent in quantity to 1.824 million tonnes and 6.74pc in value to $963m in July-Dec 2020-21 versus the same period in the last fiscal year.
Out of total exports, the share of basmati exports plunged by 38pc in quantity to 265,672 tonnes and 31pc in value to $262m while non-basmati exports fell by 3pc in quantity to 1.558m tonnes and 7.45pc in value to $700m in 1HFY21 as compared to the same period last fiscal.
Chairman of the Rice Exporters Association of Pakistan (Reap) Abdul Qayum Paracha told Dawn: “Chinese buying of Pakistan’s non-basmati rice had kept our exporters busy in September to December 2020.”
He said Pakistani basmati also enjoys an edge in the European markets as the level of pesticides in our local crop is low as per the European Union’s standard as compared to the high level of India.
He said a ray of hope has emerged from rising exports during Nov 2020 to 78,160 tonnes valuing $76m from 43,032 tonnes fetching $41m in Oct 2020 while non-basmati exports improved sharply to 379,944 tonnes with export earnings of $154m in November as compared to 220,674 tonnes fetching $98m in October 2020.
“I hope that the second half of FY21 proves much better than the first half as things appear to improve and much will depend on rice prices,” he said.
The scoping study results identify the potential to realise cash flow from surface mining within the Chinook Project.
The scoping study is an early-stage technical assessment of the Chinook Project
Montem Resources Corp’s (ASX:MR1) scoping study on the Chinook Coking Coal Project in the Crowsnest Pass area of Alberta, Canada, indicate an economically and technically viable project with upside justifying progressing to a pre-feasibility study (PFS).
The results of the scoping study identify the potential to realise cash flow from surface mining within the Chinook Project.
On the strength of that study, the company will now execute plans to conduct additional drilling, engineering and environmental work to produce a PFS for Chinook.
Multi-mine hard coking coal producer
Montem managing director and chief executive officer Peter Doyle said: “We are pleased to have completed this scoping study, which identifies the potential to realise cash flow from surface mining within the Chinook Project.
“We have focused on Chinook as it sits in Category 4 lands and has the advantage of brownfield development.
“The board believes the positive result from the scoping study underscores our potential to be a multi-mine hard coking coal producer.
“We will now execute plans to conduct additional drilling, engineering and environmental work to undertake a PFS for Chinook.”
The scoping study is an early-stage technical assessment of the Chinook Project and was undertaken as a desktop exercise by specialist consultants, including RPMGlobal and Sedgman Canada Ltd.
Venture Minerals Limited (ASX:VMS) (OTCMKTS:VTMLF) has added operational expertise to its team with the appointment of Fergus Campbell as lead technical consultant for the Riley Iron Ore Mine.
Campbell is a mining engineer with more than 30 years of experience and has held senior executive management positions in mining contracting and resource development companies with a specialist focus on iron ore.
According to Venture, Campbell’s skillset and start-up experience is ideally suited for the current stage of development at the Riley project in northwest Tasmania.
Accelerated construction
Venture managing director Andrew Radonjic said: “Venture welcomes the addition of such an experienced iron ore mine operator to the Riley team, which will see Fergus Campbell’s skillset further bolster an already well-credentialled group of mining professionals working on the project.
“Fergus’ appointment follows the recent completion of additional funding which has accelerated the construction of the wet screening plant with fabrication work now occurring simultaneously in several workshops across Tasmania and other parts of the country.”
Iron ore prices have been strong throughout 2020 and into 2021 with the outlook for the rest of the year remaining positive due to continued demand generated by Chinese Government infrastructure spending and ongoing supply concerns from Brazil.
Radonjic said: “The scene is now set for the company to move rapidly towards its first iron ore shipment in order to capture these historically high iron ore prices.”
After turning losses for six consecutive quarters, Amreli steel (PSX: ASTL) is reverting back to positive earnings buoyed by domestic demand, higher prices in the market, and a demonstrable control over costs and expenses.
Though latest accounting suggests federal PSDP spending is 16 percent lower in the first half of FY21 compared to 1HFY20, Amreli’s revenue flows indicate the company has found strong demand in private commercial and housing projects. Much of the private sector construction activity is coming through from delayed projects being resurrected (note: as part of the construction package, builders were allowed to register existing projects to avail the new fixed tax regime and other ensuing benefits).
Evidently, price increase is also a contributing factor. Market insights suggest rebar prices were raised by 4-6 percent by many rebar steel manufacturers. The PBS’ wholesale price index—on the other hand—suggests steel bar and sheets prices in Dec-20 went up 3 percent compared to this time last year, and by 23 percent compared to Dec-18 (the index includes price of flat steel as well).
On the costs side, Amreli has improved margins in 1HFY21 despite global average scrap prices during the Jul-Dec period this year standing at about 8 percent higher than average scrap prices the corresponding period last year. Comparatively, rebar prices were up 4 percent during this period. Domestic prices are typically closely pegged to international prices.
