Wednesday, June 29, 2016
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Mr. Cain Thaler

Stock advice in actual English.

Pound Sterling’s Ultimate Destination is HIGHER

Monopoly-Banker-with-Empty-Pockets-900x900

Yes you heard me. The British pound is going HIGHER.

Let’s ignore the initial push lower, which is as much a product of pro-EU campaigns convincing fools that the Brexit can somehow be “bad for Britain” without also being “endgame for the EU”.

By signaling that they are exiting the EU, the UK is now closest comparable to the country of – wait for it – Switzerland. The UK has relative low debt loads, a free currency, and close proximity to the other countries.

With just minimal agreements put in place, the UK will quickly match the relationship that Switzerland has with the EU. Accordingly, they are the best reference for what the UK will look like in 10 years.

What is the real threat of the UK Brexit? Obviously, if it were just the UK leaving, which is already free from the euro, this would not be that big of a deal. What people are really worried about are OTHER nations who suddenly begin to hold referendums.

This would be a disaster for the euro; but more importantly for euro denominated financial instruments. This is the real threat here and why the rest of Europe is so pissed off.

But if the euro comes under pressure from a series of referendums, there will be a major flight to safety. And who is now the closest non-euro country with relatively cheap currency and financial assets?

The UK, geniuses.

When market players stop wetting the bed, they are going to eventually work this out. GBP will be high by Christmas.

In the meantime, the doomsayers (particularly businesses) who assured everyone they would not last a fortnight if the UK left the EU…assuming, I would imagine, that it wasn’t going to happen…are now backpedalling furiously. Apparently, with a gun against their heads, they are quite capable of making this work.

Go figure.

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What Happened, Boys?

grizzlybear

For months the world was prepped for the Brexit vote, and for months the odds makers and money makers assured us that Remain would have it. Europe is the future, nation-states with their racist blood legacies the past, blah blah blah… Economists ran through the streets of London, crying the wrath and doom of the UK should it leave. EU funding flooded public airwaves with warnings and indeed thinly veiled threats.

So now here we are. Leave has won, and why wouldn’t it have?

What the economists and odds makers and editorialists haven’t worked out yet is that what the UK was voting against was them. The sheer oppression that “experts” have subjected the planet to has fostered deep resentments that are now on a full boil.

London lost big tonight, because nobody gives a fuck about London. Other equally sheltered places should take note.

Just as an aside, the US elections are equally questionable. Clinton is poster child of what one might call “establishment”. As terrible of a candidate as Trump is (and idiotic that a New York City billionaire has claimed the mantle of the little guy), for all we know a half-eaten, rotten banana could beat Hillary Clinton this election. If Trump comes at her like he did this week, all bets are off.

The big names in politics, news and finance all missed the Brexit call because seeing the Leave vote winning would have meant coming to terms with something they very deeply do not want to think about – how much regular citizens hate them.

2009 is still unfolding. The 2010 US election midterms are still unfolding. The Greek referendum is still unfolding. And these places will be burned down over and over again (in the Greek’s case, quite literally) until we get something new.

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Oops! Shale Industry Starts Missing Interest Payments

Monopoly-Banker-with-Empty-Pockets-900x900

In other news, overleveraged oil companies are now facing the days of reckoning, with $2.1 Billion in interest payments coming due this quarter. And already, the missed payments have begun.

The U.S. shale industry must come up with $1.2 billion in interest payments by the end of March as $30-a-barrel oil makes it harder for companies to scrape up the cash needed to stay current on their debts.

Almost half of the interest is owed by companies with junk-rated credit, according to data compiled by Bloomberg on 61 companies in the Bloomberg Intelligence index of North American independent oil and gas producers. Energy XXI Ltd. said in a filing Tuesday that it missed an $8.8 million interest payment. The following day, SandRidge Energy Inc. announced that it didn’t make a $21.7 million interest payment.

“You’ve seen two of these happen in two days, and I wouldn’t be surprised to see more in the next month as these payments come due,” said Jason Wangler, an energy analyst at Wunderlich Securities Inc. in Houston.

Grab your popcorn bags.

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BAS Has A Terrible End To 2015, But Clinches A Financing Agreement

smoldering-ruins-of-african-americans-everett

As predicted, 2015 ended in as bad a manner as imaginable for the oil industry. Patterson had been calling for this since September or October, warning investors ahead of time that the entire oil patch was going to “take a little break.” 2015 numbers are abhorrent.

So what’s next? Well, we can expect a mild reprieve to occur when first quarter 2016 numbers come in. But competition is still bloody and someone isn’t making it out of this alive.

On that note, BAS earnings contained a little glimmer of hope. Yesterday, apparently, BAS was given a life line of $165 million in term financing. They are going to use this to escape the atrocities awaiting anyone stuck in revolving credit facilities with asset value provisions attached to them.

Term Loan Financing

On February 17, 2016, Basic entered into a Term Loan Credit Agreement with a syndicate of lenders and U.S. Bank National Association, as administrative agent for the lenders. This agreement provides for borrowings of an aggregate principal amount of $165.0 million on the closing date, and delayed draw term loan borrowings in an aggregate principal amount not to exceed $15.0 million. The obligations under the Term Loan Agreement will be secured by substantially all assets of Basic. Basic expects to borrow the initial borrowings of $165.0 million under the Term Loan Credit Agreement on February 26, 2016, subject to the satisfaction of closing conditions.

The term loan will bear interest at 13.5%. In addition, Basic will be responsible for the applicable lenders’ fees, including a closing payment equal to 7.0% of the aggregate principal amount of the commitments.

In conjunction with this financing, Basic intends to amend its existing revolving credit agreement, reducing the aggregate commitment from $250.0 million to $100.0 million.

Pro forma liquidity as of March 31, 2016, including this term loan would be approximately $220.3 million, including $23.1 million of availability under Basic’s amended $100 million revolving credit facility.

Unfortunately, BAS also burned $10 million in the fourth quarter. And I’m guessing this time Patterson wasn’t making an eccentric corporate buyout.

Your move, other companies. Let’s see who dies first.

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Time For Twitter To Die

TwitterSucksBalls

TwitterSucksBalls
Picture casually borrowed from The Verge.com

I’ve been especially preoccupied for the past couple of months, not least because I want to be. I do not enjoy watching my account fling itself about in 5% interval sessions every day. So I’ve worked to keep my head out of the market’s daily trading; if I’m not actively watching then I cannot do something stupid.

I have also made the conscientious decision to get off of Twitter.

Twitter’s service is the epitome of pointless preoccupations. It is jam-packed with losers – the less informed on any subject the better – the kind of place that only journalists could call home. Twitter is a desolate wasteland of sound bytes. A proverbial dessert filled the brim with bumper sticker slogans, and no better.

The service rose to prominence on its remarkable ability to act as a staging ground for foreign opposition movements. Twitter was almost as personally responsible for the Arab Spring on the people setting themselves on fire.

So naturally that aspect of the site has been put under wraps. In order to even operate under these foreign despots, Twitter has been reduced to making agreements to prevent users from creating those types of flash movements. Strike one: its most relevant purpose of spurring democracy in the undemocratic corners of the world is gone.

So what’s left? Celebrities and vicious American politics mostly. Twitter is a great place to watch a man lose his job because he holds traditional views on marriage, or to watch the feminist activist who crushed him be forced into hiding for the rest of her life as a product of retaliation.

So not a whole lot worth seeing. The worst humanity has to offer actually. Strike two.

As far as a news source, Twitter excels. I’ve gotten breaking news from it at speeds that cripple traditional outlets, making even the Cable Networks look like homeless people. But the cost of weeding through all of that bullshit is just not appealing anymore. It’s not like first access to news is all that useful of a strategy for making money anyway.

Big returns are had by correctly bucking the herd over long term. Fifteen minutes of advanced notice in developing announcements is just not a good edge. Hell, half the time those breaking segments are wrong or incomplete anyway.

And that’s basically strike three. What’s good about Twitter is overwhelmed by the feminazis. I realized how easy it was to get stuck in the sticky politics of Twitter and how hard it was to navigate the platform successfully. And every day Twitter admins make it known that there won’t be much left worth navigating for.

As far as Twitter’s actual user base is concerned: is almost impossible to tell how many real human beings actually use the service. Bots are everywhere doing all sorts of algorithm nonsense. From the angle of the business (and all ad based New Tech business ventures in general) let me ask you something:

Have you ever intentionally clicked on a web ad?

Who are these people buying products from web advertisement? Who says “hey that car that just interrupted what I was doing looks awesome, I think I’ll spend $20,000”? There has to be some serious limitations to this approach as a viable sales generator for companies.

I mean, maybe I’m wrong here? Maybe some of you just love having your day interrupted to put your credit card number on unknown internet websites…?

But if you were a company with a $10K… $100K, …$1M advertising budget, why would you go to a service like Twitter? Especially if your own service wasn’t sales based? If you are selling widgets and some guy says “hey I found your widget on Twitter”, well that I guess is all good and well.

But what about if you’re using Twitter to promote your product which is also advertising based? How do you know the “people” linking to your website are even real?

And if you’re a company selling real products and buying ad space on any website, how do you know their traffic is real either?

Wrapping this post up, I haven’t regularly used Twitter in almost a month and a half, limiting myself to only occasional sessions, and I feel great. It’s a pointless time vacuum and being free from it my productivity in other areas have grown by leaps and bounds. Good riddance.

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Nibbled On More BAS

Go To HELL

I added another percent or two to BAS, because at $2.00 any recovery will yield 1,000% style returns and at this junction a few percent doesn’t greatly affect my risk profile. The over half of my account that’s in cash is going to sit tight until we get more clarity.

The rally in oil last week was great, but I have bad news. This run on oil companies isn’t done yet.

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As an aside, this is interesting

Hi-Crush Partners LP and Liberty Oilfield Services Partner to Increase Completion Efficiencies in Colorado`s DJ Basin

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