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  • Axion Power Concentrator 395: Apr. 8, 2015 [View instapost]
    They want to do another reverse split to cover the shortage of authorized shares…
    Apr 15, 2015. 06:03 PM | 5 Likes Like |Link to Comment
  • Axion Power Concentrator 395: Apr. 8, 2015 [View instapost]
    Ahhh… thanks John.
    Apr 15, 2015. 10:37 AM | 3 Likes Like |Link to Comment
  • Axion Power Concentrator 395: Apr. 8, 2015 [View instapost]
    Is it a "D" or an "E" ?
    Apr 15, 2015. 10:25 AM | 3 Likes Like |Link to Comment
  • Stability Of The European Union (23) January 1, 2015. [View instapost]
    I saw a chart showing exposure some the ago… DB was big.

    Are you saying that the ECB QE program involves the ECB buying Greek bonds from the banks and than letting the banks use the resultant capital to buy stocks?

    If so, do you have a link? Christ, if that is true Guns, its nothing more then outright theft!!
    Apr 14, 2015. 02:24 PM | 2 Likes Like |Link to Comment
  • AXPW: Intra-Day Trade & Buy:Sell Inflection Point Charting Beginning 04/01/2015 [View instapost]
    Thanks so much HT! On to new projects :)
    Apr 14, 2015. 12:05 PM | 3 Likes Like |Link to Comment
  • Stability Of The European Union (23) January 1, 2015. [View instapost]
    The EU has elevated "kicking the can" to an art form Guns. But now it seems we are rapidly approaching an inflection point. I can't wait to see how this works out. Both the EU and the Greeks appear to be between a rock and a hard place.

    I no sooner wrote my prediction about the Greeks defaulting when this appeared:

    Peripheral EU Bond Risk Surges As Grexit Contagion Spreads
    http://tinyurl.com/mw3...

    This started me thinking about contagion. Contagion in this situation basically means that a default in Greek bond debt would cause bond interest rates to increase in other markets where default could occur. In other words, if the Greeks default, than the risk of other heavily indebted countries to default would also increase.

    However, I don't think it's that simple. I suspect that the probability of contagion occurring is inversely related to the degree of "pain" incurred in the defaulting population if a default occurs. The "pain" would be related to the loss of wealth incurred in the population if the EURO was automatically replaced with a substitute currency of decreased valuation. For example, one EURO gives you one unit of X that has the buying power of one-half EURO.

    Why would the EURO be replaced? Because once the Greeks default, access to credit markets will be zero. In that circumstance, how does a Greek default government pay its' obligations? It would pay its' obligations with massively inflated currency. So while the Greek people avoid direct pension cuts, they will be subjected to massive pension cuts in terms of real purchasing power. Switching to a massively inflated currency would lead to a massive loss of wealth as measured in terms of purchasing power.

    Once people in other countries see that happen, my bet is they would be strongly against defaulting and losing the EURO as their currency. In other words, a major portion of contagion risk is related to currency devaluation.

    What is very interesting here is how this all relates to the US. Because the US owns its own currency, it can print all the money it wants. In other words, it's doing the exact same thing to its citizens as a Greek default will do to their citizens. In the US, if you have money in the bank, or you are paid in dollars your wealth is basically being devalued by the FED so they can repay debt in massively deflated dollars.

    Notice how this knowledge reflects back again to the EU with its recently implemented QE program. QE is strongly inflationary. So by starting QE in the EU, they are basically setting the stage to repay long term debt in EUROS with less and less purchasing power. It appears the only way you can escape the loss in purchasing power is to purchase stocks. It's amazing how all of this seems to link together. I find it very interesting on how my articles on QE and this blog are interrelated. I have been aware that by every measure I use, the current market is in a bubble. It was only recently that I realized that the bubble signal was likely caused by inflation. In other words, in order to see a true bubble signal, the effects of inflation have to be removed from the stock prices. No wonder my bubble model was incorrect! The signal was confounded with massive price inflation. It's all been a truly interesting learning experience.
    Apr 14, 2015. 11:31 AM | 4 Likes Like |Link to Comment
  • Swine Flu, MERS, Ebola And Medical News Concentrator January 1, 2015 To ?? [View instapost]
    I am delighted to hear about the good progress. Major Chemo is no walk in the park. Hang in there LT. All my best.
    Apr 14, 2015. 09:22 AM | 5 Likes Like |Link to Comment
  • Stability Of The European Union (23) January 1, 2015. [View instapost]
    More political Ping-Pong - yes, no - no one knows. But big IMF payments come due starting on May 1st. So something has to happen prior to, or on that date.

    Secondly, May day, International Workers Day, is a big political day in socialist countries. It strikes me that a socialist Greek government would like to position a default as declaring freedom from presumed financial oppression starting on International Workers Day, May 1st.

    Third, from an operational perspective, a good time to implement Capital Controls would be during a bank holiday occurring on a Friday. May 1st is a Friday. So if a Greek default is coming, it seems May 1st would be a likely day for a formal announcement accompanied with a call for a snap election.

    Of course, the prediction is based on chaotic conditions and could change at any moment. For example, the IMF might delay Greek debt payments on pressure from Obama (see below). But for now, I think May 1st is going to be an interesting day.

    Here is some evidence for my conclusion.

    The Financial Times reports that: Greece prepares for debt default if talks with creditors fail
    http://tinyurl.com/o8l...

    Of course, this was immediately denied by Greek officials:

    (Reuters) - April 14, 2015
    GREECE DENIES REPORT THAT IT IS PREPARING FOR DEBT DEFAULT

    Greece denied on Monday a report by the Financial Times that it was preparing for a debt default if it did not reach a deal with its creditors by the END OF THE MONTH [May 1st] and said the negotiations were proceeding "swiftly" towards a solution.

    GREECE DISMISSES SPECULATION OF EARLY ELECTIONS- GOVERNMENT OFFICIAL
    Athens dismissed media reports on Monday that the government was considering calling early elections. [If snap elections are called, that would serve as a strong default signal.]
    http://tinyurl.com/kxo...
    ===

    While the denial was prompt, the statement that proceedings were moving swiftly towards a solution says nothing about the nature of said solution.

    Than we have this from The Telegraph - May 14, 2015
    IMF warns Greek negotiations are 'not working' as Athens ramps up default threats
    http://tinyurl.com/nnj...

    The ECB Governing Council meets on April 15th to review emergency assistance (ELA) to Greek banks. This would be a likely time for the ECB to tighten the screws. No ELA assistance, and the Greek banks will be on a failure trajectory.

    Second, the Greek Finance Minister Varoufakis is due to meet Obama on April 16th, according to reports in Greek media [http://tinyurl.com/lmx...]. The US President has previously indicated his support calling for a fast and equitable solution to the country's debt crisis saying "You cannot keep on squeezing countries that are in the midst of depression".

    After that, The Telegraph reports that Athens has been given a provisional April 20 deadline to polish up a list of economic reforms it will need to implement before it can secure an injection of rescue cash. [More political Ping-Pong]

    The Telegraph article [http://tinyurl.com/nnj...] also contains a chart that shows what payments are due and when they are due. Here is a quick summary of payments that are coming due in the immediate future:

    Greece needs to pay about 124m to the ECB on April 17 and an additional 80m to the ECB on April 20.

    Than some big money starts coming due to the IMF. 195m comes due on May 1 and a big 745m is due on May 12. [I see no way they can make those payments without forgiveness, or the provision of additional liquidity]
    ===

    There is too much uncertainty present to make certain predictions, but the May 1st Labor Day/ Bank Holiday resonates with me. First, big money starts coming due on May 1st. Second, May day, International Workers Day, is a big political day in socialist countries. Third, from an operational perspective, a good time to implement Capital Controls would be during a bank holiday that starts on a Friday. May 1st is a Friday. So if a default is coming, it seems May 1st would be a likely day for a formal announcement.

    In the meantime, prepare for more Ping-Pong.
    Apr 14, 2015. 09:19 AM | 3 Likes Like |Link to Comment
  • Stability Of The European Union (23) January 1, 2015. [View instapost]
    Thanks Guns… I will just leave it here as Gold is an international topic. :)
    Apr 13, 2015. 10:27 AM | 3 Likes Like |Link to Comment
  • Stability Of The European Union (23) January 1, 2015. [View instapost]
    Got it Guns… thanks, that really helps to put it into perspective.
    Apr 13, 2015. 09:41 AM | 2 Likes Like |Link to Comment
  • Stability Of The European Union (23) January 1, 2015. [View instapost]
    The lack of stability is astonishing.

    ... if a 1.5% write down in the assets of a supposedly well-capitalized German bank can lead to almost overnight insolvency, one can almost imagine what will happen when the Austrian black swan wave reaches Europe's actually "undercapitalized" banks…

    I don't understand how such a small write down can force the bank into insolvency. Is there hidden negative leverage present that magnifies the write down? How could that work?
    Apr 13, 2015. 04:06 AM | 3 Likes Like |Link to Comment
  • Quickchat #279, March 19, 2015 [View instapost]
    Me too Maya. He draws from multiple sources of information and none of them see recession.
    Apr 12, 2015. 11:37 AM | 3 Likes Like |Link to Comment
  • Quickchat #279, March 19, 2015 [View instapost]
    I wonder how many companies have hit their earnings per share targets because of buybacks? Of course, all they are doing is giving the illusion of growth (fabricated growth) when in fact, earnings are decreasing. Nice for those being compensated on the basis of EPS.

    EDIT: Added the following:
    Here is a neat article by Jeff Miller on the subject of an Earnings Recession. Check out his first chart. http://tinyurl.com/ldq...
    Apr 12, 2015. 10:10 AM | 4 Likes Like |Link to Comment
  • Quickchat #279, March 19, 2015 [View instapost]
    I really like this companies products. However, I disagree with its lack of a direct sales force. Going with independent representatives / distributors that buy the products and resells them diverts a significant portion of profits away from CPST and funnels those profits into the independent representatives / distributors pockets.

    The company should have shifted to a direct sales system some time ago, particularly in the US. I believe that action would significantly increase profitability. Selling products and services through independent representatives weakens client links and tends to commoditize products and pricing.
    The fact that management has not shifted to a direct sales system is a red flag.

    At this point in time, I think the company needs to focus its manufacturing and sales efforts on products that maximize profitability. Focus manufacturing / R&D efforts where profitability can be maximized. Reduce spending or discontinue product lines that are not profitable.

    The company is currently under strong sales and pricing pressure, as much of their business is associated with CapEx levels in oil/gas. I have seen articles that suggest the current stock price weakness is a buying opportunity when one considers the long-term prospects of the oil industry and Capstone's strong sales pipeline. http://tinyurl.com/leb...

    I totally disagree. Even if oil/gas CapEx levels were to recover, the company has historically been unprofitable. Saving a few million is a start, but they need to do a lot more to make the company profitable. On top of this, the recent price plunge almost guaranties they are going to have to do a reverse split with subsequent heavy dilution to share holders if the company wants to avoid being delisted. Given the near certainty of a reverse split and accompanying uncertainty in oil/gas CapEx levels, it seems the appropriate play at this time is a short. Hence the fact that 14.4% of the float was short as of March 31.

    Getting a new CFO and dropping two other executives while claiming that this will serve to increase adaptability as well as foster innovation and creativity looks like BS. They need to make structural changes to their business model and modify their product offerings, not put lipstick on a pig. The company needs new leadership focusing on profitability now, not sometime in the distant future.
    Apr 12, 2015. 09:43 AM | 5 Likes Like |Link to Comment
  • Stability Of The European Union (23) January 1, 2015. [View instapost]
    I wonder when he will try Obama?
    Apr 9, 2015. 11:12 AM | 3 Likes Like |Link to Comment
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