Cash McCall

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  • Why Navios Maritime Acquisitions Will Not Be Acquired By Navios Maritime Holdings  [View article]
    The chief problem with Bulk right now is the US Dollar at nosebleed ranges from all the fracas in the Middle east. This has stalled US exports and there is no dollar liquidity to trade the cheap commodities. Though demand is rising. Further. China will indeed stimulate but has been waiting until they had the YUAN in place to act as a reserve currency to start replacing the dollar. The recent stupid Fed move to increase rates triggered this mini market crash and ultimately caused the dollar to rise yet more. So while demand for commodities rises including oil, the liquidity dollar issues prevent emerging market from financing in dollars. The US has a strangle hold on the globe with this dollar reserve currency.

    Please note that the Australian ore companies RIO and BHP are trading with China in the YUAN not the dollar. This is saving 10% on transactions. RIO is producing ore at record levels and selling all of it to China. So it is a matter of replacement. Under Obama the most foolish idea in the world was to turn the dollar reserve into a political weapon to punish Russia. All this accomplished was to stall europe and demolish US manufacturing and domestic oil. The US Steel production may as well shut down. The problem is not cargoes or demand, its the dollar stupid and that nitwit in office and his appointee Yellen.

    CAT and joy Global are literally being destroyed by Yellen. In China now there are five manufactures that make identical CAT equipment and they make parts that fit CAT equipment for a third of the price. The dollar reserve has set US industries up for a fall. But this is an old story. Gov should stay out of business. This will be the year when the YUAN starts to replace the US dollar reserve currency. Remember in 1945, the Pound Sterling was the global reserve currency but the war bankrupted Britain and they borrowed money with the Anglo American loan and were forced to trade the pound on the markets and it lost half its value in months. The USA is quite the bully. China will stimulate within the next month but they are trying to get the YUAN in place which I believe has been approved by the IMF or close. NM having tough times but their daily costs are lower than most so they can ride this out. Once the YUAN is used in reserve, the dollar reserve will tumble 25%, oil will rise and emerging markets will be able to finance bulk purchases. This is what happens when you put stupid people in control of economies. The US has always led the way out of the recession UNTIL NOW. Seven years of this slow death on the high seas. US manufacturing has dropped to just 17% of the US economy down from 25% in 2008.
    Jan 21, 2016. 06:10 PM | Likes Like |Link to Comment
  • Praxair: Another Possible Investment In The Industrial Gases Sector  [View article]
    I disagree. Both APD and PX are overvalued. APD is a far better run company and in a correction which I feel is coming, APD would be the right choice. PX has uncomfortable short term and long term debt. They are a sprawl and that means overhead.

    If they raise prices in the USA which has ever shrinking industrial growth, they will only lose market share to APD.

    Further, I think the PX salaries are way out of line as are the company perks and costs of sales. Looks like the execs are having a very good time acting like royalty at the stockholder's expense; nothing new here; I would go so far as to call Mgt arrogant. This may be a carryover of its days as a Union Carbide Linde division which was an extremely top heavy company. The tradition continues.

    PX and ADP growth is dependent on China. US growth has been stunted by weak industrial output at a new 24 month low and shrinking manufacturing base to 17% v 25% eight years ago. China is taking a growth breather and PX and APD will feel it. These companies have had a long good run of it but China is shifting gears and industrial gases will follow metals, mining, and materials into the basement.

    American Steel production is flat on its back due to the dot com styled dollar bubble.
    Jun 8, 2015. 10:43 AM | 2 Likes Like |Link to Comment
  • GSK Undervalued And Ebola Vaccine Might Be The Catalyst For Bulls  [View article]
    I hate to rain on the ebola parade but vaccines can be dangerous things. For example consider Coxsackie B 4 is the likely cause of Juvenal diabetes type 1. What happens is that some with a genetic potential produce a slightly aberrant antibody to the common coxasakie B 4 which attacks the virus but also the Beta Cells of Langerhans turning the child into an insulin diabetic for life.

    There is no magic in making a protein that matches the surface of a foreign invader as long as it has a cell wall. The trouble occurs essentially when the immune system starts making antibodies. and those antibodies cause an autoimmune response which is unexpected.

    SARS has a vaccine but the immunopathogenic mechanisms which can be triggered by the vaccine are worse than the SARS.

    Viruses that come straight from the animal kingdom especially those bloody bats, are virulent and create a WWIII styled immune response. The way to beat this generally is to load the immune system up with steroids to weaking the initial immune response giving the body the time to create an antibody directed at the invader before it kills the host.

    Most physicians I can tell you are neither too intelligent or innovative especially those that work for the government. These ebola cases are treated according to the limitations of those doctors that get these cases. The primary immune system that encounters ebola goes berserk. Nobody is sure why some patients bleed but what is pretty clear is that the primary or as I call it the incendiary immune response causes massive inflammation which affects the clotting proteins much the way a cancer patient develops neoplastic syndromes. As in DIC, disseminated intravascular coagulation the body simply runs out of clotting factors.

    So these features appear autoimmune in nature. So in the case of a vaccine, which is not the virus but just a protein peptide, it can trigger a massive response and even kill patients because the immune system itself goes berserk, makes misreads and triggers autoimmune responses that can attack organ system. This is also why try to develop a coxackie b vaccine for children could actually trigger an autoimmune response in more children that may have the genetic proclivity to have an autoimmune response rather than the naturally occurring rate of autoimmune responses.

    Interesting disease, spreads easily so the old HIV bodily fluids precautions need to be much more restrictive. Kissing, contact with sweat, easily done in a patient with a 103 degree temp, makes Ebola and its family quite dangerous.

    I think the idea of bringing the disease to the United States was profoundly risky. The Dallas patient was released from the Emergency Department and sent home on antibiotics. Clearly Malpractice but nobody in the ED was wearing Space suits or isolation protection. Somebody sat in the same chairs and moved the sheets off the gurney when the patient left. So the potential is here for a mathematical pandemic that in a dense population would be very hard to control.

    The CDC years ago managed to let HIV move out of SFO by ignoring the risk of a male international flight attendant that was infected and promised to spread the disease far and wide. And he did. HIV became the most expensive disease in history to treat. Ebola could wipe out significant numbers with an incubation period of in some cases of three weeks.

    GSK is a decent company but I don't think management should stay in power after a five hundred million dollar bribe in China. I think a house cleaning is in order. Just leave, no parachute.
    Oct 11, 2014. 12:28 AM | 3 Likes Like |Link to Comment
  • Why Seadrill Is Not A Falling Knife  [View article]
    Seadrill may be a falling knife but it is falling for all the wrong reasons. The Dollar reserve currency has entered the stage as yet another political football for Obama. The rise of the dollar has triggered a crash in all commodities, all due to currency speculation that the Fed may someday raise rates. The rising dollar has the same effect except as the reserve currency, it is one more reason why we need to start thinking about currency in terms of bitcoin.

    The high dollar damages oil, ore, and benefits no one. It doesn't damage shale oil because US domestic oil is not exported. There is nothing wrong with the Russian deal with Seadrill other than Obama using political and government to interfere with private sector activity. I find it repulsive in the same way I found Jimmy Carter and Obama's eliminating US participation in the olympic games repulsive. Athletes that train for years for their one moment to shine were destroyed by a couple of moronic politicians. Enough.

    The high dollar presents great risk to the USA. It can't export. It can import cheap goods from China. US imports essentially nothing from Europe. But the effect on European oil, ore, coal exports is devastating.

    Janet Yellon can't see the rise of the dollar at the highest curve in dollar history as a problem. Instead we have interest rate improv with each of the members of the Fed trying to become celebrities every time a microphone is place in front of them.

    There are no free markets left. Monetary policy is the action of central bankers alone. Natural forces are not allowed to work. The tinkering is endless. The result has been a commodities crash because the reserve currency is the Obama dollar.

    Saudi took action two days ago to discount the price of oil in order to increase volumes. The Iron ore big four are pumping up the ore volumes in the low price environment. Why? Because Saudi and the Miners are smart. They know that with the insane dollar rise, they can squeeze out marginal competitors by forcing a price war. This does not bode well for drillers and rig operators. And while Obama holds the globe hostage to aide in the next election with cheaper gas at the pump, China, impervious to all of it, is building deep water drilling rigs and capacity. They lease rigs more cheaply and they are showing up everywhere.

    This is not fundamental change. This is guys like Soros, selling the Yen, selling the Euro and buying the dollar. When it unwinds, it will send oil to 130. But when...

    Unlike Obama Admin, I see no strength in the US economy. GDP is not simply a measure of goods and services as it once was. It now includes debt. So when you buy a new car with cash, you cause less GDP apparently than if you buy in on a ten year finance plan. Go figure. But that's what we have. Runaway consumer spending and debt do not produce wealth. They produce more debt.

    For one to think the USA is better off than all other countries in the globe is insanity. This is a global economy with currencies that trade like lottery tickets and cause ripples across the productive sector, all of which cause unforeseen consequence.
    Oct 3, 2014. 03:22 PM | 5 Likes Like |Link to Comment
  • Don't Panic, Grab Seadrill Out Of The Bargain Bin Instead  [View article]
    I can easily understand the virtues of SDRL at this point but NADL? It hardly makes any money at all. Its tiny, lacks liquidity. With SDRL, it builds massive earnings through leasing of their rigs globally. I don't even seen NADL being anything but under capitalized, especially entering into a drag period. I am opened to enlightenment. SDRL on the other hand is well capitalized and increasing revenues with its vessels.
    Sep 30, 2014. 03:09 PM | 1 Like Like |Link to Comment
  • Brazil's real tumbles, Petrobras plunges as Rousseff support rises  [View news story]
    Ah.... the untethered Brazilian, emotional and out of control. Dilma has one big strike against here. In the down turn of the economy due to her terrible economic policies and cronyism, she managed to preside over a losing world cup. Brazil lost its shine with that one. It was beaten by a Germany with a much stronger economy. So it was a metaphor of things to come.

    If Silva can get equal time after the first vote on Oct 5, she will be able to articulate her views to the poor of Brazil of whom she was one of the poorest. She can explain to them the need to stimulate business growth to lift them out of poverty, to break away from Venezuela, Cuba and Argentina and break the cycle of inflation and trinket economics of Dilma and the ruling elite. She will have credibility and Brazil needs a change. All they need to do is look at Venezuela, and Argentina and understand that Dilma is a trap for them from which they can never recovery.

    If Silva does that she will win and win big and Brazil will get on track and get down to business.

    PBR is a buy after today. Don't underestimate the power of the Capitalism in Brazil in spite of the present Banana Republic fat woman in charge.
    Sep 29, 2014. 11:15 PM | Likes Like |Link to Comment
  • Expect Vale To Rebound In The Mid-Term  [View article]
    Let me make a few corrections if you don't mind. First China Steel production is up this year roughly 2.2 million tons a day. In a month that is 76 metric tons of steel. It takes 2.3 tons of iron ore to make one ton of steel. So that means they use 175 million tons of ore each month. Stockpiles using Bloombergs numbers are about 100 million tons which is less than three weeks supply. They can't shut off blast furnaces which must run round the clock. So stockpiles of 100 million tons is standard practice in China.

    Secondly Iron ore spot prices at 62% or lower have nothing to do with VALE. That is the cheap ore where the prices are dropping because Australia is running low on 62% ore. VALE ore is 67% and even higher. It is sold exclusively by contract. Steel makers use less energy with the higher grades and pollute less.

    Next, VALEMAX ships have been approved for China ports. VALE has made a lease back deal with the Chinese. Further China has proposed to build a rail line across Peru to connect Brazil Ore to the Pacific coast.

    Bree reports that VALE is the global low cost producer. Reo is second but has a lower quality ore. VALE owns the Brazil market whereas the Australian markets are yet to consolidate.

    As for the notion of "glut". Goldman says a glut of iron ore will occur in 2015 at 75 million tons. Remember out math above? That boils down to roughly a month's supply.

    India currently produces 70 metric tons of steel. That should change under the new president of India and expansion could be as high as 300 tons of steel. That would create a global short fall, using Goldman's silly numbers of nearly 2525 million tons of ore. By then an ologopoly consisting of about ten global suppliers will rule the prices of iron ore.

    Australians have already expanded production as much as possible. VALE was slow to the pick up on this but created the best solution. In 2016, they will have the increased capacity of an additional 100 million tons. Nobody else will have this much expansion power.

    Headwinds for VALE are no doubt the Brazil Gov. This is a stupid blunt woman in charge but her economic policies will change or she will be out. They have to lift the Brazil export tax. Australia dumped their Woman prime minister that slapped a tax on ore and they got rid of her and the tax.

    Brazil needs to make stronger relations with the US not with Cuba or Venezuela or Argentina. They have to quit acting like a Banana Republic and get down to business and get investment going to harvest their natural resources. They have oil reserves speculated to be even larger than Saudi. Yet Gov rules have prevented large expansions in production and Brazil needs the oil.

    Socialists are idiots. Party names don't mean anything in Brazil. Silva is running for the Socialist but they are the centrists. The Worker's Party is Delma and they are card carrying socialists. Neither will win on the first vote but the second vote once deals are cut will likely go to Silva. Plus air time evens up.

    In the long history of Iron ore production, it falls off in Brazil in August. Why... the World Cup in July of Course. They run off stockpiles and have to rebuild. But after August production rises. This sept so far, VALE is up 125% and on target to meet it 325 million tons projection by year end.

    I also think the Chinese unrest in Hong Kong will result in more stimulus and perhaps taxes on non domiciles. With unrest in HK, the Chinese gov can't be tightening up on the people in mainland china. They have to deliver prosperity and that means continue the buildout, fix the real estate market and get rid of speculators with the tax and build infrastructure.

    This business in Hong Kong began after the Chinese Economics minister said there would be no large stimulus. This translated in Hong Kong to unaffordable housings and rising interest rates. That triggered the autonomy push. Its over interest rate and China would do well to make sure it remains that and does not capture an idealist revolt.

    When VALE slingshots back up, it will be fast and furious especially with so much short interest. They will be running for their lives. Why? With VALE's big dividend now approved, the short seller who do not clear by X div, must pay the Dividend out of pocket in cash. In the case of VALE that is nearly 10%. So they are playing russian roulette with five bullets in a six shooter.

    Hedges will drive this stock down as hard as they can then it is every man for themselves. If VALE has any big announcements in the next several days, such as a big contract let with China or Cash for Ships from China, Then get out of the way. This will move like a freight train on rocket fuel.
    Sep 29, 2014. 10:56 PM | 3 Likes Like |Link to Comment
  • Vale SA: Interesting With P/B Of 1.11  [View article]
    There is no company on earth this large selling at book. The company is profitable with healthy margins. It has the lowest cost highest iron content ore. Last earnings it hit record ore production at 72 metric tons. VALEMAX is finally going to come to China ports and that improved delivery by 8 dollars a ton.

    China mines are closing and projections hold that iron ore prices will rise shortly. China steel was up 1% year over year so that is not contraction in the steel business. VALE has the lowest cost production of all the majors and a 67% iron ore content so spot prices in China for 62 are irrelevant.

    It is an absolute certainty that the current finance minister in Brazil will be gone and a business friendly replacement picked regardless of the election outcome.

    Finally VALE is selling off and has sold off non core assets in timber, Aluminum and other non core assets. It is the only large miner that will be increasing capacity. RIO and BHP capacity was played this year. VALE's Brazil production will have the capacity to rise an additional 90 million tons in 2016. VALE is well positioned to continue its dominance in iron ore and pellets. It is the number two producer of Nickle.

    VALE already consolidate the Ore industry in Brazil, the Australians have yet to consolidate. The big three are intent on driving down ore prices and running all marginals out of business. So the iron ore business will shortly be an ologopoly. Long term prices of ore as adjusted for commodity pricing was essentially roughly 80 dollars a tone for the last 60 years until China boosted prices to try to build its zombie mining system. This allowed for many new inefficient entries into the ore market. The big three are going to end this and in the process keep ore prices in a area where competition from the less efficient producers is impossible.

    What you are seeing here is Capitalism at work. China defaulted on a lot of Australian contracts and the Australians have got the remedy to drive out the Chinese miners. China mines are underground and produce very low quality ore at about 55% content at a cost of about 120 dollars a ton. Australians intend to close down those Chinese mines forever. That leaves 228 million tons of additional demand that will go to the Australians or VALE. The Australian plan is a magnificent chess move. VALE was late to the dance but is on path now with the Australians. VALE is a screaming buy.
    Sep 24, 2014. 02:22 AM | 8 Likes Like |Link to Comment
  • "End of the Iron Age," as iron ore prices slide to five-year lows  [View news story]
    Goldman is so tedious but that's God's work I guess.

    The link below will show you the problem quite simply. There are some great graphs here showing the cost of production and ore consumption. The chart combines cost and cost of delivery. China ore which is roughly 225 metric tons is about 55% iron so cost of production is enormous. Brazil is blue in the graph and is the lowest cost producer; That's VALE. They will be here a long long time. The peach colors are the Australians. Brazil and Australia are the global low cost producers. Aussie ore is standard high quality at 62%, VALE is 67%. Again... VALE ore commands a higher price than all other ores.

    This is not overcapacity, it is misallocated usage by China. They have cut there own throats and worse they created a shadow banking system based on that crummy Chinese ore, causing prices over the last four years to skyrocket. But that has no bearing on the real price of ore, the long term price of ore which has been commodity equivalent of 80 a ton for sixty years. The actual prices paid were lower but in comparison to buying power and other commodities, 80 is an agreeably number.

    If you don't like that number then realize that the price of ore predicted by Goldman is about where it was in 2009 after the spike had already occurred. The point being if that is awful then look at the cost chart. It isn't awful for VALE or the BIG Aussie majors but its pretty awful for those 225 metric tons of 55 proof iron ore rotgut that the Chinese mine.

    Google "RBA statement on monetary policy August 2014" Page 18
    [SA would not let me just post the pdf file] It has the graphs on it.

    I am quite certain that Christian and Amber are both just wonderful at goofy kid analysis but Christian said that he didn't think the Chinese would close down their mines. Maybe not Christian, the Aussies and VALE will do it for them.

    Someday if you ever get a chance read the Goldman Insight Dec 2013 report on emerging markets. It is there you will find the thesis that keep Goldman repeating its fictional idea of a Chinese slowdown, the same prediction made since 2004 which has never panned out. Of course Goldman missed that little business of the subprime collapse in the USA as well. Too many little squid wannabees with their blood funnels stuck down in the Goldman Koolade.
    Sep 11, 2014. 01:38 AM | 5 Likes Like |Link to Comment
  • 3 Top Brazilian Stocks With Generous Dividend Yields  [View article]
    Your article is good but you missed a few points about iron ore. First VALE is the largest producer of Iron ore and once the new expansion in Brazil is complete it gets MUCH bigger.

    Further VALE has the highest iron content and the lowest production cost at $28 ton, but they have increased shipping distances. That is where VALEMAX comes in. VALE has its own ships and they are the biggest ships in the world. If VALE wants to do something very good for shareholders, they would spin off their shipping business to shareholders. This is a real possibility.

    The reason the big three ore producers are increasing production is for the purpose of wiping out China's ore miners and weak players that came into the ore business after 2010. These are weak competitors with cost per ton of around 125 dollars a ton and poor quality ore. The big three will continue to drive massive production to destroy these competitors and they will knock them out forever. As the CEO of BHP stated. Iron ore will not be coming back over 100 for a long time.

    The artificially high price of ore was caused by these Chinese miners and the Chinese shadow banking system in which ore was collateralized. The Bank of China has cut back this funding leaving the Chinese miners exposed. Meanwhile Bank of China extended 2.5 billion credit line to VALE and a 7.5 Billion credit line for shipping using a mix of Chinese shippers and some new refitting of the VALEMAX class to come in just under 400000 tons for safety purposes replete with a Chinese Flag.

    Finally vale also produces pellets and a new ultra high iron content green ore to assist the Chinese with pollution control. Nobody but VALE has this capability. The first Shipments of Green Ore hit Malaysia last month.

    So when you read the nonsense about spot ore dropping and all the fear mongering, VALE is growing market share, cutting costs, trimming noncore assets and making lots of money and cashflow. Last quarter VALE had record ore production. They are the second largest Nickel producer and the price of Nickel is sky high. Also Alumina and other products are doing well. VALE is indeed, the bad boy on the block. It represents a huge upside potential and a solid dividend going forward. A hundred years from now VALE will still be in business and paying large dividends. The fear mongering is from a few hedge fund short traders who will be wiped out if VALE spins the shipping business to the shares. VALE is a great operation.
    Sep 5, 2014. 03:44 AM | 1 Like Like |Link to Comment
  • Is Vale A Good Investment For Defensive Investors?  [View article]
    More rubbish is published on SA than most places. I am now going to tell you exactly what is going on with the iron ore business. There are three large producers, VALE, RIO, BHP in that order. All are low cost producers. RIO and BHP around $50 a ton and VALE even lower at $28 a ton. VALE has a longer shipping route compared to the Australians. The Big three are vastly increasing volumes. Why? Because they have the highest grade ore and will sell everything they can mine. Australians generally 62% content and Brazil ore is 66%. Why are they doing this? Control.

    China has an iron ore business. The ore is poor quality but the Chinese State continues to keep these marginal producers opened. It is the intent of the big three to destroy the Chinese miners. Chinese miners are already underwater so it won't be long. These Chinese producers along with other marginal miners got in business after the price boom in 2010. Some of this was China's metal and ore shadow banking system which had Bank of China financing this expensive ore while the small Chinese steel operators and ports, collateralized loans with the ore. So the price of ore went artificially high.

    As China has cracked down on the shadow banking, the price of ore has dropped and these marginal Chinese businesses are in trouble.

    But there is no love lost by the big three ore miners because when the price of ore started dropping, the Chinese reneged on their contracts. So the Big three now intend to teach China a lesson in capitalism they will not forget. The big three will close down the China miners forever. Prices will then stabilize and rise but not to the crazy days of the Chinese shadow banking nightmare.

    What does this mean for smaller iron ore miners... It means your days are numbered. But that doesn't include all miners to be sure. Cliff's is the regional Great Lakes producer of pellets in North America with 60% of the US market share. There are however about 13 mines in Australia which are on the verge of closure.

    The pressure will not stop here until those Chinese miners dissolve and the Chinese shadow banking system collapses. China accounts for about 60% of the global steel production so these low ore prices are good for global steel and volumes are up.

    It is a very good chess game in that if the Chinese were to reduce ore purchases and reduce steel production, that would close down their mines instantly as well as many of their steel mills. So instead, they have been making deals with VALE to build the VALEMAX ships thus keeping steel production high but more or less admitting that he Chinese ore business must come to an end.

    Most intelligent ore traders expect prices to level off at about 95 a tone but not come back over 100 a ton until after the Chinese Miners shut down. Chinese Miner's cost of production is very high at roughly $125 a ton. So even with ore at $100, they are drying up but not fast enough to suit the big three.

    So that's the ore story. It is Capitalism at its finest. I have no qualms about recommending VALE, RIO, and BHP in that order. A hundred years from now these companies will still be making buckets of money. My dark horse speculator is CLF. Their Great Lakes business is very isolated from the Big three and they have new management that should sell off noncore assets.

    I have no idea what the author of this article means by asking if VALE is a good defensive stock. Its cheap, its giant dividend is not in jeopardy. They make money and have enormous cash flow. Last quarter they had record ore production and they haven't even started production on their giant new Brazilian mine. Alumina and Nickel business is going great. Investing in these big miners is investing in the future of world growth.
    Sep 4, 2014. 07:15 PM | 6 Likes Like |Link to Comment
  • Iron ore prices hit lowest since October 2009  [View news story]
    There is a great deal of foolish talk about iron ore prices dropping. I noticed one poster was astute in his observations that the margins of the big three are significant. I will go even further. VALE is the lowest cost producer running at about $28 a ton. RIO is next at around $50 a ton.

    Other competitors are in trouble since there costs are as high as $80 a ton. Ultimately the iron ore pie will be divided into about five slices and that's it. The three or four majors are content to squeeze down the prices.

    Further China has ceased to finance some companies in China that use iron ore as a shadow banking leveraged commodity. This has forced the iron futures down artificially low. This is why VALE CEO has predicted a fairly improved spot market in the next several months. One must be cautious in reading seaborn iron ore as a direct relationship to demand. It would appear that the port stocks in China have diminished substantially over the last four months and most believe the Chinese are already increasing their orders. VALE earning last quarter demonstrated that the thesis of using the spot cost of ore as a predictor of profitability was inaccurate. Most analysts were caught flatfooted as VALE sold record levels of ore.

    I expect to see analysts continue to use the spot ore price incorrectly and miss a large opportunity in VALE as the dividend approaches. VALE has done a very good job of cost containment and they are going to increase Brazilian production substantially. They have a 7.5 Billion credit line with the Chinese for shipping. VALE is chartering out a number of disguised VALEMAX ships commissioned just under 400000tons to avoid the ban of the large ships in Chinese ports. Thus, the Chinese keep the ban, and facilitate the Chinese charters.

    My contention is that VALE should spin off that shipping business to the shareholders and increase sharevalue. That way Chinese Charters could participate.

    VALE is extremely undervalued and should rise significantly over the next several months.
    Sep 3, 2014. 05:57 AM | Likes Like |Link to Comment
  • KCG Holdings Continues To Hide Under The Radar  [View article]
    Well done. As with any new and profitable enterprise, HFT has to undergo an attack by the Luddites. Certainly the auto and truck business faced the same negative activity from horse and buggy trades at the turn of the century. HFT will undoubtedly prevail and KCG is the strongest of the lot. It already undergoes significant regulatory scrutiny and this really is a bar to entry in this business by competitors.

    The fact that KCG trades at book is astonishing especially in light of its massive and I mean massive reduction of debt. Clearly the business is profitable.

    Further not mentioned in the article is the SEC devising trading rules for the small caps to improve liquidity of the small caps is a clear indicator that HFT is here to stay and is in fact working with the SEC on the data analysis of these test ideas.

    I have found the CNBC articles on HFT to be heavily biased and negative but like most of the CNBC product, it has become a tabloid press of the hedge fund shorts and has no significant intellectual value. CNBC has become increasingly more political and liberal and Bloomberg has moved to a more relaxed approach with HFT avoiding such outrageous CNBC metaphors that markets are "rigged". I am not sure what CNBC was claiming to achieve with all their HFT bashing but I think it is clear that KCG in particular has gotten well beyond the influence of this and should feel quite relieved with the cooperative SEC approach.

    I also agree with your pricing notions only think you may in fact be a bit too conservative. I think it is now clear that HFT is here to stay. It is a business which improves efficiency in a massively deliverging world. Those are exactly the kind of businesses which Ray Dalio seeks out. One can only imagine the growth of HFT in the global market in years to come.

    The horse and buggy drivers will complain but they are well on their way to extinction. I expect KCG shares to rise markedly between now and January as September volumes increase along with the Alibaba effect.
    Sep 3, 2014. 05:20 AM | 1 Like Like |Link to Comment
  • Vale's Health: How One Symptom Caused A Fundamental Misdiagnosis  [View article]
    Unfortunately, practically all the Seeking Alpha article over the last six months have continued to bite on a very stupid and incorrect assumption that VALE could not deliver good numbers with the fall off the iron Ore spot price.

    I basically responded in a viscerally negative way to those articles because the assumptions were all wrong. I explained that VALE margins were in excess of 50% and they are the lowest cost producer in the world. I showed that the cost of production was falling faster than the price of ore but no, I had to deal with articles by authors that had never been to China and quite frankly did not know the ore business or the coal business yet sold themselves off like experts.

    So I will clarify a very simple tenant. VALE, RIO, BHP will sell every ounce of ore than can mine. There is no glut, the emerging markets steel industries continue to increase at 3 to 6% a year. China doesn't have a glut of ore at their ports; and does not have a shadow banking issue. While it is true that china has borrowed a lot of money to expand its economy, it has borrowed from itself and does not have third party debt obligations as the US and Japan have.

    Further, China is engaged in a project now to build railroads in Brazil. They also extended 2.5 billion credit to VALE. VALE produces the highest grade ore in the world which requires less heat to produce better quality steel.

    VALEMAX is a significant play to reduce shipping cost.

    VALE pays a wonderful dividend, it makes money and it is selling for less than book. Only JP Morgan had the story right. Morgan Stanley shot from the hip and fell flat on its face with its moronic linking earnings of VALE to the spot ore market. They just didn't understand the ore business but that didn't stop them from trying to knock down VALE stock. While they were selling, smart money was buying.

    Aug 3, 2014. 10:02 PM | Likes Like |Link to Comment
  • Stay Away From Whole Foods Market  [View article]
    Whole foods mgt is a bunch of bumbling idiots. A great example is their removal of the Lobster Bisque from Bay, on the grounds that it was not lobster friendly enough. Apparently you go with the inferior product as long as the lobsters are not treated like food. OK... how utterly moronic.

    I give some latitude to the stupid policies of Whole Foods just because their bread and butter shoppers are nutty as loons about a whole plethora of liberal nutty causes. So mgt has to feed into this insanity to preserve its core. That said, Whole Foods remains the only store system where you can buy a great lunch and even experience some well prepared vegetarian plates.

    How about prices. Prices are still inflated. They have plenty of buffalo meat but you should be able to buy elk chops and other game meats but whole foods doesn't extend itself too far into the game meats.

    I don't like mgt's lack of prior expansion which should have been done gradually and consistently. So they are now forced to play catchup. Stores like the North Carolina Lowes foods are giving WFM a run for their money regionally. WFM should buy Lowes and expand their presentation without so much push for their core political nutty groups. Lowes has found a way to make shopping fun for those that are less concerned about freedom for mollusks.
    Jul 14, 2014. 01:07 PM | Likes Like |Link to Comment