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MattZN2

MattZN2
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  • Greece: The Slow Motion, Multi-Year Train Wreck [View article]
    Apparently Germany at least recognized that Greece was unlikely to be able to handle its debt way back in 2011.

    http://bit.ly/1LNtNFw

    There's plenty of blame to go around. What austerity Greece has implemented has only led to severe pain, and clearly hasn't allowed the economy to bounce back. At the same time the rest of the EU continued to support them pretty much knowing that Greece had 0 ability to pay back the so-called loans. If Merkel didn't think that even a 50% haircut would work 4 years ago, what are the chances of it working today? Still zero.

    So insofar as the debt goes the only two real choices for the EU is at least a 75% write-off / debt-forgiveness or they keep on their current path and get zero back.

    For Greece, going to an electronic Drachma is probably not possible, which leaves only one real choice and that is to bring in international banks for its citizens and private businesses to use (the Greek national banks stay closed forever) and privatize all government businesses as quickly as possible. That's the only way they can possibly stay on the Euro.

    -Matt
    Jul 3, 2015. 09:14 PM | Likes Like |Link to Comment
  • S&P upgrades California's credit rating [View news story]
    You guys need to stop watching conservative soap operas on T.V.. Reality and Fantasy don't mix.

    -Matt
    Jul 3, 2015. 02:12 PM | 2 Likes Like |Link to Comment
  • Raymond James: Linn Energy, LinnCo undervalued with catalysts to come [View news story]
    As a trade there are possibilities but as an investment the company is garbage now. They double-dipped shareholders with both an ATM *AND* a secondary, then made a sweetheart deal with private equity. You don't do an ATM and a secondary at the same time, the whole point of the ATM is to replace the secondary. And the private equity deal smacks of desperation.

    That makes them uninvestable. They won't become investable again until they completely scrap their distribution and start dealing with their debt load realistically. Most E&P MLPs have blown the capital that investors gave them. With wells producing most of their lifetime earnings in just the first few year, the E&P space clearly has way more debt on its books than it should have at the current juncture. It was easy to ignore when the companies were still expanding quickly, but it can't be ignored now. Now it brings up the very real question as to whether those wells are really earning anything vs the debt used to construct them.

    Maybe they are hoping that Oil, NG, and NGL prices will rebound. They could end up waiting a long long time for that.

    -Matt
    Jul 1, 2015. 01:33 PM | 2 Likes Like |Link to Comment
  • Eurozone rejects Greece's bailout extension request [View news story]
    In my opinion, this is the result that Tsipras wanted. Basically he strung it out as long as he could and now he's working on changing the mindset of the Greek people to accept the fact that the money train has stopped running.

    Blame? The European Monetary Union for letting Greece borrow so much in the first place, and Greece for becoming so dependent on it that they couldn't survive without a continuous flow of cash injections from the ECB, yet wanting to believe that the electronic balances in their bank accounts were all real. Blame is easy... both are to blame for living in a fantasy world.

    -Matt
    Jun 30, 2015. 11:38 PM | Likes Like |Link to Comment
  • Wind And Solar Will Soon Become The 'Least-Cost Option' [View article]
    This is the reality in the U.S.:

    http://bit.ly/1eZq3DE

    Now add to that the fact that coal has dropped from over 60% of power generation to 29% in 2014 for the U.S. If natural gas prices stay low Coal-based new electrical generation capacity could potentially stabilize in the low-to-mid 20's (20-25%), but with the U.S. electricity consumption curve flattening that's a big lose because renewable sources have very low marginal costs of production (the cost is all frontloaded, whereas with coal the cost is ongoing).

    Natural gas is mostly responsible for coal's current losses, but renewables (Solar and Wind primarily) create a continuous pressure on coal fired generation simply by virtue of the capacity having a very low marginal cost of production once it has gone in.

    The other problem for coal is that coal plants really have to be used for base load generation and renewable sources accentuate the daily cycle to the point where coal plants can't operate efficiently. That is beginning to be a problem in the lower-48 and is already a huge problem in Germany (for the coal plants), in in Hawaii (for all non-renewable energy sources).

    Now throw in the debt problem that coal, oil, and natural gas E&Ps all have. As these companies cycle through bankruptcy the liabilities for coal mines generally transfer to the new owner and do not reduce costs very much. But the liabilities for a oil or natural gas well die with the company doing the selling, and the new owner of the well or wind turbine winds up with much lower costs.

    Then there is the locality problem. Coal is most efficient when the coal can be transported to a nearby power plant, either by rail or floated down a river. That's being taken away as the dynamics of where the mines and plants are changes, increasing the cost of coal-fired generation in many areas. For solar the equivalent is an essentially one-time cost in electrical transmission infrastructure (and far more modest maintenance costs), which is far more manageable in the long-run.

    Throw in coal ash disposal and equation gets even worse. Power companies far prefer a natural gas power plant simply by virtue of not having to deal with disposing of materials which are increasingly being classified as toxic materials. Sure, some states are trying to (or succeeding in) rolling back the regulation and the classification, but it doesn't change the reality and the power companies now it.

    World wide coal consumption continues to increase but it is also very clear that some countries, particularly China, have hit the limit of what their populations are willing to endure w/regards to pollution. I wouldn't count on world wide consumption staying on an increasing curve. And for U.S. coal companies, world demand is not necessarily able to relieve the pressure due to transportation costs and export capacity.

    Coal isn't quite to the point of Whale Oil (after all, coal is a very large resource whereas Whale Oil was a severely diminished resource), but it is fighting a losing battle. Coal consumption doesn't have to go to zero to make coal companies unprofitable. The simple lack of growth and continuous pressure from other sources (even sub-percentage pressure) is enough to make coal companies unprofitable.

    -Matt
    Jun 30, 2015. 10:58 PM | 1 Like Like |Link to Comment
  • Futures drop as Greek crisis worsens [View news story]
    At the moment I have a substantial position in NAT and TNK on economic grounds. I don't think they are an indicator of anything, leading or lagging. They just happen to be in a sweet spot with growing demand for oil shipping and not enough ships which will probably last through at least 2016. But it isn't a recommendation or disrecommendation, the names have already appreciated over 100% from their lows.

    The rest of the market I'm finding is just impossible to gauge, but it doesn't look good. The crisis in Greece and simmering crisis in a few other Euro countries could mess up the dollar/euro even worse than it is already (result in a stronger dollar over the next year), which combined with Japan could greatly impact earnings for U.S. companies whos global exposure is huge as well make competition more difficult. The only reason it hasn't translated to inflation yet is because our main trading partner is China and the Yuan has also been relatively strong. If China destabilizes (which is quite possible), all bets are off.

    Low oil prices could continue to mess up the energy markets and make Junk Bonds (which have a heavy MLP component) far more dangerous than people think. Low oil and natural gas prices are being driven by continued high volumes of production in the U.S. and elsewhere. Any recession in any major country or economic area anywhere in the world will make that far worse by reducing the demand side (which so far has been able to grow apace, but not achieve parity with production). A strong dollar only makes that worse, particularly for MLPs whos only growth outlet are exports.

    The combination of that and Puerto Rico's likely default in the next 12 months has already crushed bond funds to some degree and appears to be completely destroying bond insurers. A large number of relatively mundane Muni bond funds have serious Puerto Rico exposure. The possibility of rising interest rates finishes the job on the Bond side.

    The Fed has no bullets left. Rising wage pressure means they will have to start raising. Yet the strong dollar argues for more easing (which I think is impossible for them to do at this juncture). So whatever happens next, there will be no brakes.

    So far most of the U.S. damage seems relegated to private equity funds and hedge funds, and not our banking system which is very well protected due to the so-called 'excess' regulation that occurred after 2008. I'm very happy that regulation is still in-place, even if it hasn't fixed the too-big-to-fail problem. Student loans are a big problem which has effectively saddled our government with debt that will have to be written off (basically another underfunded liability). Theoretically that's an inflation indicator but the mess in the rest of the world is hiding it.

    So... I'm throwing up my hands and trying to build a reasonable (~20% or so) cash balance (an effort which is still in progress) without generating too big a tax bill (failing at that), staying out of bonds, and sticking with low P/E economically robust companies in the non-energy side of the stock portfolio for the most part. The energy side has a few long-held mid-stream MLP pipelines, which have taken a beating, but thankfully no E&Ps or coal.

    -Matt
    Jun 30, 2015. 09:46 PM | 1 Like Like |Link to Comment
  • Futures drop as Greek crisis worsens [View news story]
    I'm not sure there is really any sector that is safe, but I still think the stock market is in far better shape than the bond market. That said, everything I track except oil tankers is basically bright red. The general market's biggest problem is the potential for the dollar to become even stronger than it is already, and with most companies globalized these days that is a big issue for their stocks even if our domestic economy is doing well.

    We could easily end up with a market crash across most sectors and yet still keep our economy intact. It sounds strange, but right now our biggest problem is ex-U.S. and there isn't really a whole lot we can do about it. The Fed has no more bullets left.

    -Matt
    Jun 29, 2015. 07:54 PM | 1 Like Like |Link to Comment
  • Futures drop as Greek crisis worsens [View news story]
    I think you are a bit confused re: California. Not sure why so many people seem to think the state is broken. Unemployment on average does have serious issues in the central valley but mother nature is responsible for a large portion of that these days, and not so much politics. The heavily populated areas have been booming for several years.

    -Matt
    Jun 29, 2015. 07:49 PM | Likes Like |Link to Comment
  • Futures drop as Greek crisis worsens [View news story]
    Not sure what you mean by CA? California? Perhaps you don't realize that the CA budget was fixed 2 years ago and the people themselves voted for the hard changes needed to do it. Also not sure what you mean by socialism and entitlements... in CA? Other than a few silly city laws here and there, its about as capitalistic as it comes.

    -Matt
    Jun 29, 2015. 07:45 PM | 2 Likes Like |Link to Comment
  • Why Teekay Tankers Stock Is A Buy Right Now [View article]
    This is pretty insane considering that Aframax rates are over $90K/day at the moment. I've been long TNK and am going longer today. Options premiums not really in our favor (for going long calls or short puts) so I'm adding to my common stock position.

    The whole UBS thing smacks of manipulation. The tanker names are so badly analyzed and under-reported or mis-reported that it's easy to push the computers around. I think most live investors still in this space know what the real deal is, though, and will ultimately prevail as the cold hard cash keeps hitting the balance sheet each quarter.

    -Matt
    Jun 25, 2015. 11:55 AM | Likes Like |Link to Comment
  • Apple Pay In India: A Distant Dream [View article]
    I really doubt that AFA requirements are an impediment. The fingerprint works just fine for the additional form of authentication. The physical iphone is the first (iphone == card, fingerprint == additional form). It will be a non-problem.

    Take-up will be slow in India, but who cares? This is all about the future, not the present. NFC-based transactions are obviously going to be used for everything, ultimately.

    -Matt
    Jun 23, 2015. 05:52 PM | Likes Like |Link to Comment
  • Taylor Swift > Apple [View article]
    Apple is also under a bit of pressure to reduce their 30% take on subscriptions purchased/renewed in-apps, particularly for newspapers and magazines. They announced some reductions a month or two ago. I expect those numbers to continue to go down over time.

    On the music service it was clearly overreach by Apple. I can even tell people what happened. Apple doesn't pay devs for downloads of paid apps which Apple features (temporary as a free app) in the App store, which is supremely unfair to app devs. Apple tried to transplant that contract mechanism to their music offering and it backfired on them. Not paying artists for music that Apple decides to give away free is supremely unfair to artists, particularly on Album releases whos revenues tend to be front-loaded in the first few weeks after a release. It's a slightly different mechanism, but the same problem.

    So Apple correctly had to give on this issue and they may have to revisit their app-store policies on app featuring as well. If they are smart about it.

    -Matt (very long apple for a long time).
    Jun 22, 2015. 12:51 PM | 1 Like Like |Link to Comment
  • Reuters: Advanced Micro Devices considering breakup, spinoff [View news story]
    AMD had a chance to sell into the home server market with the original Phenom II when they went to AM2 in 2008 (6 years ago), not to mention when they did the original phenom II release which could do ECC. But AMD blew it big-time by not requiring manufacturers to make ECC-compatible mobos.

    Most didn't, or ran BIOSes that didn't. It could have been a major differentiator 6 years ago. They had another chance when they went to AM3 and also blew it. It is far, far too late now. Intel has already cornered the consumer server market with its low-end Xeon offerings. They own the normal server market. They own the high-end server market. They own the laptop market (or will soon). And Intel is in the midst of taking over the desktop market.

    That leaves AMD with what? The high-end workstation GPU market and the discrete gaming GPU market (but not the cpu space any more for gamers), both of which are relatively low-volume markets.

    I really don't see them as having any chance in any market except the discrete GPU market, and the discrete GPU market is going to get seriously squeezed from all sides over the next few years as integrated solutions continue to advance. The discrete GPU market will always have the horsepower advantage, but AMD will lose the volume distribution to the integrated solutions (if not already). AMD is in real trouble.

    -Matt
    Jun 21, 2015. 01:20 PM | 2 Likes Like |Link to Comment
  • Greece Again? Who Cares [View article]
    I have to disagree. Greece matters to the European economy and the Euro, and both have a major effect on US business if simply due to globalization. Most large US businesses are global businesses these days. Fluctuations between currencies due to multiple crisis from 2008 to today have become huge and volatile and that's a big problem.

    The only reason the US markets haven't crashed from the currency fluctuations is because we are married hand and foot to China and China's currency has remained relatively strong vs the dollar. That plus many foreign investors injecting capital into the last 'safe' haven in the world (the US). It isn't going to last forever.

    Economies are heavily interlinked these days. I don't think the US is immune any more.

    -Matt
    Jun 18, 2015. 11:57 PM | 1 Like Like |Link to Comment
  • Bank Stock Prices And Higher Interest Rates: Lessons From History [View article]
    Any long-term graph against price must use a log scale and be adjusted for inflation against time or it isn't even remotely useful.

    Even taking that into account, it doesn't look to me that there is any actionable correlation on the graphs presented. The bank stocks were doing their thing pretty much independent of interest rates. While you can always make a calculation as you have done, and there will always be some numerical value out the hind end, it doesn't mean that the number is necessarily a meaningful measure of what you are trying to test. And in this case, it looks pretty meaningless to me.

    -Matt
    Jun 18, 2015. 11:44 PM | 1 Like Like |Link to Comment
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