Thursday, May 25, 2017
Wednesday, May 24, 2017
So Sandstorm's lost a third of its value since the story got out that it was buying Mariana.
Let's see if I understand this.
Mariana owns 30% of the Hot Maden project in Turkey, and Sandstorm is putting many eggs into one basket by taking Mariana's 30% in a buyout and then trying to convert that into a stream.
OK, so number one, if Sandstorm only wants a stream and not mine ownership, then I'd think they should have worked out the stream ahead of time. Otherwise, they're counting on their Maden partner's good nature to seal this deal after buyout. Otherwise, they'll be building a mine, which they don't have any expertise at, as the Colossus affair demonstrated. They're giving up stream negotiating power by buying into this project.
But hey, maybe their partners are good guys? Well, let's see what Google tells me.
Apparently, their partners are Lidya Madencilik Sanayi ve Ticaret A.S.?
They're a subsidiary of Çalık Holding A.S.?
Çalık Holding's CEO from 2007 to 2013 was Erdoğan's son-in-law, Berat Albayrak, now Turkey's Minister for Energy and Natural Resources? Apparently Wikileaks asserts they published a bunch of his private emails, alleging that he was helping smuggle Islamic State oil into Turkey? But Turks can't read about this because Erdoğan has banned the media from reporting any of it, which isn't hard since he and Albayrak have bought much of the media anyway, via Çalık? And by the way, Berat's brother is still on the Board at Çalık?
As a junior mining investor, at this point I give up. I don't bother trying to corroborate or disprove any of this stuff. I don't care whether the Islamic State stuff is true or the other allegations about Albayrak are true: I only care that Mariana's majority partner was once run by the son-in-law of the president of a third-world country aligned with Russia. Given typical third-world political economy, that alone is enough to give this deal the cooties.
I liked this movie better the first time I saw it, when it was called Simandou.
And so Sandstorm is buying 30% of a mining project in Turkey, thinking that these partners, i.e. possibly the family of president Erdoğan, are going to happily cut them a fair streaming deal. And that they'll actually get paid for the life of the deal.
I don't own Sandstorm now, and I guarantee you I won't after reading this.
Nolan, if you wise up and cancel this offer, which you should if you love your company and its future, then please send me $50,000 for my consulting contribution. It's money well earned, it'll save you millions personally, and your shareholders even more if you're into that sort of thing. You can get in touch with me thru Daniela Cambone.
It's funny that just two weeks ago a guy who should know something about third world governments and mining was calling Sandstorm cheap at $3.40 and the Mariana deal a good one.
Friday, May 19, 2017
Thursday, May 18, 2017
Wednesday, May 17, 2017
I guess people are selling S&P 500 today because they think Trump is about to be impeached? Is that it?
Anyway, here's some great reading for you:
New Deal Demoncrat - is the rental affordability crisis abating? If rents have quit increasing in the US, that'll mean more money in the pockets of the poor, which is how you build a sustainable economy. But I'm sure Trump will fuck that up somehow.
FT Alphaville - healthy pickup in capex predicted, again. Last time it was predicted, it didn't happen. Will this time be different? Not if you read some of the economic theory stuff I've been reading: the reason we're in capex stagnation is because more and more corporate earnings are being captured as rents by the power elite - the same reason government bond yields are at silly lows, btw.
Macro Tourist - the $VIX article no-one will like. Quote:
The narrative overwhelmingly embraced by most of the street is that there is a monster VIX short position out there, and that this volatility selling is a disaster in waiting. This camp has some impressive alumni. For the past year, the smart as a tack Jesse Felder, has been writing pieces about this risk. If you want to understand his point of view, check out the article from last summer - “The Short Vol Trade has gotten completely out of hand”. I love Jesse’s writing, and taking the other side of his trade gives me pause, but I respectfully suggest he might be wrong on this one.
He takes the "every seller is matched with a buyer" assumption and runs with it, arguing that there's a monster $VIX long position out there. The kill-shot comes when he notes it's actually the Vix long ETF that has built the monster position: apparently XIV's shares outstanding has been collapsing! That's convincing enough for me.
AEON - human capital theory was a cold war propaganda campaign. Really interesting long essay about how the Ayn Rand club invented the term "human capital" as a counterweight to Soviet communism. I'm skeptical of the whole Mont Pelerin Society conspiracy theory, but I also know that people like Milton Friedman were propagandists and not economists. In fact, if you decide to model human capital, you'll find that a monopsonist employer will use their market power to underpay for it - in which case worker exploitation simply becomes more obvious.
BBC - Avril Lavigne is dead again. The old "Avril Lavigne died in 2003 and was replaced by an exact replica" story has returned. Oh, and entirely parenthetically, her new album comes out this year.
Tuesday, May 16, 2017
Engadget - China hit hard by Wannacry because they use pirated software.
Yes, it was true as of Saturday that Wannacry spread so aggressively through China, India and Russia because those three countries are third-world shitholes where the entire nation runs off of one pirated copy of XP.
But then the killswitch got tripped. The worm stops spreading entirely if it connects to the killswitch website.
The reason the virus has continued to spread through China after Saturday was because their nation firewalls the killswitch website.
at 8:10 AM
Monday, May 15, 2017
The Register - Microsoft tells governments to quit hoarding exploits. Quote:
In the midst of the ongoing WannaCrypt attacks, Microsoft has issued an unusually strongly-worded warning to governments around the world to quit hoarding vulnerabilities.
The bug exploited by the attack was hoarded by the United States national security agency (NSA), leaked earlier this year and since patched by Microsoft – but patches aren't perfect, rollouts take time and WannaCrypt locked up a lot of machines in its first wave.
Microsoft is not pleased, and in this post, renews its call for a “Digital Geneva Convention”, and its long-standing demand that governments disclose vulnerabilities to vendors instead of stockpiling them.
“An equivalent scenario with conventional weapons would be the U.S. military having some of its Tomahawk missiles stolen,” writes Brad Smith, Redmond president and legal boss.
Noting the “unintended but disconcerting” link between nation-state activity and criminal activity, Smith adds that governments need “to consider the damage to civilians that comes from hoarding these vulnerabilities and the use of these exploits”. The “Digital Geneva Convention” Redmond recommends would therefore require governments “to report vulnerabilities to vendors, rather than stockpile, sell, or exploit them”.
With the caveat that these exploits are generally the result of poor programming, partially because Bill Gates would rather farm the work out to idiots in Bangalore instead of paying his domestic coders a decent wage, and the "Digital Geneva Convention" was probably written to benefit Microsoft and not the civilized world, I otherwise agree.
Exploits are potential weapons of mass destruction, very much like Tomahawk missiles. When a hack gets out into the wild, it can at least cause millions of dollars of damage, and at most bring down worldwide communications and commerce: we've seen that happen in the past.
We're okay with the military having weapons of mass destruction, because we expect them to have the tools to effectively attack national enemies. But we also expect the military to damn well keep them under lock and key, and not just let some contractor walk out the door with them to sell them on the black market.
We do this with plutonium, sarin and anthrax, so let's also do this with hack tools.
Oh, as an aside: when we find out some Russian is making sarin in his kitchen, we kill him and then lock up everyone he's ever met. We also don't let him sell it on the darknet and take payment in Bitcoin.
I think governments will take this seriously, and I still think Bitcoin's days are numbered.
at 7:21 AM
Saturday, May 13, 2017
Krebs on Security - NHS hit by ransomware attack.
Bleeping Computer - Ransomware using NSA exploit leaked by Shadow Brokers is on a rampage.
Avast - ransomware spreading aggressively, over 50,000 victims.
The big story going around right now is that a ransomware worm is locking up computers by the tens of thousands.
I haven't yet read anything that has clearly explained how it's spreading, so I don't want to fire up my old Vista even if I disconnect from the net and disconnect my data drive beforehand.
I've heard people say it gets into systems via good old-fashioned email attachments and website drive-by infections, and then spreads internally on a company's LAN via MS networking protocols, exploiting a MS networking security hole that I obviously don't have here at home. So I'd be competely safe. But I've also read that it sets up a bunch of processes to attempt connection to random IPs via port 135 and port 445, and that scares me.
I was hacked by the 135 worm long long ago, and I'm pretty sure my Windows system locks down those two ports nowadays and the exploits are long gone.
But still, I was hacked remotely by the port 135 worm long long ago, and I don't ever want to go through that again. Worms are a real bitch.
So I'll just keep my Vista shut off for now, thank you.
Too bad you lost another Windows customer, Microsoft! At least you can count on the Linux development community remaining so fucking stupid that they can't ever develop anything to replace you, since they don't even know how to fucking write a startup routine that can wake a fucking Dell LAN card.
As for the hacker who did this, if we are to believe Russia, they apparently made the mistake of making the Russian Interior Ministry one of their targets. So if that's to be believed, I'm pretty sure the guy is going to end up in a wood chipper by next weekend.
He went way too large with this attack, and he attacked the wrong people. Stupid.
But what I find funny are comments like these on Krebs' site:
So uk and world hospitals should buy now bitcoins.
then when attack comes then they are ready and it will save many lifes.
Goverments now should prepare their bitcoins reserves.
OK, so obviously Krebs gets a load of lowlife children on his comments pages; most of them are little hackers who have probably DDOSed him.
But really? Governments and hospitals should stockpile bitcoins? Really? To be prepared in case of future ransomware attacks?
How about this: MI6 tracks down everyone associated with Bitcoin and fucking kills them for being members of a terrorist organization. It actually makes better sense, fiscally.
And as far as the conspiracy theory that this was actually a targeted attack by the NSA, just look at the map, Russia is the biggest victim here?
Well, if that were so, then it's only so because all of fucking Russia is operating off one pirated copy of Windows XP that they've never bothered to update.
at 12:33 PM
Stuck in linux right now because with all that's going on I'm not sure I have the guts to fire up my Windows. More on that later.
Weekend market reads:
Calculated Risk - retail sales up 0.4% in April. And up 4.5% above last year.
Calculated Risk - LA port traffic increased in April. Container volumes way higher than last year. Unfortunately, unless there's enough demand to mop that up, we'll just head into another inventory correction. As an aside, why is meat 50% more expensive than it was last year?
New Deal Demoncrat - real wage growth set to resume. Don't worry, Trump will find a way to fuck the working class.
New Deal Demoncrat - weekly indicators. Geez, looks like the whole summer will be a low-volume boredom melt-up.
FT Alphaville - US too expensive? Consider Japan. That's not exactly positive on the surface. Then again, Japanese yields are also stupid low. And that hints at the real reason: all assets are expensive, because there's insufficient supply of assets, while demand is high because the kleptocracy has sucked tens of trillions of dollars out of the economy into their own pockets. It's really that simple.
FT Alphaville - panic and $VIX. Ex-Jesus and Mary Chain lead singer Jim Reid says this:
ultra low vol doesn’t necessarily predict bad returns going forward but returns are generally higher when vol starts at a higher point than current levels or when it is ultra high. Quite high but not ultra high tends to be the worst starting point. There is therefore some evidence that future returns from this starting point might be sub-trend but no particular evidence of an imminent big problem looking at the historical data alone.Which really just boils down to "buy low sell high", which means Jim just wasted my fucking time with this crap. No wonder William can't stand being in a band with him.
Friday, May 12, 2017
Thursday, May 11, 2017
Ermagerd! The S&P is down 0.63% this morning! $VIX popped to 10! Let's check Zerohedge to find a reason to sell!:
Ritholtz - yeah, $VIX is actually bullshit. He thinks Josh Brown has a good explanation for low $VIX: simply, nobody's that interested in buying downside puts anymore. Then again, they were just last fall, and with the subsequent Trump market pop most likely overdone they'll be likely to buy downside puts again in the near future. Since $VIX is ideally an index of the cost of a downside put, this is a good experimental setup right here.
So if Josh is right, $VIX should go back to its normal 12-14 range and XIV should lose a bunch of money for a while, the way XIV was a money-loser for about a year through 2015-2016, if I remember correctly. Which will be nice, cos then the XIV longs get punished for being suicidal idiots while the rest of us just sit thru a 10% drawdown in US equities. We need that.
Bloomberg - Ermagerd! Cherna Derlerverergerng cerntergern! Apparently, China is deleveraging, and that carries risk of contagion or something. Just like it did for the past 10 years, in fact. Me, I see a slight drawdown in ASHR and no move in FXI, so I'm wondering why everyone's suddenly piddling their frilly little pink girl-panties.
Wednesday, May 10, 2017
Medium - Troubled Wisconsin man goes on 50-state killing spree.
With a helpful photo of what a troubled Wisconsin man on a 50-state killing spree looks like.
But it's America, we expect this kind of stuff from them.
FT Alphaville - remain weirdly quiet as Satan laughing spreads his wings. Oh, lord yeah!:
The Vix — flawed measure of fear that it is — has fallen to another low, closing at its lowest level since 1993.
With a helpful picture of what the $VIX at its lowest level since 1993 would look like.
What freaks me out is that people who pass themselves off as institutional investors think it's perfectly okay to buy a synthetic short $VIX futures ETF like XIV - and then hold it.
Yes, holding XIV (or HVI.to in Canada) makes a lot of money, and "all you're doing is shorting time premium". That is all true. But there's still a risk problem with this, and an even worse market structure problem.
If you hold XIV, you need to realize you've got a 50% intraday loss riding on your books. Because XIV can drop 50% in a day if you get a $VIX spike. Check the charts. It's already happened a few times. Have you run a simulation to prove that your position is small enough to clear it without moving the market? Do you keep track of how large everyone else's positions are too, or do you really think you can be first out the door?
You don't have to know how XIV even operates, just read the goddamn prospectus! Why do they have that big section in bold saying "The Closing Indicative Value will be zero on and subsequent to any calendar day on which the Intraday Indicative Value equals zero at any time or Closing Indicative Value equals zero"? Or the part under "Risk Factors" (nice title, wonder what it means?) that they put in bold AND italics that says "Because of the large and sudden price movement associated with futures on the VIX Index, and the daily objective of the ETNs (including inverse or leveraged exposure), the ETNs are intended specifically for short term trading"?
Because XIV is actually able to lose over 100% in a day. It can do that because it's a short $VIX future.
And so the minute you get a $VIX intraday spike, and the loss on the ETF explodes, Velocityshares will try to wind it down before it goes negative. Which will mean buying back all of XIV's $VIX near and second month short position, during the day, during a spiking market. All this at the same time as Horizons is also selling HVI.to's $VIX futures. And while every other synth shop is selling theirs as well. And while the CBOE $VIX professional traders can smell blood in the streets.
That means an acceleration toward zero.
And because your position gets closed out right at the peak in $VIX, your loss gets capitalized. YOU DO NOT get to get back into the market to ride XIV back up, because IT'S CLOSED.
It doesn't matter what price you bought at, the potential of your XIV position going to $0 the next time fear spikes should wildly screw up your risk profile no matter who you are.
And these XIV holders are the people who bid down $VIX futures.
Then again, I do still think that if it were a true unbalanced elephant-in-a-kiddie-pool trade, someone would be able to make a bloody fortune on the other side. And there must be a few hundred quants out there that have already looked at this, it's a frickin' gimme.
Hopefully none of them have thought about starting an artificial run into $VIX near & second month to force XIV down and precipitate a loss. Hopefully it's not possible to sell a XIV position short. Hopefully there are no Russian quants who've read the Financial Times' XIV warnings over the past 2 years who work in an "economic warfare" subdepartment at the GRU, because it will only take a few billion dollars to spike $VIX to 80 and crash the S&P 500, as long as XIV as part of the market structure.
In fact, they could slowly build a $5B XIV position, then take $100B of the central bank's money and buy OOTM near puts on high-beta NYSE stocks when SPY's RSI is >70; then pull the trigger, dump the XIV position as a sacrifice to trigger a market run, and clean up on the puts like a mofo.*
And then Pooty-Poot will give them a fucking medal for bringing down American kapitalizm.
If you own XIV as a hold, you're holding a potential goes-to-zero-then-things-get-worse position. You are an idiot and should kill yourself right now for the benefit of humanity.
I do love trading HVI.to (Canada's XIV): but I trade it, only after the intraday has spiked and the futures have gone back into contango, and once I get my first 10-20% I cut back, and once I've made 30% on the rest I sell and walk away.
If people keep piling into XIV, this will become the next financial weapon of mass destruction. You heard it here first.
* - Then again, maybe Pooty-Poot would be able to launch the same attack even if XIV never existed, just by selling $VIX futures directly at the CBOE? I'd be happy to hear an explanation of why he could, because that would make me sleep a lot better.