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I am shocked...SHOCKED...that nobody in the media or political sphere can understand what is going on behind the scenes that is causing clearing firms to block trading in certain ridiculously volatile securities.
Pretend Robin Hood is a casino (a stretch I know).
Casinos hold a certain amount of cash reserve on hand to cover all daily activities. Now imagine everyone playing starts winning big all at the same time. Slots, tables, etc and the House is losing huge. /2
The Casino's cash reserve is getting dangerously low, a few more big wins to pay out and they'll have no cash left. So they go out and close a few rows of tables, rope off some slot machines, forcing some players to be unable to play. /3
Then they call the bank and have them deliver a new boatload of cash, and reopen the Casino fully once they have enough to operate again.
That's kind of what is going on behind the scenes here, in the plumbing of the markets. /4
Most people have never heard of a "clearing firm", but without them the stock markets wouldn't function. Most of the largest brokerages are "self-clearing", meaning they also run their own clearing firm, but many use a third party.
See below: /5
Pretend Robin Hood is a casino (a stretch I know).
Casinos hold a certain amount of cash reserve on hand to cover all daily activities. Now imagine everyone playing starts winning big all at the same time. Slots, tables, etc and the House is losing huge. /2
The Casino's cash reserve is getting dangerously low, a few more big wins to pay out and they'll have no cash left. So they go out and close a few rows of tables, rope off some slot machines, forcing some players to be unable to play. /3
Then they call the bank and have them deliver a new boatload of cash, and reopen the Casino fully once they have enough to operate again.
That's kind of what is going on behind the scenes here, in the plumbing of the markets. /4
Most people have never heard of a "clearing firm", but without them the stock markets wouldn't function. Most of the largest brokerages are "self-clearing", meaning they also run their own clearing firm, but many use a third party.
See below: /5
wow, @apexclearing now blocking @public from allowing customers to trade specific stocks
— Mike Dudas (@mdudas) January 28, 2021
wall street norms imploding in real time, fallout is gonna be wild pic.twitter.com/gUyhufV32t
Which developed country would you say is facing the biggest economic slump of all? The conventional answer is the UK. Eg see this @OECD forecast. But here's a thread about an obscure bit of statistical small print which might mean we've been overstating the scale of the recession
Before we get onto the small print let's deal with what the numbers are telling us. And there's no doubt they're bad. Very bad. Indeed, the @OBR_UK reckons we're facing the biggest slump in GDP since 1709. Down 11% this year alone.
We won't get final 2020 GDP for months (and even that'll be subject to revision). But on the basis of the 1st estimate of Q3 GDP UK contracted at annual rate of 9.7%. So you can see where OBR are coming from https://t.co/dXK7Mqx3Cd
* yes it was later revised; we'll get to that
In short: look at the headline GDP figures and it looks like the UK is facing an almost uniquely hideous recession. One of the worst in the world. That 9.7% fall is more than DOUBLE the fall in France, Germany and most other EU nations. Worse even than Spain (-8.7%).
This grim economic news has provided more fuel for those convinced Britain's COVID experience has been far, far worse than everyone's else - both in public health and economic terms. But I have for some time wondered about that chart 👆and whether it really makes sense...
Before we get onto the small print let's deal with what the numbers are telling us. And there's no doubt they're bad. Very bad. Indeed, the @OBR_UK reckons we're facing the biggest slump in GDP since 1709. Down 11% this year alone.
We won't get final 2020 GDP for months (and even that'll be subject to revision). But on the basis of the 1st estimate of Q3 GDP UK contracted at annual rate of 9.7%. So you can see where OBR are coming from https://t.co/dXK7Mqx3Cd
* yes it was later revised; we'll get to that
In short: look at the headline GDP figures and it looks like the UK is facing an almost uniquely hideous recession. One of the worst in the world. That 9.7% fall is more than DOUBLE the fall in France, Germany and most other EU nations. Worse even than Spain (-8.7%).
This grim economic news has provided more fuel for those convinced Britain's COVID experience has been far, far worse than everyone's else - both in public health and economic terms. But I have for some time wondered about that chart 👆and whether it really makes sense...
Every time I see tweets like these I think about the tech people I've met & the $500 Lanvins so many wear. Or the $1100 Owen kicks some of the CEO's wear. The shoes look like Converse but they cost like Gucci. Some cost more. They wear designer, just not the ones you know
The other thing a lot of them do? They have bespoke casual wear. So handmade t-shirts. Custom fit track suits. Hoodies that are designed specifically for them. Mostly a very specific kind of new money wears well known labels, but they all wear designer. Stop blaming clothes
The real difference between rich people and poor people is generational wealth. That's it. Your parents can afford to pay for your education. Leg up. You inherit property? Leg up. Your family can invest 6 figures in your start up? Leg up. Rich people in America have help.
They have help from before birth tbh. Because their grandparents contribute to college funds. They buy rental property & gift it to their grandkids. They had more than enough money for their own expenses so they left money. And the parents of rich people? Rich too.
It's not the Gucci belt that's a barrier to economic stability for people now. It's not having a time machine to undo the impact of 5 generations of poverty. Even the best "rags to riches, by my bootstraps" stories have generational wealth hidden in them. Usually a friend's.
Once y\u2019all get off social media y\u2019all gonna realize the average millionaire doesn\u2019t dress in designer. A lot of y\u2019all don\u2019t realize how many you encounter in your life because they don\u2019t ever dress or appear like one. Real estate changed my whole perspective of that.
— J (@J_realbidness) December 26, 2020
The other thing a lot of them do? They have bespoke casual wear. So handmade t-shirts. Custom fit track suits. Hoodies that are designed specifically for them. Mostly a very specific kind of new money wears well known labels, but they all wear designer. Stop blaming clothes
The real difference between rich people and poor people is generational wealth. That's it. Your parents can afford to pay for your education. Leg up. You inherit property? Leg up. Your family can invest 6 figures in your start up? Leg up. Rich people in America have help.
They have help from before birth tbh. Because their grandparents contribute to college funds. They buy rental property & gift it to their grandkids. They had more than enough money for their own expenses so they left money. And the parents of rich people? Rich too.
It's not the Gucci belt that's a barrier to economic stability for people now. It's not having a time machine to undo the impact of 5 generations of poverty. Even the best "rags to riches, by my bootstraps" stories have generational wealth hidden in them. Usually a friend's.
Let's look again at the 2005-2008 two parabolic advances in $gold. first, read yesterday's thread if you haven't:
Today i want to look what some major miners did - between the 2 parabolic gold advances: how did they act?
Getting more historic context in the minds, will allow us to navigate calmer the stormy waters ahead, and HOW we want to manage them.
(2)
my basic framework is we will see a parabolic metal top mid 2021, followed by another parabolic metal top early 2023.
Now what did some miners do in a same situation: the 2006-2008 timeframe.
Notice the $GDX was launched exactly a few weeks after the 2006 top 😉
(3)
example 1 of 4 is Barrick
gold lines = 2 gold parabolic tops.
Barrick didn't advance much first, and as such had only a 23% retrace before setting a floor.
Not something you would have wanted to trade.
Even with the 50% gold parabola retrace, the metal floor was $150 higher
example 2 of 4 is Hecla
while Hecla corrected 42%, the correction was very fast in time. The new metal floor made it quickly rise back after.
Something we could have hedged with SLV puts for example.
Silver retraced 38% and traded in tandem with $gold
How high can #gold run during this next intermediate cycle?
— Gold Ventures (@TheLastDegree) January 1, 2021
my current target stands at $2440 by May
targets are not exit points: the combination of a lot of signals/ratio's are. we adapt along the way
(1) https://t.co/QjuekzVzw1
Today i want to look what some major miners did - between the 2 parabolic gold advances: how did they act?
Getting more historic context in the minds, will allow us to navigate calmer the stormy waters ahead, and HOW we want to manage them.
(2)
my basic framework is we will see a parabolic metal top mid 2021, followed by another parabolic metal top early 2023.
Now what did some miners do in a same situation: the 2006-2008 timeframe.
Notice the $GDX was launched exactly a few weeks after the 2006 top 😉
(3)
example 1 of 4 is Barrick
gold lines = 2 gold parabolic tops.
Barrick didn't advance much first, and as such had only a 23% retrace before setting a floor.
Not something you would have wanted to trade.
Even with the 50% gold parabola retrace, the metal floor was $150 higher
example 2 of 4 is Hecla
while Hecla corrected 42%, the correction was very fast in time. The new metal floor made it quickly rise back after.
Something we could have hedged with SLV puts for example.
Silver retraced 38% and traded in tandem with $gold
1/5
2020 Predictions Report Card
Item 1 - Tesla will lose more money in 2020 than 2019.
❌
I missed this one clearly. Didn't realize that they could recognize three years of credits in a single year, because I was using GAAP. Tesla does not appear to be conforming to GAAP here.
Doubt the auditors make a stink about it but who knows.
Also note that the total net income for the first nine months of 2020 ($451M) matches almost exactly the increase in A/R balance ($433M). A/R balance is now 1.76B, dwarfing their reported profits of $451M.
Item 2 - Model S will be discontinued.
✔️❌
They didn't discontinue. They dropped the price $10,000 instead. Combining this will the price cuts in 2019, including free EAP, gross margins for the Model S are now decisively negative. Giving myself partial credit on this one. (:
Item 3 - Model Y price will be cut $2K after initial orders are filled.
✔️
Ding ding ding. Prices were cut $3K right after initial backlog was filled.
Item 4 - MY SR+ will be released
❌
Missed this one. My best guess is that M3 SR+ are so low, they don't want to offer a similar MY variant.
2020 Predictions Report Card
Item 1 - Tesla will lose more money in 2020 than 2019.
❌
I missed this one clearly. Didn't realize that they could recognize three years of credits in a single year, because I was using GAAP. Tesla does not appear to be conforming to GAAP here.
2020 Predictions:
— Dean Sheikh (@DeanSheikh1) January 19, 2020
Tesla will lose more money in 2020 than in 2019.
The Model S will be discontinued.
MY prices will be cut $2K+ after the first batch of suckers make their purchase.
MY SR+ will come out this year to hide lack of growth from the weakest retail investors.
Doubt the auditors make a stink about it but who knows.
Also note that the total net income for the first nine months of 2020 ($451M) matches almost exactly the increase in A/R balance ($433M). A/R balance is now 1.76B, dwarfing their reported profits of $451M.
Item 2 - Model S will be discontinued.
✔️❌
They didn't discontinue. They dropped the price $10,000 instead. Combining this will the price cuts in 2019, including free EAP, gross margins for the Model S are now decisively negative. Giving myself partial credit on this one. (:
Item 3 - Model Y price will be cut $2K after initial orders are filled.
✔️
Ding ding ding. Prices were cut $3K right after initial backlog was filled.
Item 4 - MY SR+ will be released
❌
Missed this one. My best guess is that M3 SR+ are so low, they don't want to offer a similar MY variant.
The proposal for $2000 stimulus checks is divisive, and not along simple left-right lines. Lots of disagreement among progressives, with people like Bernie Sanders very pro but many others not on board. Both sides have a point 1/
My take: the economics aren't very good, but the political economy may make such checks necessary 2/ https://t.co/XY7d9E8SDY
The key economic argument, which @crampell picks up on, is that given a slump that has affected people very unevenly, aid should concentrate on those actually suffering 3/
So if you have a fixed amount to spend, unemployment benefits and maybe small-business aid should be priorities, not checks that will in many cases go to people who are doing OK 4/
But is there a fixed amount to spend? No binding budget constraint for the feds, so this is all about politics. And my sense is that broad issuance of checks is actually kind of a loss leader, helping to sell a package that includes UI 5/
My take: the economics aren't very good, but the political economy may make such checks necessary 2/ https://t.co/XY7d9E8SDY
The key economic argument, which @crampell picks up on, is that given a slump that has affected people very unevenly, aid should concentrate on those actually suffering 3/
So if you have a fixed amount to spend, unemployment benefits and maybe small-business aid should be priorities, not checks that will in many cases go to people who are doing OK 4/
But is there a fixed amount to spend? No binding budget constraint for the feds, so this is all about politics. And my sense is that broad issuance of checks is actually kind of a loss leader, helping to sell a package that includes UI 5/
1/10 I detest Warren simply b/c she's an inconsistent, low IQ, lying opportunist, & her "wealth tax" idea. What the majority of her stans fail to realize is that wealth doesn't mean money. Now she's on the wagon attacking retail investors-plebes. How do her actions hurt farmers?
2/10 Let's start w/ wealth tax. I believe I'm wealthy, but not in the financial sense. I have a loving family, patriarchs who taught me self reliance & the value of hard work, I've worked hard to get a good job, I have the most amazing fiance, I could go on but this is my wealth.
3/10 Yeah, we have acreage, cattle & goats, flocks of chickens, tracts of crop land & a fleet of 50+yo equipment/implements that have been purchased & repaired, then repaired again. We make modest salaries from our day jobs & are fiscally responsible. Farming isn't get rich quick
4/10 though, it's a break back life that sees you lucky to break out 15% in the black on your yields averaged. How does this wealth tax idea impact us? We already pay property taxes, fuel taxes, personal property tax on some equipment, income taxes when I report sold livestock &
5/10 crops, income tax on land leased to other folks, capital gains are applied to leased land too, then we have to title & tag the farm trucks that touch the road in any capacity, sales tax on supplies, feed & seeds, then sales tax IF I need to buy goods back. At the end of the
Casino-like swings in stock prices of GameStop reflect wild levels of speculation that don\u2019t help GameStop\u2019s workers or customers and could lead to market instability. Today I told the SEC to explain what exactly it's doing to prevent market manipulation. https://t.co/NWaZe1jFVb pic.twitter.com/MAbjHcq47i
— Elizabeth Warren (@SenWarren) January 29, 2021
2/10 Let's start w/ wealth tax. I believe I'm wealthy, but not in the financial sense. I have a loving family, patriarchs who taught me self reliance & the value of hard work, I've worked hard to get a good job, I have the most amazing fiance, I could go on but this is my wealth.
3/10 Yeah, we have acreage, cattle & goats, flocks of chickens, tracts of crop land & a fleet of 50+yo equipment/implements that have been purchased & repaired, then repaired again. We make modest salaries from our day jobs & are fiscally responsible. Farming isn't get rich quick
4/10 though, it's a break back life that sees you lucky to break out 15% in the black on your yields averaged. How does this wealth tax idea impact us? We already pay property taxes, fuel taxes, personal property tax on some equipment, income taxes when I report sold livestock &
5/10 crops, income tax on land leased to other folks, capital gains are applied to leased land too, then we have to title & tag the farm trucks that touch the road in any capacity, sales tax on supplies, feed & seeds, then sales tax IF I need to buy goods back. At the end of the
$ARPO Thread: Raz P2b glaucoma readout Dec 15 to Jan 15, assigning 90% POS, potential 3 to 5x, with (likely) partnership 1H21. Glaucoma dead for Big Pharma unless there’s a brand new MOA or pathway being targeted. Here we have both…a new MOA (Tie2) and a new location (SC)
https://t.co/zsc2eBVI4e Tons of great preclinical work on TIE2 MOA showing clear correlation to SC integrity, adult-onset glaucoma, and disease-modifying effects. See mosaic if interested
What do KOL's think of the new MOA: Special session held at ARVO 2019 to discuss Tie2 for Glaucoma. $ARPO then completed a closely watched P1b with a topical formulation. Now, a P2b trial in 195 pts enrolled within 3 mos, a month ahead of schedule, in the middle of a pandemic.
SOC is PG (-7 mm Hg IOP) +/- adjunct (-1 to -1.5 mm delta). Best efficacy adjunct is Rocklatan (-1.5), but AE profile: hyperemia (60 vs 15%), pruritus (8 vs 2%) site pain (20 vs 7%) vs PG , + other AE’s not seen with PG: 10% conjunctival hemorrhage, 15% verticillata. Almost DOA
But, sells $80 to $100M/yr US (same as $ARPO MC ha!). Every 0.3 mm reduction critical towards delaying vision loss. Rocklatan MOA was projected to make it a $1B drug, until AE profile (& payor delays) killed launch. $ARPO thesis: Raz efficacy >/= Rocklatan, without AE baggage.
https://t.co/zsc2eBVI4e Tons of great preclinical work on TIE2 MOA showing clear correlation to SC integrity, adult-onset glaucoma, and disease-modifying effects. See mosaic if interested
can you share the preclinical work you describe along with the papers?
— James Brandt (@jmsbrandt) November 20, 2020
What do KOL's think of the new MOA: Special session held at ARVO 2019 to discuss Tie2 for Glaucoma. $ARPO then completed a closely watched P1b with a topical formulation. Now, a P2b trial in 195 pts enrolled within 3 mos, a month ahead of schedule, in the middle of a pandemic.
SOC is PG (-7 mm Hg IOP) +/- adjunct (-1 to -1.5 mm delta). Best efficacy adjunct is Rocklatan (-1.5), but AE profile: hyperemia (60 vs 15%), pruritus (8 vs 2%) site pain (20 vs 7%) vs PG , + other AE’s not seen with PG: 10% conjunctival hemorrhage, 15% verticillata. Almost DOA
But, sells $80 to $100M/yr US (same as $ARPO MC ha!). Every 0.3 mm reduction critical towards delaying vision loss. Rocklatan MOA was projected to make it a $1B drug, until AE profile (& payor delays) killed launch. $ARPO thesis: Raz efficacy >/= Rocklatan, without AE baggage.
At a time when Buffett is being criticised for his style, again, I can't help but admire the investor & the person. Can't help but want to be more like him.
"Buy a company because you want to own it, not because you want the stock to go up."
Some excerpts:
👇
"Buy stocks for simple reasons, not torturous & sophisticated ones".
Eventually the thesis for a good investment boils down to 2-3 simple points. You have to do a lot of work to figure out what those are & why.
2/
Even Buffett has struggled with & changed his exit decisions. This I believe is a much tougher problem than the buy decision.
3/
1969 article: He has made a fortune and is no longer motivated to count boxcars and read statistical manuals. He comes close to the truth when he says: “You shouldn’t be doing at 60 what you did at 20.”
90 & still counting box-cars.
4/
He attributes his problem to a market that no longer lends itself to his kind of analysis, where real values are hard to find. - 1969
It has been 50 years since we are debating whether the market values "this kind of analysis".
"This kind of analysis" is all that there is.
5/
"Buy a company because you want to own it, not because you want the stock to go up."
Some excerpts:
👇
Excellent compilation of Forbes articles on Warren Buffet from 1969 to 2000s. h/t @valuewalk \U0001f44f@dmuthuk @Gautam__Baidhttps://t.co/V7uTYjwSrn pic.twitter.com/GPDyuk7WGB
— Ram Bhupatiraju (@RamBhupatiraju) December 5, 2020
"Buy stocks for simple reasons, not torturous & sophisticated ones".
Eventually the thesis for a good investment boils down to 2-3 simple points. You have to do a lot of work to figure out what those are & why.
2/
Even Buffett has struggled with & changed his exit decisions. This I believe is a much tougher problem than the buy decision.
3/
1969 article: He has made a fortune and is no longer motivated to count boxcars and read statistical manuals. He comes close to the truth when he says: “You shouldn’t be doing at 60 what you did at 20.”
90 & still counting box-cars.
4/
He attributes his problem to a market that no longer lends itself to his kind of analysis, where real values are hard to find. - 1969
It has been 50 years since we are debating whether the market values "this kind of analysis".
"This kind of analysis" is all that there is.
5/