Category: Market Today

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Clients are Fleeing Neil Woodford Amidst Scramble for Liquidity

2 min read

Neil Woodford has frozen his flagship fund, the Equity Income Fund after it shrunk by £600m during May and the Kent County Council attempted to pull out its £263m investment

Since May 3, when Neil Woodford has decided to suspend his flagship equity income fund, shares of the sister fund, the Patient Capital Trust Fund, have dropped for 25%. This underperformance of the stock market-listed fund was caused by concerns over bad market bets of the suspended equity income fund. Bad performance of Woodford’s healthcare investment, combined with more than £187m in redemptions, has shrunk the value of the fund’s portfolio from £4.3bn to £3.7bn. To those familiar with health-care investments records of once-lauded UK investor this may seem as expected. But for the general public, it comes as surprise news about the fund which was valued at one point in 2017 as much as £10.2bn.

Surprising news

According to regulatory fillings Woodford has found himself under mounting pressure to cash in investments in a scramble for liquidity. But already underperforming stocks see their prices pushed downward by these sales, which in turn forces Woodford to sell more. In the 6 months before the suspension of equity income fund, companies in which Woodford has positions have performed abysmally. E-Therapeutics has fallen 75%, Circassia 69%, Autolus 54%, Theravance 41%, IP Group 30%.

And there are indications that other investors in these entities have planned to cut their positions in them even before Woodford’s sale pushed prices down. Market participants seem to be expecting a wave of forced sales from Woodford, with reports of some hedge fund managers taking short positions against his investments. Troubles for Woodford are very likely to get worse before it gets better.

Troubles for Neil Woodford

And those troubles are spilling over to the patient capital trust fund, FTSE 250-listed fund, in which at least three UK local government pension funds have investments. Around £10m in investments which contribute to funding retirement benefits for former local government employees, such as school teachers, councilors, and so on. While the investments of council pension funds of Derbyshire, West Yorkshire, and Dyfed; are small compared to the overall size of their pension schemes, £21.7bn, there is a considerable risk of posting a loss if the councils decide to sell before the price recovers. This risk is raising public concern over whether the local councils should be making decisions concerning large, risky investments. The concern which is in large informed by the experience of more than £1bn lost in investments by local councils into Iceland banks in 2008.

The Woodford’s reputation is questionable

The suspension of equity income fund means that, for at least 28 days, the retail investors will be unable to cash out their investments. This development has prompted the stockbroker Hargreaves Lansdown to remove Woodford’s fund from their Wealth 50 list of suggested funds. This move is a considerable blow to Woodford’s reputation as Hargreaves Lansdown only six months ago owned around 30% of fund’s shares.

Many industry experts say that two reasons are to be blamed for Woodford’s malaise. First being the bad bets on UK stocks, which have taken a hit after the Brexit vote. One such is the investment in outsourcer Kier, whose stock fell by 41% on June 3 causing Woodford’s equity income fund £37m loss. The second cited reason is an investment in illiquid stocks. A situation which Woodford is attempting to rectify. According to the Reuters analysis of Woodford’s firm has already sold or transferred at least £808m in the UK listed companies.

You would like to READ George Soros – The Man Who Broke the Bank of England

18th June 2019
Bitcoin rose and hit One-Year High

2 min read

Bitcoin rose and hit over $9,000. This is its highest since May 2018.

This new high is perhaps caused by Facebook’s reveals to launch its crypto. Such an event added more optimism and confidence about the future of cryptocurrencies in general because it showed that digital money is going to be adopted by big companies.

The biggest cryptocurrency climbed as much as 9.4%. Other crypto coins also rose: Litecoin for 4.4% and Ethereum for 4%.

Cryptocurrencies price chart

Let’s stay with Bitcoin.

Bitcoin rose more than 130% in 2019 and has almost doubled in value. How did it happen?

The big companies like Facebook expanded or revealed that have plans, to their offering of cryptocurrency services.

It seems that Facebook’s plan to launch a digital currency is pushing people toward Bitcoin.

June 18th is tomorrow ( the date that Facebook planned to reveal more details about new digital asset) and we will have full public information. Previously, Facebook announced the plan to release a white paper for “Libra” or “Globalcoin”. This should be on June 18th as they said.

FOMO effect

Jeremy Allaire, the chief executive of Circle, tweeted the launch of Libra (whitepaper) will be a “massive inflection point in the global adoption of cryptocurrency.”

This entrepreneur said that by June 21st, he expects for Bitcoin to be valued at $10,000, “marking [the] start of Crypto Summer.”

Yes, $10,000 is a fine number, but many see it as a pivotal level for the Bitcoin price.

When Bitcoin rose to this level, and that time isn’t so far, FOMO will favor the crypto market.

Bitcoin chart

If you can recall the time when BTC went over $4,500 you know what we are talking about. This means that the price of Bitcoin and other cryptos will go higher, more above $10,000 and they will do it very fast.

For proponents, this is great news and event worth waiting for. There are so many emotions in the game. Just try to read everything on Twitter. Bitcoiners will be glad to see the opponents frustrated and to see FOMO from those who celebrated when BTC dropped about 90 %.

What will they feel about those who believed that Bitcoin is dead forever?

The Wall Street analysts stated that once $10,000 is broken trough, there will be a “fast and furious” progress to $20,000. Taking that new value as the new position, it looks more obvious that Bitcoin can double the price in the following several months.

The price of $40,000 sounds pretty good, don’t you think?

Some have a different opinion

However, there are some that deny this pleasant emotion about Libra and bright influence on Bitcoin.

Peter Schiff, investor, and libertarian-leaning economist speculated that Facebook’s Libra project will be “bad news” for Bitcoin.

This famous cryptocurrency critic, who claims that BTC has no intrinsic value and thus is not better than hard gold (Schiff is a prominent gold investor), calculates that Libra will be much stabler, cheaper, and more easy-to-use than Bitcoin.

And yes, that is exactly what Facebook promised about Libra,

low fees, fast transfer and a level of stability not seen with Bitcoin.

Behind this promise is the idea that the new cryptocurrency will be secured with traditional currencies and other ‘steady’ assets.

The bottom line

All is math. Bitcoin was $2,634 on June 16, 2017. Say you bought some BTC at that time. Now, you have an almost tripled return after 2 years. Bad investment? Never dare to say that. Sudden and fast ups and downs, yes. That’s the nature of Bitcoin and any other cryptocurrency.

And speaking about Bitcoin’s future, as Nelson Mandela said: “It always seems impossible until is done.”

risk disclosure

17th June 2019
Tesla shares drop but it could a 50% grow within a month

3 min read

Tesla shares were higher 2%, floating around the $200 mark on Thursday.

The day before, Tesla CEO Elon Musk had sent an email to employees, saying that Tesla could gain a new delivery record and had above 50,000 net new orders for the next quarter.

“Based on current trends, we have a good chance of exceeding the record 90,700 deliveries of Q4 last year and making this the highest deliveries/sales quarter in Tesla history!” Musk wrote in the mentioned email.

Tesla last report for the first-quarter was disappointing for Wall Street.

The company missed Wall Street expectations.

And the worries about Tesla short term arose immediately.

Tesla last month announced first-quarter deliveries missed Wall Street expectations. The worries about the company’s short term bloomed.

The consequence was, some Wall Street experts have decreased their expectations for the company.

They expressed their concern, frequently focusing on sale worries and liquidity. The negative criticism arose.

Tesla shares have dropped 30% in the past 12 months and 42% this year.

The big turn over of Tesla’s shares

Shares of the electric-car maker drop at $190. It is for the first time in two years.

Image source: Yahoo Finance

The company got thrashed by a range of negative analyst predictions.

Also, Elon Musk warned the stuff the “hardcore” cost cuts are necessary because the company would be out of cash in 10 months if not doing so.

For analysts, the bad sign was recently price cut on its cars. The demand is lower and there are so many reasons for experts concerns.

But still, some of the analysts claim that Wall Street is “misunderstanding the Tesla story”.

Musk’s successes are internationally recognized. Also, it isn’t a secret that he put himself and Tesla into trouble. All because of a tweet on August where Musk claimed there is a possibility to the company to be taken private with “funding secured”. That caused problems with the government.

According to Yahoo Finance, an analyst for a firm “with a major investment in Tesla said Friday that recent drastic price-target cuts on the stock by others on Wall Street are missing the big picture.”

That firm is Ark Invest. Last year its founder forecasted on CNBC that Tesla could score $4,000 per share. They still stand by that call, even now when Tesla’s stock lost almost 40% of its value.

To buy or to sell Tesla shares?

Tasha Keeney, Ark analyst, stated Ark hold so firmly in Tesla that its five-year, bear-case scenario is $560 per share.

That would be almost triple the value of the price where the stock closed, at $195.

Also, the fact is the company raised $2.7 billion. The first quarter was finished with $2.2 billion in cash.

So, bankruptcy appears very doubtful. Almost impossible. The opinion that Tesla will easily run out of money in the next period and close its complete business looks a bit absurd.

The company could raise more capital as Musk already showed they are able to do so.

Also, they could change its business model and sell battery packs to some other carmakers. Or something else, Elon Musk is able to do very unexpectable things to maintain Tesla and exits as a winner.

Tesla could also sell more stock and convertible debt. The last has a lower interest rate than regular loans. Tesla recently raised a convertible debt with an interest rate of 2%. So, who says they cannot do it again?

Tesla is a global leader in two businesses: cars and renewable energy.

Tesla has a really great opportunity in the sector of electric cars. Especially in China, for example.

Its stock could easily produce a return of more than 100% in the future.

Okay, there was some disturbing situation with their autopilot when one man was killed in a traffic accident while using autopilot. He simply and sadly hit the truck. But the company announced that their new cars have the hardware for full self-driving abilities and the software is ready.

Tesla can meet its near-term production goals, that is for sure. It can manage the cash crisis. So it is more realistic to expect it will have a good future. This brand is not going to easily disappear.

Yes, its CEO Elon Musk can be questionable but at the same time, no one can say he isn’t a very capable man. Controversial but capable.

So, Tesla stock can be attractive for risk-tolerant investors.

risk disclosure

26th May 2019
Tesla’s stock hit a new 52-week low

2 min read

Tesla’s stock has fallen another 6% yesterday. It is now down 40% in comparison with last year, according to CCN.

Tesla’s stock is falling more and more every day and Wall Street predicts a total disaster.

Image source: Yahoo Finance

At the same time, Tesla’s car price is falling down too.

The company announced that it is going to lower prices on older model S and X cars. Merrill Lynch announced that selling on those models is lower than ever.

Critics have the opinion that Tesla’s stock has always been a bet for naive traders.

Morgan Stanley reduced its lowest-case scenario price target to $10:

“Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention.”

The Tesla golden era is likely over

Tesla’s stock had confronted pressure for a long time. It had problems with the installations of its car. It had delays and deficits of components. But Tesla and Elon Musk somehow managed to cover all of these problems.

The company had to report a huge loss of $702 million in the first quarter this year, just a few weeks ago. The consequences were they had to draw extra funding. This loss was caused by a decrease of 30% in selling cars.

Also, their tax credit of $7,500 was cut in half meaning the government subsidies are lower. That’s really the bad position for the company and Elon Musk itself.

Tesla rivals are more powerful than ever

For example, BMW progress the development of their own electric cars.

Tesla shares continued the slump falling 6% to close at $192,73.

Citigroup analyst Itay Michaeli lowered the price target on the clean-energy carmaker’s plans by nearly 20% to $191 per share.

Michaeli stated the company’s recent capital growth of $2.7 billion provides the balance sheet defense against a 2019 downturn.

“The recent capital raise was a positive step but won’t necessarily get the balance sheet out of the woods if Tesla cannot achieve FCF targets,” Michaeli formulated.

But, at the same time, he said the company has to solve its serious cash spending rate.

Tesla and Elon Musk tried to guarantee the investors their investments are safe. They claimed the company developed a new driving automation system and self-driving vehicles which should increase the safety. Obviously, the investors have no trust as the consumers don’t have.

Tesla’s claims are not supported by the data, they look more just hollow promises.

Musk tries to avoid criticism and keep a good status, it is obvious.

But it looks the Teflon chief position doesn’t belong to him anymore since his reputation likely not stays intact.

Moreover, he and Tesla seem will have more problems in the future.

With competition and investors both.

Elon Musk was putting all of Tesla’s difficulties under the rug.

Declarations on how Tesla should be prized as a tech stock and not as a business with unlimited problems fall into the water.

Banks warned to a Tesla’s disaster

Bank of America Merrill Lynch and Citi analysts each declared critical statements evaluating the stock’s recent pull-backs by investors. They both concluded it is a sign that should concern.

Their analysis is based on intense selling pressure, with shares falling 16% during the past week.

And also, there is a leaked email from Elon Musk that refers to employee expenses.

All of this was very important for BAML and Citi.

“With fundamentals deteriorating, specifically deliveries/production that are starting to stall as well as losses/cash burn that are not turning a corner on a sustainable basis, some of these optimists now appear to be taking a much more pessimistic stance, with the stock breaking down in recent days,” BAML analysts headed by John Murphy addressed to clients on Wednesday.

The analysts told the current tension on the stock seems to be inspired by “shorts pressing aggressively, as the stock (and story, to some extent) was already breaking down.”

risk disclosure

23rd May 2019
Huawei is Riding Again in the US market

2 min read

On May 15 after the US President has signed the executive order declaring a national emergency and giving to the US Commerce Department power to create a blacklist for foreign companies which are barred from procuring the US-made products and selling their products in the US.

On May 20 the Commerce Department has issued a special 90-days authorization for Huawei.

After the US has blacklisted Huawei and another 68 Chinese companies from purchasing the US made products and services stock markets around the world had their say. This latest “broadside” in the US-China trade war has sent shockwave around the globe which caused stocks of many involved companies to the tank.

Alphabet, owner of software giant Google; Qualcomm, mobile chip maker; Micron Technology, NAND memory chip producer; Huawei, mobile phones and telecommunication equipment manufacturer; are some of the largest companies whose stock prices were impacted.

In the unexpected move on May 20, the US Commerce Department has issued a special dispensation in the form of a general license which will allow Huawei to continue purchasing the US made goods and services.

The special general license has a 90-day period and will be reviewed before August 19.

The talk on the street was dominated by security concerns for customers who have already purchased Huawei phones. With Google confirming that it will not continue providing its services to Huawei, this concern seemed founded in facts.

With these new developments, there are indications that Google has reversed their decision, or at least stayed it for the next 90 days. For Huawei’s customers, which are not only smartphone owners, it means that Huawei will be able to receive security updates and advisories from Google and distribute them to their customers until August 19.

But that is just half of the story about Huawei and US

Huawei is striving to become the largest smartphone maker by the year 2020, and currently the largest telecommunication equipment maker in the world, which describe itself as the “unparalleled leader in 5G”.

The US has already attempted to pressure its allies to stop using Chinese made telecommunication equipment in their infrastructures. In a statement a Huawei spokesperson said that imposed restrictions “will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.”

And these words are not without merit, as many American rural internets and phone operators rely on affordable Chinese made equipment to provide their services in their markets. Replacement of which could have a large economic impact and take several years according to the January filling to FCC by the Rural Wireless Association, an association of small communication and internet providers.

“The Temporary General License grants operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” Secretary of Commerce Wilbur Ross said in a statement.

The US underestimating Huawei

In one of the rare interviews for Chinese media on May 21, the Huawei founder, Ren Zhengfei has said that the US is underestimating his company.

“Huawei’s 5G will absolutely not be affected. In terms of 5G technologies, others won’t be able to catch up with Huawei in two or three years. We have sacrificed ourselves and our families for our ideal, to stand on top of the world. To reach this ideal, sooner or later there will be a conflict with the US.”

With the development of this situation reminiscent of the last year’s ban on ZTE equipment, Ren’s defiant words sound like a promise to not cave in the way their competitor did.

While the unilateral decision of the US to ease the trade limits indicates awareness of how far-reaching consequences these bans can have, and desire to avoid the repeat of fiasco caused in Europe and South Asia last year.

risk disclosure

22nd May 2019
Bitcoin is ready for the next big move

3 min read

The Bitcoin price is $7.979, at the moment of writing this post. That is lower for 0,593842% than the opening price this day.

The furious rise in Bitcoin price in the past few weeks was exciting for the majority of the crypto world. But at the same time confusing also.

For many of them, Bitcoin awakes memories on its fantastic heights at the end of 2017 when Bitcoin hit its record high of $19,783.21 on December 17.

This new Bitcoin rally brings new peaks level to many companies. For example, several crypto-tied penny stocks recorded new peaks too.

For example, the shares of MGT Capital Investments Inc. rose by 15% on Tuesday 9, May. This company is ranked as one of the biggest U.S. based Bitcoin miners.

On Tuesday the company stated that it is thinking to give its cryptocurrency mining sector extra chance. The statement came after Bitcoin’s price increased expanded the mining profitability.

This company had its highest market cap in December 2017 when it reached $350 million.

That was in any sense the golden era for crypto.

Almost at the same time, one UK company added the word ‘blockchain’ in its name rose its shares for nearly 400%.

With the hope that such time is coming, traders and investors gave a chance to other similar companies such as Grayscale Bitcoin Trust BTC or Riot Blockchain Inc.

The price of their shares rose in the past few weeks.

The Bitcoin price is likely to go far up from $8,000 and it will come very fast.

Will this word become another buzzword?

The word that can increase importance and market value? That will be interesting to see.

Anyway, Bitcoin increased by 60% in only two weeks.

Nevertheless, many investors are not convinced that this rally has both legs. This price climb seems to fast for them.

On the other side of the expert’s opinion are the other group of investors. Bulls! They insist that BTC has already reached its bottom price and all we can expect is this ‘çrypto-king’ is going to rise.

Bitcoin touched the bottom when it fell below $6,000. The crypto expert Dave the Wave called it the “ideal buying zone”.

However, traders were panicked and we saw a violent selloff. For smart people, it was time to buy.

Previously, Bitcoin was in that buy zone for two years. It was 2014 and 2015, and almost one year between 2012 – 2013.

The penny-stock companies recognized an open space to conquer.

On the other side, the rumors about the possibility the biggest companies to adopt crypto fell in the water after the Consensus 2019 conference.

Loving eBay formally denied such news.

But Facebook hired two ex-Coinbase experts. At least one of them is connected with Facebook’s blockchain venture.

Jeff Cartwright moved from Coinbase in March after five years at the cryptocurrency exchange. According to Cartwright’s LinkedIn profile, he entered Facebook this month. He will serve as a policy and compliance manager.

It isn’t a secret anymore that Facebook has plans about blockchain and cryptocurrency. The details are secret, of course. As the secret is the true role of Cartwright because Facebook spokesperson Elka Looks refused to comment ” on personnel’.

And, however, there is the third part – the media.

Just to illustrate, for example, CNBC removed Bitcoin widget last month. But now, the situation is totally twisted. They have almost in every single show a segment about Bitcoin. Weird!

And Microsoft uses Bitcoin, as we heard.

Okay, Bitcoin owners use Microsoft, right?

So, on Monday 14, May, the company revealed a project that, would give you the possibility to control your own credentials, autonomous of all companies. The new project is based on the technology that supports Bitcoin, blockchain.

That will be interesting to see, of course, if you like to take such responsibility.

Digital identity is the most exciting dream for every blockchain fans. The idea behind is that we all could have absolute, faultless access to all kinds of apps by creating mobile credentials. For now, the keys are in the hands of Facebook or Microsoft.

Enthusiasts support this idea because it can be a blessing for privacy. No one could track your activity on the internet. And that is the core of blockchain and Bitcoin as well.

Proponents also say it would help to stop hackers. Honestly, it would be harder for hackers to approach users data because all of them would be stored in one place or in a decentralized digital configuration.

But we are still a far away from that.

Until then, keep your eyes on the growth of Bitcoin.

The future is interesting and promising.

risk disclosure

16th May 2019
Tesla plans to raise up to $2.7 billion

1 min read

Tesla expects to raise up to $2.7 billion in equity and convertible bonds. Tesla shares rose 4.5% to $255.03 on Friday 3, May.

Actually, Tesla will offer 3.1 million shares of its stock and $1.6 billion worth of convertible notes. Tesla had before intended to offer 2.72 million shares and $1.35 billion worth of convertible notes.

But obviously, it isn’t enough.

In its last earnings report, Tesla notified “heavier-than-expected” losses in the first quarter this year.

The new fundraising is the opposite of Musk’s initial stand to raising capital.

But now, Musk said it is necessary in order for Tesla to be profitable in the future.

Tesla shares continue to rise.

Elon Musk showed readiness to raise new capital.

The company had a $700 million loss in its first quarter of this year. That means the company has just $2.2 billion in cash.

“At this point, I do think there is some merit to raising capital,” Musk said. “This is probably about the right timing.”

Cowen analyst Jeffrey Osborne wrote that $2.7 billion is “badly needed,” but inadequate to cover capital expenses.

“Our take is that ~$2.7 billion is sufficient for 3-4 quarters of offsetting operating losses if the sales and margin weakness we saw in Q1 continues, and even shorter if sufficient CapEx funding is used for the company’s aggressive expansion plans and Tesla gets off the ‘spartan diet,’” Osborne wrote.

It’s possible that a part of the new capital would be used to pay off $566 million in convertible debt from Tesla’s 216 acquisition of Solar City.

Also, there is a $500 million Chinese loan used to fund the Shanghai Gigafactory, Osborne added. Tesla has a sum of $10.4 billion in loans due to 2025.

The company said that Musk would increase his investment from $10 million to $25 million as part of the sale of stock.

The analysts had expected a loss

According to Factset, an adjusted loss of $1.15 a share on sales of $5.4 billion for the quarter. But actual losses increased far beyond their expectations.

Zachary Kirkhorn declared it “one of the most complicated quarters” in Tesla’s history.

“This was one of the most complicated quarters” in Tesla’s history, Chief Financial Officer Zachary Kirkhorn said on Wednesday. He also noted the Tesla push to deliver Model 3s overseas and some other projects.

Tesla reported nearly a one-third drop sales in comparison with the previous quarter.

It delivered 63,000 electric vehicles in the first quarter this year.

Deliveries structure was: 50,900 Model 3 vehicles and 12,100 Model S and X SUVs.

Musk said that a large number of vehicle deliveries has moved to the second quarter.

Well, the truth is that almost everyone expected the loss for Tesla in the first quarter. But no one expected it to be this big.

Several factors might affect this situation. First, the tax rebate loss.

Further, more rivals followed by less interest in Model 3. The initial interest is fully satiated. Also, there are a lot of alternatives now in the same industry.

Don’t waste your money!

risk disclosure

6th May 2019
Bitcoin is ready for further increases

2 min read

The last month was very good for the crypto markets.

Bitcoin showed the ability to climb into the $5,000 area. There was no important selling pressure and that fact can encourage traders that have to expect BTC to see further gains in the near-future.

Just make comparison with Bitcoin’s last month close with the one seen in 2015, actually in October 2015. That was succeeded by a bull run.

This question was opened recently. A leading cryptocurrency trader revealed that eerie lines are shown today, the similar to 2014/2015 during the bear season.

Bitcoin approaches $5,400.

Today, 2 May, Bitcoin is trading under 1% at its prevailing price of $5,375.

But take a look at the time frame of one week.

Bitcoin has grown from its lows of $5,100.

And after really disturbing news.

What happened?

New York regulators shook the crypto world with the declaration that BitFinex, one of the leading crypto exchanges, had cheated investors.

The regulators claimed that Bitfinex employed its own “dollar-backed” stable coin, Tether, to mop $850 million in missing funds and put it under the carpet.

The news like this one caused great drops in Bitcoin’s value. But today, this crypto shows differently attitude.

After the news was published and widespread, BTC dropped a poor 10%. Moreover, it proceeds to escalate back towards its highs of over $5,600.

Besides, Bitcoin posted a green monthly candle. For many analysts it is bullish.

For example, DonAlt, a cryptocurrency analyst, tweeted about BTC’s monthly close.

And there were more very interesting events about Bitcoin in the past weeks.

For example, TD Ameritrade allowed BTC trading, also, eTrade added BTC and ETH. Oh, yes, Samsung is going to create its own token. And maybe the most important, the French government decided the banks have to support crypto.

So, the similarities between Bitcoin’s April of 2019 close and its October of 2015 close, are notably similar.

So, the conclusion can be that after April’s close will be followed by a massive bull run. But it would require a massive entrance of the money. Are we ready for that?

Only in that way, BTC’s price would hit $330k in the next few years said the analysts.

Bitcoin continues in an uptrend. So it is likely to rise towards the $5,500 level in the coming sessions, very soon.

According to newsbtc.com, in the past three sessions, there was a steady rise above $5,280 in bitcoin price against the US Dollar.

The BTC/USD pair reached traction above the $5,300 resistance.

It is above the 100 hourly moving average. The price went up over the $5,340 level and traded at $5,359.

A break above the $5,360 level may open the ways for a potentially the $5,400 level. The next main resistance is near the $5,450 level. That is a point where sellers may arrive. The prevailing price action is positive and, therefore it could be more gains above $5,360.

If a downside change appears, the bulls have to protect $5,280 or $5,250.

Well, it is almost impossible that the next bull run can be the same as in 2015.

But an entrance of money from corporations may be sufficient to feed the new parabolic upwards move.

That is what many investors are expecting.

BTC is at above $5,400 this morning. The consolidation continues.

Don’t waste your money!

risk disclosure

2nd May 2019
Why Recession 10 Years Later? We Have Not Learned The Lesson!

Economic experts and academics agree that there is a real possibility of the US facing a recession by the end of 2020, but how well is the US prepared for it?

By Gorica Gligorijevic

Why recession again, how is possible that we didn’t learn the lesson? April 30th will mark the 10th anniversary of Chrysler’s bankruptcy, one of the victims of the Great Recession of 2008/09.
This recession was started by the largest bankruptcy in history, by the fall of the Lehman Brothers. Which showed, along with the dot-com recession before it, that the excesses of Wall Street can cause severe economic downturns with global repercussions.

Wall Street was to be blamed for the software stock and housing bubble which brought the US and global economies to their knees.

Ten years later we are still wondering whether the US and the rest of the world are prepared for another recession.

And these worries look more pressing with the Fed’s yield curve study’s February 2019 update upping the odds for recession from 14% to 50%.

In the past couple of years many prominent economists, such as Paul Krugman, have been warning that the US regulators are ill-prepared for the next recession and that their response to the previous one was ill-suited.

Such voices of concern are now joined by the Economic Policy Institute, Washington, D.C. based think-tank, in a recent report authored by Josh Bivens, the EPI’s director of research.

Why recession ten years later

In June of this year recovery from the Great Recession will enter into the 120th month of economic expansion in the US. That way equaling the previous longest period of economic expansion which started in March of 1991. This record-setting is making people wonder when will the next recession hit?

Bivens state and many other experts agree, that there are real chances for it to happen by the end of 2020.

With Fed’s also upping their projection of chances one has to ask themselves are the US ready to tackle the next recession?

While most people think that the next recession will trigger a suboptimal response from policymakers, because of too high public debt and loo low-interest rates, it ain’t so. Though no person can successfully predict a recession, everyone can see their root causes. And the common theme is the fall of the aggregate demand, i.e. a decrease of the economy-wide spending relative to the production capacities.

EPI’s report goes to show that there are very little risks of the fiscal contraction causing the next recession.

And due to last year’s tax cuts, which are fiscal expansion measures, this is a no brainer. But that does not remove the risk of monetary contractionary policies, which could be triggered by vanning effects of Trump’s tax cuts, and is evident from the interest rates hikes in recent years.

Criticism of economic inequality in the US

EPI’s report can be read as a stern criticism of economic inequality in America, as it exposes direct connection of policymaker’s preference to aid large financial institutions and unwillingness to enact fiscal expansionary policies as a response to the economic downturn.

Simply put economic inequality and the austerity measures worsen the recession dynamics which are driven by the fall of the aggregate demand.

Bivens says that Fed’s interest rates hikes have given to regulators sense of normalcy, but robbed them of sense of urgency to provide recovery for all Americans and not just the Wall Street.

Low- and middle-income households spend a higher percentage of income than rich households, but also have a much higher propensity for spending. With the growing economic inequality being most visible in the stagnating wages of low and middle-income workers, the aggregate demand they could generate is limited, thus putting a severe limit on the recovery from a future recession, as the speed of recovery is depending upon the ability to spend.

But, according to Bivens, it’s not just household spending inability which will impede the future recovery.

“A key lesson from the Great Recession is that fiscal policy is the most effective tool for aiding recovery,” he said.

And for most of the recent recovery, the US government was very shy of the fiscal stimulus out of fears of the level of public debt. When the Fed Chair, Ben Bernanke, took unprecedented action in severely cutting interest rates he sent a very loud message to policymakers that they must do more by providing sustained fiscal stimulus.

With the recent bipartisan support to declaring the US public debt as a single greatest national security risk, the US economy looks less than ill-prepared for answering to the next recession.

Update 8/10/19

Traders-Paradise recently got this email from Andy Kearns, Content Analyst in LendEDU:
“Quite recently, our team conducted a nationally-representative survey of Americans to gauge their sentiment towards the situation of an economic recession. I believe our findings on how the risk of a recession might change consumer spending and investing habits could be an interesting addition for your readers on this page…You have my permission to use anything from the report that you liked.”
Thank you, Mr. Kearns.
So, here you, our readers, will find interactive graphs and charts that display the answers to their survey questions. Also included is an Analysis of Results section so consumers can better understand their findings.

Here is a link to the full report:

23rd April 2019
Morgan Stanley Taking Lyft For A Short Ride?

3 min read

Lyft, a popular ride-hailing app, has gone public on 29th of March this year, but since then their ride was a bit bumpy. And for that, they blame the Morgan Stanley, the underwriter of IPO for their direct competitor Uber

When Lyft got listed on the market on March 28 stock was priced at $72 dollars. When next day it started trading it opened at $87.33, but quickly reached the high of $88.10 and closed at $78.29, 8.7 percent above its listed price. On Monday, April 1, it has closed at $69.01, just short of $3 dollars under the price the initial investors have paid it. Since then it has recovered and is moving above the listing price, but Lyft still has a long ride ahead.

Reports said: Morgan Stanley is trying to short Lyft

According to the report from the New York Post, based on the unnamed sources, Morgan Stanley is trying to short Lyft. Though the NY Post has a bit of a reputation, the Monday drop in stock price precedes some rather bizarre bets. Recently Lyft has sent an email to their pre-IPO investors reminding them are not allowed to commit to any transactions that might affect a holder’s economic interest in the stock. Allegedly, this and the language of the “lock-up” agreements have led investors to hedge their investments, and not trying to earn from the fall of the stock price. A “lock-up” agreement is a legally binding contract issued by the underwriters of an IPO that prohibits people close to the company, including executive and employees, from selling shares for a period of time, in the case of Lyft for 6 months.

Despite the fact that Lyft has yet to report any profits, IPO has attracted a lot of attention and actually getting oversubscribed on the second day of trading. According to the same NY Post report, Morgan Stanley has contacted one of the IPO’s underwriter in an attempt to seek help in shorting the stock. Allegedly, Morgan’s customers who have invested in the Lyft before IPO are attempting to protect their investment from price fall, contrary to the “lock-up” the agreement and the bank is offering them such product. And the report is citing an unnamed investor saying “If I can lock in $70 now, I’m going to do that”.

Do you know what the Shorting stock does mean? Find HERE

Lyft is demanding

And Lyft has decided to respond to this situation. According to reporting of CNBC, they are threatening Morgan Stanley with a lawsuit over this situation. In a letter, which CNBC had reviewed, Lyft is demanding that the bank publicly state that they are not helping early investors in short-selling the stock. But also demand that if they are selling such product to hand over a list of shareholders who are involved. While Lyft has requested a response by the end of the day on April 2, Morgan Stanley is yet to officially reply to these allegations.

However, in the statement to CNBC, a bank’s spokesperson have stated that Morgan Stanley “did not market or execute, directly or indirectly, a sale, short sale, hedge, swap or transfer of risk or value associated with Lyft stock for any Lyft shareholder identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement.”

In the reported letter Lyft and the IPO syndicate are accusing Morgan Stanley of creating a special instrument which allows pre-IPO investors to circumvent the “lock-out” agreement and short-sell the stocks. “Our firm’s activity has been in the normal course of market-making, and any suggestion that Morgan Stanley has engaged in an effort to apply ‘short pressure’ to Lyft is false,” the spokesperson for Morgan Stanley said.

The single largest transaction

According to CNBC’s report quoting an unnamed person close to Morgan Stanley operations, short-selling accounts for 1.3% of Lyft’s trading volume, with single largest transaction accounting for 425,000 shares. Also, according to this report, the Financial Industry Regulatory Authority, the self-regulatory organization of the US banking industry may have been involved in this matter.

Maybe the strangest thing in this dispute between Lyft and Morgan Stanley is the reports from market analysts, including the Citron Research one of the investors in Lyft, calling the shorting of the company an “amateur short”. Citron has published a report stating five reasons to not short Lyft, chiefly stating projection of the Goldman Sachs that ride-hailing industry will grow to $285 billion by 2030. With that in mind, Morgan Stanley has secured the underwriting deal for Uber’s IPO, the direct and much larger competitor of Lyft. And according to CNBC’s reporting Lyft has addressed the above-mentioned letter also to the bankers who are managing the Uber’s IPO, which is interesting as the short-selling products are created in a different division of the bank, separate from investment banking.

Don’t waste your money.
risk disclosure

8th April 2019