Just a matter of time. - CH



The Securities Law Blog: SEC Exposes Two Initial Coin Offerings Purportedly...: The Securities and Exchange Commission today charged a businessman and two companies with defrauding investors in a pair of so-called initia...

The concept of bitcoin is really fantastic. Groups of people join together sharing power and computer power and by virtue of the blockchain and its characteristics, you create more coins. As far as sharing or using the coins you still are able to use the blockchain system to send the coins around to vendors and anyone who has a wallet or accepts the coins. Also, to make it easier, there are massive decimalization abilities. 

So why does Bitcoin cost a lot of money now? Well in all actuality the Blockchain system is probably worth $10-50 billion. Maybe even $100 billion if there turns out to be a game changing enterprise adaptation. And while the coins are currently part of a much larger asset bubble and self perpetuating market being manipulated by those market makers – it also has a value because it was the original vehicle on which blockchain was created. Maybe the real value is $150.00 a coin. It's almost impossible to gather a sober cash settlement price now due to the complexity of the decentralized market combined with cartel type control and the utility value a BTC transfer offers. 

Remember the Bitcoin exchange Mt. Gox? Well in case you don't know about it a virtual wallet company - which is one way to store cryptocoins - went bust. Venture capitalists and  money managers came in and bought a lot of bitcoins. Those coins have been put to use in many fashions and that (Wild Wild West) activity has created a premium and a false supply and demand issue which is therefore driving up the price. Plus, the various trading venues regurgitate the pricing every day are all attributing to the price inflate and not ironically, are owned by large Bitcoin asset holders. 

The Utility Factor

Bitcoin also has a utility - smuggling factor that has increased the price due to the perceived lack of clearing risk. However, payments and transfer activities to wallets can be tracked. Does Bitcoin have a utility factor? It absolutely does and there has been quite a bit of market saturation in addition to the ease of payment Bitcoin and Blockchain offers. Right now, Bitcoin is the most famous complimentary currency on the planet. What is a complementary currency? A simple example would be Delta Sky Miles. If you had a lot of miles and you could buy groceries with those miles, you would likely use them to buy things. Maybe you could even give some of the miles to your nephew for graduating high school. He then could use the miles to buy a new pair of sneakers from New Balance online. However when the shoes come in they are too big, so he takes his shoes back to the New Balance store however (this time a physical location). The store processes his return, he gets a new pair of shoes and the store owes him a small refund from shipping fees he incited online, they pay him the difference in US dollars. From that scenario Sky Miles have just gonna full circle.  

While you're unable to do that today with airline miles, if a portion of the world started excepting Delta Sky Miles and then Delta allowed Sky Miles to be traded between parties freely, you would have a system in place. The only real difference on this system is it would be completely controlled by Delta Airlines. Part of the beauty in the design of Bitcoin and Blockchain is that it is not controlled and it is decentralized. But that still allows for cartel like pricing mechanisms and physical hoarding. 

Think about what's going on in North Korea right now. Think about what's going on in India with currency reforms and then let's think about what's going on in China where individuals are trying to take money offshore without the government finding out. Every single one of those scenarios create an argument for the use of Bitcoin. And since money is tied to it and perhaps desperation and greed, premiums are being paid to use the vehicle to transfer.

Global trade and shipping are the next utilities that will use blockchain heavily and since bitcoin is in contract form on the markets -  there is a chance that we could see real integration between corporate balance sheets and the blockchain or bitcoin financial products. 

The C.A.P.E. ratio is above 30 today, compared with an average of 16.8 since 1881. It has been above 30 in only two other periods: in 1929, when it reached 33, and between 1997 and 2002, when it soared as high as 44. - Sept 15, 2017 Robert Shiller





Using market data from both estimated (1881 - 1956) and actual (1957 onward) earnings reports from the S&P index, Shiller and Campbell found that the lower the CAPE, the higher the investors' likely return from equities over the following 20 years. The average CAPE value for the 20th century was 15.21; this corresponds to an average annual return over the next 20 years of around 6.6 per cent. CAPE values above this produce corresponding lower returns, and vice versa. In 2014, Shiller expressed concern that the prevailing CAPE of over 25 was "a level that has been surpassed since 1881 in only three previous periods: the years clustered around 1929, 1999 and 2007. Major market drops followed those peaks".





Cape Ratio :

1) A ratio used to gauge whether a stock is undervalued or overvalued by comparing its current market price to its inflation adjusted historical earnings record .

2) it is a variant of the more popular price to earning ratio and is calculated by dividing the current price of a stock by its average inflation adjusted earning over the last 10 years.

3) Using average earnings over the last decade helps to smooth out the impact of business cycles and other events and gives a better picture of a company's sustainable earning power .

4) The ratio was invented by American economist Robert Shiller.

5) It is not intended as an indicator of impending market crashes, although high CAPE values have been associated with such events.
- WIKI


Bob Shiller. Always insightful. - Chad

Nominal exports valued in yen increased 18.1% from the same month last year in August, following July’s 13.4% rise, overshooting the 14.7% increase that market analysts had expected. The expansion, the fastest since November 2013, was driven by growing sales to the rest of Asia, which rose 19.9%, and an acceleration in growth of exports to North America, which went up from a 13.0% increase in July to 22.9% in August. The external sector is benefiting from a weak yen and stable global demand. Growth in imports moderated from 16.3% in July to 15.2% in August. The print overshot the 11.8% rise that markets had expected. The strong growth in imports are a clear indication of strong domestic activity. The trade surplus went from a JPY 350 million deficit in August 2016 to a JPY 114 billion surplus in August 2017. Accordingly, in the 12 months leading up to August, the trade surplus inched up to JPY 3.3 trillion, which was higher than the JPY 3.2 trillion surplus recorded in the previous month. - Edward Gardner, Economist at FocusEconomics

The Bank of Japan (BOJ) governor Haruhiko Kuroda kept the interest rates and asset buying program intact in the recent policy meeting.The BOJ maintained a negative 0.1% interest rate, which was widely anticipated by the markets. BOJ also maintained its stance on buying bonds amounting to 80 trillion yen annually. Critics are arguing if the current policy is sufficient to achieve the 2% inflation target of the BOJ in fiscal 2019 - Zack's Investment Research

According to data for the first week of September (Sept. 4-8) released by the Tokyo Stock Exchange on Thursday, foreign investors sold more Japanese shares than they bought by a total of 294.8 billion yen ($2.67 billion) on the first and second sections of the TSE and the Nagoya Stock Exchange, as well as the startup markets.

As a result, their net purchases since the second week of November 2012 (Nov. 12-16) came to 13.7 trillion yen. That figure has fallen consistently since reaching more than 20 trillion yen in the middle of 2015.

During the same period, cumulative purchases of exchange-traded funds by the BOJ, excluding new-type ETFs added to the central bank's ETF-buying program for monetary easing, totaled 13.9 trillion yen as of Thursday.

Foreign investors account for roughly 70% of trading in Japanese shares, but they tend to opt for near-term trading. - WSJ Nikkei Asian Review

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Ethanol prices remained relatively unchanged over the past month, as increasing production in the U.S. and Brazil kept a tab on demand-induced upward price pressures. The spot price registered on 8 September was USD 1.64 per gallon. The price was 0.6% higher than on the same day last month, and was down 6.3% on a year-to-date basis. However, it was 6.5% higher than on the same day last year. The price of oil, a substitute for ethanol, has remained relatively unchanged over the past month, contributing to ethanol’s low monthly price variation. In the U.S., a court on 28 July ruled against the Trump administration’s efforts to curb biofuel use, which will likely support ethanol prices going forward on the back of more predictable U.S. domestic demand. In Brazil, RenovaBio—a federal program designed to cut emissions—is expected to be announced soon, which should boost future ethanol demand. On the supply side, the Brazilian Chamber of Foreign Trade approved a two-year twenty-percent tariff on U.S. ethanol imports on 23 August, benefiting Brazilian producers. Prices are expected to remain at a stable level this year, as increased production should be countered by slightly higher global demand. Prices are expected to average USD 1.57 per gallon in Q4 2017 and USD 1.68 per gallon in Q4 2018. From Focus Economics.

How is Russia doing? The country has no problem making the news but the economics of Russia are not always discussed. Russia is a fascinating country that perseveres in a vast  complex environment and the mix of economic data coming from the country is fascinating. Below is a snapshot on the Russian economy and the experts at FocusEconomics. 

- CH

A preliminary estimate revealed that the economy continued to pick up steam in Q2, with GDP expanding at the fastest pace since Q3 2012. While a breakdown by components is not yet available, the acceleration was likely broad-based as monthly indicators for consumption, investment and exports all performed well in the quarter. Early data for Q3, however, is less positive. Industrial production growth slowed to a four-month low in July, and the manufacturing PMI dropped in August. Meanwhile, the Central Bank took steps to curtail some concerns over Russia’s banking sector in August which included rescuing troubled lender Otkritie, the country’s largest privately-owned bank. Cleaning up the country’s banking sector has become a top priority for officials, as the sector continues to suffer from the effects of the 2015–2016 recession. The Central Bank’s strong financial position means that problems are likely to be contained, and the institution is offering support to other lenders in distress. 

FocusEconomics analysts upgraded their forecasts for the Russian economy this month in light of an upbeat Q2 GDP reading. Rising wages and recovering investment should fuel growth of 1.4% in 2017, which is a notch higher than last month’s forecast. Next year, GDP is seen expanding a stronger 1.7%.  Inflation decreased to 3.9% in July from June’s 4.4%. Reduced price pressures should allow the Central Bank to continue with its easing cycle in the coming months, and all of our panelists forecast another cut in the key rate before year-end. The FocusEconomics panel expects inflation to end 2017 at 4.1% and 2018 at 4.2%.

Agency Rating:
Moody’s: Ba1, Stable
S&P Global Ratings: BB+, Positive
Fitch Ratings: BBB-, Stable

Economic Notes and Infrastructure:
• Substantial oil and gas wealth
• Dependence on oil exports
• Persistent inflation
• Financial system vulnerability
• Rich in natural resources
• Weak democratic institutions
• Rapidly ageing population
• Strong international reserves position

Telecommunication (2015)
Telephones - main lines (per 100 inhabitants): 25.0
Telephones - mobile cellular (per 100 inhabit.): 160
Internet Users (per 100 inhabitants): 70.5
Broadband Subscriptions (per 100 inhabitants): 18.9

Transportation (2014)
Airports: 1,218
Railways (km): 87,157
Roadways (km): 1,283,387
Waterways (km): 102,000
Chief Ports: Kaliningrad, St. Petersburg

House view is that rates should stay untouched for next 6-18 months. We will see how that goes. - CH

Federal Reserve Governor Lael Brainard said the U.S. central bank needs to pay careful attention to underlying inflation before raising interest rates again, as longer-run price pressure trends appear to be lower. - Bloomberg

“My own view is that we should be cautious about tightening policy further until we are confident inflation is on track to achieve our target,” Brainard said in a speech at The Economic Club of New York on Tuesday. If inflation continues to fall short of the central bank’s 2 percent target, “it would be prudent to raise the federal funds rate more gradually.” - Lael Brainard

Headlines from the last time Bullard spoke, on June 29:

• Current level of Fed rates appropriate
• Small effect on inflation if unemployment falls
• Weak inflation data questions rise to 2%
• Low unemployment is probably not an indicator of meaningful higher inflation over the forecast horizon
• Recent inflation data has surprised as the downside
• Calls into question the idea that US inflation is reliably returning toward the target
  (link source)

Dynamic global trade and improved labor markets, coupled with fiscal stimulus and accommodative monetary policies in key countries, are prompting the global economy to consolidate its healthy growth trajectory. A comprehensive estimate for the global economy corroborates that GDP expanded 3.1% annually in Q2, matching the result in Q1 and in line with what our Consensus Forecast had expected last month. Economic momentum is expected to continue in Q3, with the global economy forecast to expand 3.1% again.

Economic activity improved in most of the advanced economies in Q2, with the Euro area leading the pack. The euro bloc’s economy expanded at the fastest pace in over six years on the back of robust domestic demand. The Euro area’s strong recent economic performance is largely due to a declining unemployment rate, along with the European Central Bank’s (ECB) monetary stimulus program. Against this backdrop, analysts are now betting on the timing of monetary policy normalization in the Euro area. While economic data for Q3 corroborates that the Euro area’s economy is in good shape and that the ECB could start tapering its qualitative easing (QE) sooner rather than later, inflation remains below the ECB’s target of “below but close to 2%”, adding uncertainty about the Bank’s next step. In the United States, the economy also gathered steam in Q2 following Q1’s disappointing result. As in other advanced economies, domestic demand led the acceleration due to a healthy job market and strengthening confidence about the economic recovery.

Elsewhere, Japan’s domestic economy propelled growth in Q2 to levels last seen over two years ago. Resilient household consumption raised hopes that Japan may have entered a more sustainable growth trajectory. In the UK, uncertainty about the future of the economy, together with eroded wages due to higher inflation, led the economy to slow in Q2. Among the key emerging market economies, China’s economy continued to show strong resilience in Q2, while the economic recovery in Russia continued to gather pace, with GDP expanding at the fastest pace in nearly five years. While analysts were hoping that this year’s long-awaited Jackson Hole Economic Policy Symposium would deliver some clues to the future of monetary policy in the Euro area, the gathering proved to be disappointing in that respect, as ECB President Mario Draghi did not unveil details about the ECB’s approach to cutting back its asset purchase program. In the same vein as her colleague in Europe, Federal Reserve Chair Janet Yellen did not provide forward guidance on future monetary policy moves by the Federal Reserve, in a context of low unemployment, rising asset prices and a stubbornly low inflation rate. Instead, she praised the financial regulations put in place since the global financial crisis to limit financial risks. Yellen’s speech has been seen as a critique of President Donald Trump and his stated intention to roll back certain post-crisis reforms. Yellen’s term expires in February, and Trump has not stated whether he will reappoint her.

- FocusEconomics

Good points for review. A whole new economic division. Refugees arrive and the government must spend to support the refugees, thereby providing a shot in the arm to local economies due to an increase in spending, and increasing robust regional economies industrial sectors.

Clearly ageing industrial economies and apprentice laden industries need a cycle of new employees - if nothing else. The balance due or bounty found will be decided by a number of various indicators. - CH


Europe is ageing fast, with the old-age dependency ratio in the EU-28 forecast to soar from 28.8% in 2015 to 50.3% by the middle of the century. Many pension and healthcare systems across the continent are already creaking under the strain of having to provide for so many retirees. The most recent wave of refugees arriving in Europe could help alleviate this burden to an extent. Most refugees are young: Around 50% of those who have sought asylum in the EU over the last few years are between 18 and 34, while nearly one-third are younger than 18. They are also likely to have higher fertility rates than native-born citizens. Both of these factors should help slow the rate of ageing and lessen the impact of the transition of our greying societies. The IMF estimates that the current influx of refugees could reduce pension spending by 0.25 percentage points of GDP by 2030 for the EU as a whole, and by more for large recipient countries. - Focus Economics

The economic impact is likely to be slightly positive in the short-term. All the refugees arriving in the European Union need to be housed and fed. Their medical needs must be addressed, and both children and adults have to be educated in preparation for entry into local labor markets. Before they are ready to work, financial support is also necessary. The ensuing boost to government spending and fiscal transfers will give domestic demand a shot in the arm. According to estimates from the IMF, by the end of 2017 GDP in Austria, Germany and Sweden—the main destination countries for refugees—will have been boosted by 0.5%, 0.3% and 0.4%, respectively. In Germany, by far the largest recipient in absolute terms, refugee-related expenditure amounted to more than EUR 20 billion last year. - FocusEconomics

Right now it is common knowledge that the U.S. has a nuclear reactive POTUS - but the chance we will go to war is slim.

There is a chance NK has nukes, or at least is in the later stages of nuke development. However, diplomatically the U.S. has not changed on the fundamental opinions of keeping the peace on the Korean peninsula. There is a clear permanent government and leadership in U.S., and the ever changing presidents will never affect that. POTUS is using Kim Jung's playbook: make noise and then demand negotiations. China is also a reason for the temper tantrums from the Oval Office. Neanderthal logic would follow the ethos of beating drums scaring people into submission, but this is indifferent to the current POTUS thoughts on diplomacy - despite his ploy to disturb NK's nuclear development. What could happen next is a concession to attempt control over nuclear development.

What could happen?

A mistake or accident could lead to mass casualtites. This is unlikely, but the unnerving comments and current sentiment from POTUS is troubling U.S. allies. 

To my readers

I spare us all the torment of U.S. politics, both local and national. I only cover geopolitics for economic and geo-analyst reasons. - CH

The Japanese economy expanded healthily in Q2 on the back of a strong pickup in domestic demand. GDP rose 4.0% in Q2 over the previous quarter in seasonally-adjusted annualized terms (SAAR), which was notably above the 1.5% expansion in Q1. Read more at Chaganomics Long Form. 

“Cool Down Time For Amazon (NASDAQ:AMZN)”

Despite the frenzy and furor over Amazon on both sides - shareholders and antitrust types alike - AMZN could have a rough patch ahead. While growth and market share dominate the culture and drive of $AMZN what is happening in their quest for dominance is destruction. When sales competitor Wal-Mart Stores (NYSE:WMT) is compared to Amazon the difference is intense: WMT has an enterprise value of $271B with revenues at $486B, Amazon is currently at an enterprise value of $478B with revenues of $150B. The joke in the past was Amason sold $1.00 for $.99, now AMZN is creeping towards selling $1.00 for $.50.

See Article @ Investing.com

New Russia numbers rolling in from Focus Economics. Economically I am fascinated by the emerging modern Russia, despite the political noise that dominates the headlines. From a matter of container ports and port economics the country is situated in an incredible situation with ports in the Baltic Sea, the Black Sea and the east asia port Vladivostok above Korea and Japan in the middle of the Sea of Japan. 

Russia: Economy gains momentum in Q2 - Full story plus new Consensus growth forecasts: http://bit.ly/2i2VdjG

The Container Guide (2015)

By Numerous authors

2017 Georgia Cotton Production Guide

By Coop Extension / UGA

The Insolvency and Bankruptcy Code, 2016

By India Ministry of Law and Justice 

Keynes Hayek 

By Nicholas Wapshott

Free To Choose 

By Milton Friedman 

The Essential Milton Friedman

By Milton Friedman 

Note: numerous ibanking deals cramped my summer reading, but nevertheless I am back with a fury. The book: The Container Guide, is really something and I encourage any logistics and global trade nerd to buy it. 

Chaganomics has opened up access to a new long form subsection. It is aptly named Chaganomics Long Form (LINK) and covers energy, physical commodity trading, global trade, marine shipping, major shipping concerns and financial developments news tying these aspects to our modern markets.

See: Chaganomics Intermodal and Bulk Shipping Page 

While this is only in Europe, many have been talking about it. Personally there is no way I would pay for research if we traded at a firm as well. To a degree this is avoidable, as shown below. JPM will absorb the costs and make them a soft dollar sale product.

To borrow from the FCA: The Markets in Financial Instruments Directive is the EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives), and the venues where those instruments are traded. LINK

Market Chatter: JP Morgan Asset Management Plans to Absorb Research Costs Due to New Regulation - 12:18 PM EDT, 08/11/2017 (MT Newswires) -- JP Morgan's (JPM) asset management unit plans to absorb the cost of research from brokerages rather than pass them on to clients after new European Union regulations come into force in less than six months, Reuters reported. The new rules will require brokers to charge fund managers for research they provide separately from trading services, according to the report. Vanguard, Jupiter, M&G and Aberdeen have also said they will pay research costs themselves, while hedge fund Man Group's stockpicking unit GLG, Janus Henderson and Schroders, said they plan to pass research costs on to clients, the report added. JP Morgan shares were 0.6% lower on Friday afternoon. Price: 91.67, Change: -0.52, Percent Change: -0.56

From the SEC: The report includes a survey and analysis of recent academic literature, as well as original analyses drawn from publicly available databases and non-public regulatory filings. The report examines the issuance of debt, equity, and asset-backed securities, as well as activity and liquidity in U.S. Treasuries, corporate bonds, single-name credit default swaps, and bond funds. Specifically, the report identifies trends for unregistered offerings, such as those under Regulation D and Regulation Crowdfunding, as well as fixed income transactions, fixed income quotations, and broker-dealer financial positions. LINK

In response to the U.S. Russia sanctions Russia has made an announcement regarding changes for international payments and about settling their payments in USD.



Russia will speed up work on reducing its dependence on U.S. payment systems and the dollar as a settling currency in response to U.S. sanctions, RIA new agency cited Deputy Foreign Minister Sergei Ryabkov as saying on Monday.

"We will of course intensify work related to import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling currency and so on. It is becoming a vital need," Ryabkov was quoted as saying. (Writing by Polina Nikolskaya; Editing by Maria Kiselyova abd Dmitry Solovyov) - RTRS

From Aug. 1, 2017:

The United States began removing furniture and equipment from a diplomatic property in Moscow on Tuesday in the first sign of compliance with a Kremlin order to slash its presence in Russia as retaliation for new U.S. sanctions.

President Vladimir Putin has ordered the United States to cut around 60 percent of its diplomatic staff in Russia by Sept. 1, and said Moscow will seize two U.S. diplomatic properties in response to sanctions approved by Congress last week.

The White House has said U.S. President Donald Trump will sign the sanctions bill, meant as a response to alleged Russian meddling in the 2016 U.S. presidential election and to further punish Moscow for its 2014 annexation of Crimea from Ukraine - RTRS

Climateer Investing: "iHeartMedia edges closer to bankruptcy with $174 ...: On Tuesday the WSJ Bankruptcy newsletter had the news that IHRT was making the coupon payment on some of the unsecured debt. The stock jump...