Month: September 2018

Musk’s $20mn fine covered if Tesla shares jump 59 cents

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$20mn sounds like a lot. It is a lot. The SEC has struck a deal with Tesla’s Elon Musk which demands he steps down as chairman and hires two independent directors. Musk owns 33.7mn shares. Technically he would only require a 59c share price rise to cover his fine. Make it a dollar to cover taxes and transaction costs plus legal fees. In any event the fine is peanuts in the grand scheme of things.

To be honest, Tesla disciples will breathe a sigh of relief that their king still remains in the company and more importantly as the figure head. The question remains is whether a new chairman (from outside?) will see to it that the company is not just a one man band which has been painfully obvious with so many senior level defections. Too often the board has seemed to be an onerous burden for Musk in that his intergalactic brilliance shouldn’t require checks and balances.

Will a new chairman demand a thorough audit into business practices to date? It is likely that the SEC will expect a new chairman to lift the standards of the board to make sure that shareholders interests are properly decided with all directors heard. An independent audit should be viewed as the bare minimum. What would that unearth?

Tesla shares should bounce on this news and in aftermarket trading it is up. The question is how a new structure changes dynamics which reveal the short cuts and internal processes which have created so many reporting inconsistencies.

A new low

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Today was a dark day for America. Despite both Ford & Kavanaugh putting forward seemingly credible cases, they were washed aside for the most sickening display of partisan politics. One could almost picture fiendish crowds awaiting the direction of the Roman Emperor’s thumb. How sad that the two people with the most to lose were treated as punching bags by despicable senators. Social media forums were nothing more than ferals chanting obscenities in a colosseum. Sick, sick, sick! No dignity on display.

The questions lobbed by both Democrats & Republicans for the main part were a clear display of making one’s mind up beforehand. What a farce. It was blood sport. It had little to do with seeking the “truth” rather trying to use reprehensible tactics to confirm or deny Kavanaugh. Ford & Kavanaugh may as well have been road kill. Neither side cared for the testimony of those that opposed their preformed views.

Sexual assault is a heinous crime. Period. True victims of it can suppress traumatic memories for decades. The statute of limitations may well be a convenient out clause for perpetrators in law, but sufferers shouldn’t need a deadline to reveal those inner demons. How many people have chosen to take their own life because they can’t deal with the shame?

Some basic questions.

Why would anyone be in the least bit surprised for Kavanaugh to fight his corner after being smeared with such serious defamatory accusations? Even if he is proven not guilty of those crimes his reputation has taken untold hits. If he is found to be guilty then he ought to be punished to the full extent of the law. However was his testimony any less believable? He asked for an investigation immediately after the news broke on Ford’s claim. Yet here were senators grilling him to demand one. Do they listen?

Ford too. She would be risking a great amount to go in front of a Senate Committee and lie. It is a punishable offence. Would she really seek to go into a viper pit and take the trouble to invite unsolicited attacks on her? Yet why is no one prepared to corroborate her evidence? Afraid of the repercussions?

However it struck me, as a victim of sexual assault myself at age 13, as to why Ford needed to read her story from a scripted page. I can unequivocally state every detail of what happened to me without notes. I could explain it repeatedly over and over again. Even years or decades apart, nothing would change. The face of the man that did it almost 35 years ago. Where. What time. What happened. The lot. I only came out with it several years ago but such would be the emotional pain that she shouldn’t have needed notes. Not accusing Ford of lying, just something that appeared strange to me. Real victims require no preparation. It’s burned in the memory. Was alcohol a factor? People may deal with trauma in different ways. That was the only thing that put a question mark against authenticity.

Why did Democrats not raise the other allegations against Kavanaugh with respect to indecent exposure and rape gangs until it was raised by their opposite numbers? Why did they drag Renate’s name through this hearing? A person not even party to the whole sordid affair gets her name blasted in front of millions. And discussing flatulence – could the question be so irrelevant?

The stink (no pun intended) of all of this is the timing of many allegations. As CM had written earlier, Feinstein seemed to pull this joker out of the pack to cause maximum damage to Kavanaugh’s confirmation. Had she been a true fighter for the rights of supposed rape victims, why wouldn’t she seek to immediately take it in closed session to protect confidentiality of Ford and do the right thing. No, the letter was leaked to the press and all of a sudden Ford was thrust into the boiling cauldron. There was plenty of time to act.

Yet Grassley and other senators rattling off the words of former Senator Joe Biden and his claim of the irrelevance of FBI investigations was a futile attempt to confirm their man. Once again, it had nothing to do with Kavanaugh or Ford. To be honest one had to feel for Kavanaugh at times in that he was not after platitudes from Republicans. He wants his name cleared and undoubtedly wants his reputation restored. I defy anyone accused of such horrible things not to feel upset.

CM, like most are none the wiser on guilt. So many had made up their minds well beforehand. The only thing absolutely for certain was the unbecoming behaviour of that rabble. It was utterly disgusting. Neither side could claim any victory, let alone Phyrric.

The only thing anyone should be praying for is to never witness something so appalling again. Justice should be served through the correct procedures. Yet politicians only proved today that they are utterly self serving and more evident was the wake up call for all Americans about those who supposedly represent them.

Musk channels the Black Knight?

It has become apparent that the SEC & Musk had a deal which would see him removed from Tesla yet his lawyers have rejected it at the last minute because he’d rather fight the charges. One could argue in favour of his bravery to appeal against what looks to be a very open and shut case about breaching probably the most basic of errors in standard reporting to the exchange to ensure fairness.

Maybe he feels that he is only going to get a slap on the wrist? In the 63 odd charges laid out against individuals by the SEC for reporting violations in 2018, the average fine has been $75,000. Hardly a ripple to Musk’s net worth.

The bigger risk for Tesla shareholders if Musk loses in court against the SEC and is forced out (to be honest his board should demand it) will be losing a figurehead who at the very least has managed to make a company with no profits, monster debts and questionable actions worth more than Ford, FCA & GM combined. Betting against Musk has been a dangerous game. He may well be teflon coated but it remains questionable whether he can strap himself to his reusable rockets and escape the fraud charges.

Musk charged with securities violations

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Tesla CEO Elon Musk has been accused by the SEC of violating Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5]. The SEC claimed,

“Musk’s false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors…Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions. When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a “special purpose fund,” and had not confirmed support of Tesla’s investors for a potential going private transaction. He also knew that he had not satisfied numerous additional contingencies, the resolution of which was highly uncertain, when he unequivocally declared, ‘Only reason why this is not certain is that it’s contingent on a shareholder vote.’ Musk’s public statements and omissions created the misleading impression that taking Tesla private was subject only to Musk choosing to do so and a shareholder vote.”

The eccentric and maverick CEO responded,

This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

It is common knowledge to corporates that the exchange is the first port of call for all public releases to be openly documented for consistency and equal access. It is irrelevant whether a social media feed might be deemed as “in the spirit” of open disclosure to Musk’s personal opinions. The SEC rules are the rules. There aren’t soft interpretations. A listing requirement is to follow the rules of fair disclosure. Whether Musk was or wasn’t aware is irrelevant – as the CEO of a $50bn company he should know better or at least sought the advice from those that do.

In any event if he was true to the spirit of good corporate governance he would have the good sense to realise his position as CEO has become untenable. How the board can have confidence in him is beyond CM? The multiple senior resignations give an insight but for all of Musk’s instellar cosmic brilliance as a salesman, unfortunately laws are there to provide safety for investors. The shares are offered 13% lower in the aftermarket.

A court will ultimately decide his fate but the $420 a share with secured funding unraveled so quickly as to question his judgement.

Investors, even the die hard believers, don’t need a CEO already under the pump to be distracted anymore than he already is. It is a shame because he is undoubtedly a brilliant mind. Unfortunately that would seemingly make him feel he’s somewhat untouchable leading him to make knee jerk decisions such is what he’s been charged over.

Actions speak louder than laughs

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While the mainstream media has blown much hot air about the UN GA audience laughing at POTUS during his speech, where was the very same audience backing the poster boy of virtue signaling and globalist politics? Here is a picture of Canadian PM Trudeau addressing the UN General Assembly during the Nelson Mandela Peace Summit on Sep 24th. Worse, a whole section of them are on their mobile phones. As impolite as deleting/sending emails during the speech of any world leader (or anyone for that matter) is, at least being laughed at suggests the audience was paying attention to the content, as ridiculous as anyone may have made it out to be. As much as Trump’s boasting and glass jaw were on full display, it was standing room only, because love or hate him, his words have global ramifications.

While French President Macron might have sounded sensible castigating Trump’s America First view as fanning the flames of nationalism around the world, perhaps he might have reflected on the shift toward populist parties across Europe occurring well before either took office. Macron should remind himself that anti-EU leader of the far right Front National, Marine Le Pen, achieved twice the vote ever achieved by her party. 35%.

People may not have noticed but Sweden’s newly appointed PM Stefan Lofven has lost a no confidence motion yesterday. The right leaning Sweden Democrats achieved the fastest growth in the Sep 9 election, taking almost 18% of the vote from 12.9%, holding the balance of power despite the establishment is reluctant to wed . All the while,  3 weeks have passed and a no confidence motion has occurred.

Italy is now run by an anti-EU M5S & anti-immigrant League coalition. Austria voted in a EU-skeptic party led by a 32yo Chancellor Sebastian Kurz. The Brits voted for Brexit. The Dutch awarded the fastest growing share to platinum haired Geert Wilders’ Freedom Party. The Hungarians and Polish have openly told Juncker where to stick his views on forced migration. Even Chancellor Merkel had the worst showing of her party in 70 years as the anti-immigrant Alternative for Deutschland took 13% of the vote, achieving 94 seats in the Bundestag mostly at the expense of Merkel’s CDU & former European Parliament President Schulz’s SPD.

Poor old Justin Trudeau had a member of his own party, Leona Alleslev, defect to the Conservatives stating she was ‘concerned about the government’s handling of the economy.’ It is one thing for the opposition to berate the government for poor stewardship but it is deeply embarrassing to lose people from one’s own party due to a lack of confidence.

So yes, we can collectively laugh at Trump for his bluster, chest beating and itchy Twitter fingers, but one would hope the mockers at the UNGA would glance in the mirror and realise that their constituents are becoming ever more disillusioned with the establishment they represent. These are the same people that bashed the president for calling out their lack of commitment to NATO, with 23 nations well behind promises made of their own volition 12 years prior. Could it be that for however abhorrent they might find the current leader of the US, he is calling many out on their failure to hold up their end of the bargain?

At the end of the day, no matter what one’s personal feelings for Trump may be, we have to live with his decisions. He is far from perfect. Yet instead of the predictable constant drone of noise following his speech, perhaps countries would be better off putting aside personal differences. Rather than crossing fingers in hope he maybe impeached so they can go back to the status quo and live the very lies he has exposed in his almost 2 years in office. Now that type of hypocrisy is truly laughable. Indeed the very fact that out of touch politicians can mock in such a manner shows just how badly they stink at relaying the very messages they think resonate with the public.

Yale Law School students fail their most important test

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Yale Law School is supposed to be one of the most prestigious places one can graduate. However the multitude of students who staged a sit down protest over Supreme Court Justice nominee Brett Kavanaugh’s alleged sexual misconduct just failed one of the most important tests in the very subject they wish to practice – the presumption of innocence.

Despite holding next to no credible evidence to base their judgement at this stage nor have any witnesses come forward, these students have shown blind prejudice. It may well turn out that Kavanaugh is found guilty of the allegations. However he like they are equal under the law until proven guilty.

Nonetheless it seems these students have no compunction. They are clearly so poisoned with partisan politics that they are willing to convict a potentially innocent man of a crime he may not have committed. These students are the very same future justices they vehemently protest in the man they attack.

Or could it be they are guilty of being irrational teenagers/millennials at university who think social justice allows for a kangaroo court? So devoid of understanding how the real world works. Either way, their protest shows how brainwashed and lacking in the ability to think for themselves to stage a protest based on such flimsy evidence which has conveniently rolled out to stall his confirmation hearing.

Maybe they’d dazzle their professors by stating their concerns in “law” in what they’d be looking for to ensure “both” sides of the story we’re heard? Or at the very least how they’d represent either side based on the evidence to date? Alas, no. Best just jump on the despicable Democrats band wagon and wish Kavanaugh gets smeared so he isn’t confirmed as a SCJ (the real aim).

While in no way justifying sexual harassment/assault on any level, looking back over CM’s university days three decades ago should witnessing the Forestry students conduct drinking games while sitting stark naked in the refectory and drinking their own vomit from an old Adidas Rome sneaker or even worse “animal acts”  to get back in the game worthy of a full police investigation? Or do we put it down to kids being stupid as many get their first grips with alcohol? No one in CM’s year of students (male or female) who saw it ever made a big deal of it then or now. We most likely laughed at the cringeworthy nature of it all.

Yet this is the future. Shame on the Yale Law Faculty for not teaching these kids the most important values of fair trials. Perhaps evidence of how the professors could be more radical than the students. True colours?

Kavanaugh may yet be found guilty but at the very least let him and Christine Blasey Ford set out their evidence.

Finally, will  these same students protest if Ford is outed as lying? Of course not!

Yamaha’s MotoGP woes in stats

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Many in the MotoGP world are questioning the horrible performance of Yamaha in 2018. As it stands Yamaha holds no victories this year with a handful of races left in the season. This would equal its worst performance in 15 years.

Yamaha’s successes really started to trend much higher after hiring Honda legend Valentino Rossi (who took the 2001, 2002 & 2003 crowns for Honda). He subsequently took 2004 & 2005 crowns for Yamaha. After narrowly missing the 2006 title to Honda’s Nicky Hayden and losing to Aussie Casey Stoner in 2007 on a Ducati (the first title for the Italian maker) Rossi won for Yamaha in 2008 & 2009.

Yamaha won the championship again in 2010, 2012 & 2015 under Jorge Lorenzo. Honda won the 2011 with Stoner and the 2013, 2014, 2016 & 2017 titles under Marc Marquez who looks odds on to win 2018. At tonight’s Aragon GP in Spain, Yamaha’s four riders start 12th, 14th, 17th & 18th on the grid.

In August this year after the poor performance at the Austrian GP, Yamaha made the unprecedented motion of apologizing to its riders for having such a rubbish bike. The problem has continued for 18 months now. No doubt the developers in the team back in Iwata, Japan are still busy working out how to take responsibility instead of working to fix it.

The reality is that the other motorcycle teams have got much better. The Italians didn’t qualify for the recent Football World Cup and Germany was bailed out in the pool games. So Yamaha needs to stop resting on the laurels of having two world class riders with 10 championships between them to come up with a competitive product.

N.B. Suzuki withdrew from MotoGP in 2012 & 2013. Ducati entered MotoGP in 2003.

Will financial planners bring out a Naomi Osaka ETF?

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Japanese investors can get star-struck with investments. In 2015, popular pop-idol band AKB-48 saw the stocks of companies it was sponsored by surge 136% relative to the market. Aggregate sales of those companies surged 46% and 30% over the following two years. Such is the ‘hayari‘ (boom) culture in Japan. Corporates know this.

Since the US Open win by tennis star Naomi Osaka, sponsors are lining up to sign her. Prior to the win, Nissin Foods, WOWOW & Yonex were already sponsors. Nissan has just signed her. Since the win, the Topix has risen a tad over 6% while Nissan, Nissan & WOWOW have risen 7.5% in aggregate. Yonex has jumped 12.2% Early days to be sure, but the likelihood is that if she is sponsored by some smaller less liquid stock names these stocks could well fly.

Forget fancy models and esoteric investment strategies. Find whatever Osaka will be sponsored by in Japan and outperform through popularity over underlying earnings performance.

Any financial firm that launched a Naomi Osaka basket would likely see massive inflows and be able to charge higher fees on the back of it. Will the marketing departments wake up?

Feinstein’s timing truly defending the rights of a sexual assault victim?

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There is absolutely nothing right about sexual harassment of any kind. CM wrote extensively here on the subject last year. CM also warned of the dangers of #MeToo turning into baseless witch hunts that could permanently stain the character of otherwise innocent people. CM contends that false claims should be equally punishable under the law to prevent false claims getting air.

Whether Supreme Court Justice-in waiting Brett Kavanaugh is guilty of harassment 36 years ago is nothing more than an allegation at this stage. All claims should be heard under the legal framework. However studying the timeline of events, there is a touch of convenience in Senator Diane Feinstein’s use of Christine Blasey Ford’s accusation letter.

Kavanaugh’s announcement as SC nominee was made mid July, 2018. Ford documented her supposed harassment encounter in a letter to Feinstein two weeks later, dated July 30th. Yet it would appear Feinstein sat on this nugget til September in order to maximize its utility to prevent Kavanaugh’s confirmation if all other political stunts failed. With any luck she can drag an FBI investigation into the mid-terms (i.e. the real goal).

If Feinstein truly wanted to defend the rights of a supposed sexual harassment victim, surely she should have acted immediately? No doubt she would need a bit of time to discuss with lawyers to understand if this constituted substantial evidence but sexual harassment is a serious claim and crime. Surely the united forces within the Democratic Party could summon the resources to expedite the allegation and use its validity to block.

As the party of supposed social values, what better way to derail the candidate than to release a real claim ASAP after legal checks and balances, including meeting the openly Trump hating Democratic professor were completed. Provided the evidence was incontrovertible it would sell itself. Could it be that the evidence is so sketchy that Feinstein knew it only served as a stalling tactic, hence delaying it by 6 weeks? This says more about the moral compass of the Democrats than Ford.

It seems that Ford does not want to testify under oath before the Senate Judiciary Committee until the FBI investigation. Yet the FBI will investigate what? The crime scene is 36 years old. Her recollection is vague at best. Interviewing people who were likely underage kids who were drunk at a party

Alas, as all of the stunts from Democrats, including Cory Booker admitting he may lose his position for leaking certain documents which turned out to support Kavanaugh not being racist, they pull out claims of sexual misconduct, in the hope it drags the confirmation beyond the Novemeber elections whereby a potential blue wave will potentially allow them to block Trump’s choice. Tactically a shrewd move, but utterly disgusting to true victims if proved untrue.

There is no reason to fault the Democrats wish to block a Republican choice for a vacant SCJ seat (which by the way was on the 2016 ballot given the subject was raised in the presidential debates because it was the first time since Eisenhower that an SCJ seat was empty at election time) on the basis of supposed conflicts in convictions and beliefs. No doubt the Republicans would do likewise. Yet citizens were given the chance to vote on a SC judge with their presidential choice. The names were all out there.

Unfortunately, to use a sexual assault allegation based on sketchy information given by the accuser who admits she doesn’t remember much 36 years ago is utterly reprehensible if the claims turn out to be false. There will be no surprise if the Dems get their goal achieved that Ford will quietly withdraw her claims.

Let’s be perfectly clear. If Kavanaugh is guilty of such a serious crime then he is unfit to serve on a SC bench. Should Ford’s claim turn out to be completely baseless then the Dems will reveal themselves as morally bankrupt to use such a tactic to besmirch someone’s reputation. The timing of the letter is convenient to say the least.

Is this the way forward? Everything that doesn’t stand on its merits or via democratic process will somehow be stopped by claims of sexual impropriety?

In this battle the only thing everyone should be united behind is that “justice” is properly served for the right reasons. Certainly not to dish up political character assassinations for convenience.

True victims tend to bottle trauma for substantial periods, usually decades. Yet rarely would they openly come out on a whim and chuck around claims which don’t help their own healing process.