Bitcoin’s Friday bloodbath proves cryptocurrency is a risky business

On December 22 Bitcoin, as many other cryptocurrencies, had the most significant drop since 2015: the prices plunged below $11.000 and then they stabilized around $14.000. This kind of correction was inevitable for many analysts, after Bitcoin’s price doubled two times over two months and hit a record high of $19,857 (one year ago Bitcoin’s value was around $1.000).

Moreover, other altcoins had even better performance compared to Bitcoin:  Ethereum is up over 7.000 percent and Litecoin is up 5.400 percent. Those huge performances have attracted mainstream attention and people and financial institutions are jumping in the crypto-market more and more every day. However, Friday bloodbath should be a first warning to all people who are not familiar with cryptocurrencies , or any other investments, and turned to Bitcoin for an easy source of earnings.

Forbes’ Jessie Damiani indicated 6 possible explanations why the Bitcoin prices dropped so low, while some see the drop as fallout from long-unresolved problems with Bitcoin’s infrastructure.

The drop is probably not the Bitcoin’s bubble burst invoked by many analysts over the year, but Bitcoin’s extreme volatility proves this market is risky almost as any penny stocks out there.

 

5 interesting penny stocks to watch for 2018

Hemisphere Media Group Inc. (NASDAQ: HMTV )

Founded in 2013, Hemisphere Media Group is a leading U.S. Spanish-language media company serving the U.S. Hispanic and Latin American markets. The Hemisphere Media Group is the only public company with a focus on Hispanic people living in the US and it also serves many Latina American countries.

Pay-TV subscribers in Latin America, not including Brazil,  grew by 44% from 2012 to 2016, and are projected to grow an additional 15 million
from 53 million in 2016 to 69 million by 2021 representing projected growth of over 28%, while the U.S. census bureau estimates that the Hispanic population  in the United States will grow to 70 million by 2025. The network has over 50 million subscribers and the management estimate that user base will continue to grow.

Advertising revenues and retransmission/subscriber fees are the main sources of revenues and it is important to monitor these two variables, as they have an impact on the stock price.

Technically, HMTV is in a sideline channel and in November it hits a low at $11, a lever which played as support in the last three years.

HMTV stock on a daily chart. Credit: Yahoo finance

 Accelerize Inc. (OTCBB: ACLZ)

Accelerize Inc. a technology company that operates in the cloud business and offers software solutions for businesses interested in expanding their online advertising spend. Accelerize is primarily focused on Enterprise process
apps and in 2016 its Global SaaS software reached $106b revenues, with an increase of 21% over the 2015. In a nine-months period ended September 30 the revenues increased from $17.883.105 to $18.016.552 while the cost of every single voice (Cost of Revenues; Sales and Marketing Expenses;  General and Administrative Expenses;  and other expenses) increased about 30%.

The company has an history of losses and has a substantial amount of indebtedness, while the management estimates the Costs of Revenues will continue to increase in the next months. If the management will be able to secure the company’s line of credits and to lift the company’s cost structure is highly probable that the stock price will climb over 1$ again.

Accelerize’s stock is sitting on its all time low from more than 2 year and the prices are moving in a sideline channel range of 0,55-0,25.

ACLZ
ACLZ chart on a daily timeframe. Credit: YahooFinanceChart

Netlist Inc. (NASDAQ:NLST)

Founded in 2000 by Jayesh Bhakta, Chun Ki Hong, and Christopher Lopes, Netlist’s main business is memory subsystems designed for datacenter server, high performance computing and communications markets.

The company has introduced over the years many disruptive products and in 2015 signed an a strategic partnership with Samsung  to produce a new class of NVDIMM-P (NV-P) memory solutions. 

Netlist incurred over a nine-months period ending in September 30 a net loss of $10.3 million and the company has an accumulated deficit of $154.913 million. The management believes the Company’s existing cash balance,
together with cash provided by the Company’s operations, will be enough to t to meet the Company’s anticipated cash needs for at least the next 12 months, but if the funds will be inadequate the Company will have to significantly modify its business model and/or reduce or cease its operations.

The stock is near its all time low and usually a rebound may occurs from this level.

NLST
NLST monthly chart on the long period.
Credit:YahooFinanceChart

NII Holdings Inc. (NASDAQ:SIEB)

Founded in 1995, NII Holdings is a provider of wireless communication services that operates mainly in Brazil. The group, once listed in the Fortune 500, went through bankruptcy in 2014, and in the same year reached an agreement with its major stakeholders on terms on a Chapter 11 reorganization plan.

In 2017 revenues were impacted by pressure on competitive forces and the wind down of iDEN business: on a nine-months period ended in September 30, the revenues dropped from $736.6 million to $680.7 million.

The company is still sitting on an big debt and it still failing to generate enough operating cash flows and earnings to cover annual interest expenses and there are risks of a new bankruptcy.

The stock is at its all time low and at the moment there are no signs of rebound. For this reason we recommend to wait next quarter and see if NII’s financial situation starts to recover.

NIHD
NIHD monthly chart. Credit: YahooFinanceChart

Repros Therapeutics Inc. 

Founded in  1987 as Zonagen, Repros Therapeutics is a US-based pharmaceutical company focused on the development of oral small molecule drugs to address hormonal and reproductive system disorders.

Proellex, a drug designed to treat symptoms linked to uterine fibroids and endometriosis, is still in Phase II development and the Food and Drug Administration (FDA) has put the drug under partial clinical hold.

Enclomiphene, another drug in Repros’ pipeline, is it not likely to receive a positive response to its marketing application by the European Medicines Agency’s advisory group.

Repros Therapeutics has been recently acquired by Allergan, but the deal is under investigation by Monteverde & Associates PC.

The company’s stock is on its all time low and much will depend on the product’s pipeline approval and on the future plans of Allergan.

RPRX monthly chart. Credit: YahooFinanceChart

 

Ewald Nowotny urged the European Union to regulate Bitcoin

Bitcoin

During the 2017 Bitcoin’s value jumped from $1.000 to over $16.000 and, as the crypto-currency popularity grows, Central Banks starts to worry over the consequences of a bubble burst. In a worst case scenario the blame will be put at the bank’s doorstep since bankers kept the currency unregulated despite the high demand.

Not for nothing Ewald Nowotny, president of the National Bank of Austria and member of the European Central Bank ’s governing council, on Monday urged the European Union to regulate Bitcoin: Simply because of the scale, it is certainly increasingly necessary to discuss whether and in what form regulations are needed here. A particular aspect that needs to be discussed …is the question of how far the regulations on money laundering …are relevant here,” he told a news conference.
“While even small lenders were subject to strict controls on money laundering, it made no sense that even large bitcoin transactions could proceed without similar checks”, he added.

Musk defeats MADA in Missouri court: Tesla can sell EVs in Missouri state again

Tesla

Thursday 7 December, the Missouri Court of Appeals has overturned last year verdict to ban Tesla from getting a license in Missouri’s State.  Musk’s company was forced to close all stores in the state after the Missouri Automobile Dealers Association (MADA) tried to have Tesla’s dealer license revoked. Tesla can now resume selling cars directly to consumers: “We have been serving customers in Missouri for almost five years and have contributed to the state economy and jobs for Missourians, something that will now continue,” the company said in a statement.

The appeals court rejected the plaintiffs’ arguments that the MADA was entitled to challenge the issuance of licenses to Tesla, and the court point out that the association was effectively a Tesla rival trying to avoid competition and not looking after the public interest.

Tesla operates two stores and a service centre in Missouri (one in Kansas City and one in University City) and it can now sell EVs to customers again without having to go through third-party dealers.

 

Venezuela crisis: some Venezuelans are playing old video games to survive

venezuela flag

Venezuela is today one of the South America’s rotten economy and the country become a symbol of Latina America’s socialism failure. The currency is worth less than a dime, people are starving and fighting to have basic commodities and essential supplies, young brains continue to expatriate in other countries.

The country is sitting on the larger oil reserves in the world (397 billions barrels), and the Venezuela’s economy rely on oil export too much (oil accounts for about 95% of Venezuela’s export). Oil prices collapsed in late 2014 from $110 per barrels to $45 and reached a $25 low in early 2016, putting Venezuela’s economy under severe stress (Crude oil and Brent are now stable around $55 per barrel, which is still not enough to stop the economic bleeding).

Economic instability and political blockade turned Venezuela into a leaving hell since then. The hyperinflation, which soars above 800 per cent  in October and over 4.000 per cent compared to an year ago, made bolivar worthless and the government interrupted many social programmes, mostly financed through oil’s export revenues.

In a race for survival, Venezuelans need to find alternative ways to cover the family’s basic needs. Some of them are using old video games such as RuneScape or Tibia, where users can trade virtual gold for us dollars or cryptocurrencies, as Bloomberg reports.  Venezuelans gold farmers are becoming so familiar in Venezuela to a point to affect the games’ inflation. The practice, already used in other basket-case economies such as North Korea’s, is usually enough to earn about 2$ per day, more than what they made with their real jobs.

Bitcoin market cap surpasses New Zealand (and many US giants)

Bitcoin

2017 will be reminded as one of the greatest among cryptocurrency enthusiasts, crypto miners and bitcoin owners. The surge of Bitcoin, the most famous cryptocurrency on the planet, has been impressive and consistent for the whole year.

On January 2017 Bitcoin touched $1.000 for the first time and on December it values 10 times as much, surpassing the $10.000 ( bringing its climb this year to more than 1,000 percent). The consensus and the future of the cryptocurrency it’s unclear, with some analysts predicting price to rise over $100.000 (John McAfee’s target price for 2020 is $1 million) while others keeps seeing it as a bubble ready to burst at any time.

Meanwhile, one thing is clear and undeniable: the price keeps rising and along with it its market cap.  With all Bitcoin in circulation, the cryptocurrency has now a market cap of $190 billions, and it continue to rise very fast.

Bitcoin value is currently above economies such as New Zealand (whose economy is valued $185 billion), Romania ($188), Iraq ($175), Algeria ($165). The Bitcoin economy surpasses even giant companies as Pepsi, McDonald’s and Boeing, as reported from Bloomberg. 

At these values, Satoshi Nagamoto’s fortune is worth about $10 billion, turning him one the richest person in the World (he now stay in the top 250th). The pseudonymous creator is estimated to own 980,000 bitcoins, amassed from mining the cryptocurrency in its early days.

 

Bad news for the UK economy: the OECD forecasts a slowdown for 2018 and 2019

The UK will start to feel the Brexit’s effects very soon. An OECD’s report has outlined a sharp decline in Britain’s gross domestic product (GDP) growth: in 2018 the growth is set to 1.2% and 1.1% in 2019.

The “uncertainty over the outcome of negotiations around the decision to leave the European Union and the impact of higher inflation on household purchasing power”, is the reason for this slowdown, as reported the institute.

The economic think tank also warned against further rate rises from the Bank of England (BoE). “Monetary and fiscal policies need to remain accommodative. Inflation has risen to 3%, but in the absence of wage pressures the central bank should look through the temporary inflationary impact of currency depreciation,” it is written in the OECD’s report.

This is a sign that Britain could not achieve growth without investment in technology and infrastructure, as stressed by BDO tax partner Paul Falvey.

The UK decided to leave the European Union in the summer 2016, after an historic referendum which divided the country. The real effects of Brexit on the whole Europe and on the UK itself are still unknown.

How Tesla looks after Semi: is the company a sinking ship or a golden spaceship?

Tesla
Tesla
Tesla supercharger battery – CC0 License – Pixabay

 

Elon Musk has presented recently the new electric truck called Semi, the first truck in the line of Tesla electric vehicles. The truck has been long awaited from both investors and electric enthusiasts, as it is an important test for Tesla and the electric market. The truck fleets represent more that 50% of the total vehicles circulating in the United States, and they are one of the first causes of Co2 emissions, in the country as in the rest of the world.

What we have heard during the conference sounds appealing. The Semi should be available from 2019 and it will run 500 miles with a single charge (30 minutes are required to fully charge the truck). The futuristic truck (the aerodynamic and the appearance are truly impressive) should be less cheaper then the diesel counterpart, and of course it will help to contain the pollution. Semi should operate $1.26 a mile to run, versus $1.51 for a diesel. At least, this is what Musk has promised.

A future between dream and reality for Tesla Semi: will it find a market?

It is important to states that Musk hasn’t revealed yet a price for the Tesla Semi, and it is unlikely that – many – transport companies will invest on this vehicle with blind eyes. An analysis published on ACS Energy Letters underlines that such vehicle would require a $400.000 battery pack. If we think that the whole truck will cost more then of $500.000, it will be necessary to drive more then one million miles before break even against a diesel truck, as stated by technologyreview.

We can rationally assume that a company thinks in terms of economic advantages, so the environment variable will not play the same role as in the others Tesla models. Tesla Semi will require strong government subsides, and I personally don’t think that the Trump administration will be favourable.

With all this said, the Tesla Semi looks like a technology gem. The (semi) autopilot will be without a doubt something that will affect the market, however, even other car manufacturers show progress on this field. That’s why I’m skeptical on the future of Semi.

Ok, Tesla is not profitable but the electric cars are gonna save the World. Or not?

The story of Tesla and of Elon Musk is quite funny. Tesla is one of the few companies, if not the only one, that runs from more then a decade without making one single dollar of profit (and has received tons of dollars). Behind Tesla there is an environment of investors that believe in a project rather then short term profits. And actually this is totally fine. Every business should run looking at the long term. So, what’s the problem here?

The problem here is that we can’t postpone the future indefinitely. Tesla is not a charity or a volunteer foundation. It is a business and as any business it should prove that it is profitable, since the investors can’t continue to lose money forever. And after 15 years of promises the future is about to knock the doors of Tesla headquarters. The release date of Tesla Semi (2019) will be crucial for the future of the company. This could have an impact on all Musk’s businesses.

Every business of Musk regards something about the future and the salvation of humanity, which makes this business man quite unique and extravagant. It’s also good to stress the fact that meanwhile he is making a lot of money out of it. We are talking about the same man that once said: “odds that we are not living in a simulated universe is one of millions”. A declaration that have no valid scientific support and it is incoherent with the rest of his plans.

Remaining in the electric car ecosystem, Tesla at the moment is proving that the production for the mass market is hard staff.

Car manufacturers will be happy to have a mass market for the electric car

If we think at the best case scenario – with EVs invading the market – it will be impossible for Tesla to serve the whole market. At that point other car manufacturers will jump in the electric revolution, and they couldn’t be more happy.

The numbers in the sector continue to shrinking, as the total fleet of vehicles in the United States declined in the last decade. It is a trend that was well anticipated by a report of Lester Brown. Forget the story that car manufactures want to defend the oil economy. At least, not anymore. They make money by selling  cars and a law that would force all the citizens to buy electric vehicles will make them happy.

On the other side we don’t have a clear picture of all pro and cons of this mass conversion. The analysts converge on the fact that the electric cars are the best option if we look at the entire life cycle, however, we know that any activity has its externalities, and the same is true for electric vehicles and renewable energies as well. The public expenditure required to turn all this into reality seems just too big, especially if we consider that the world population will continue to growth. Giving a car to almost every person doesn’t sound a good option. The video below shows the dramatic situation in China, just to give you an idea of what we are talking about.

At the contrary, the option of electric cars seems more in line to preserve the current life style instead of giving us a real solution for serious problems, and handle the mobility issues once and for all.

Tesla looks like a golden spaceship but it stinks (and the bad smell becomes more strong each passing year). It’s just a matter of few years before we’ll know if Musk’s plan is gonna succeed or not. The Semi will tell us a lot on the future of the company. Tesla is an impressive innovative company, and it will remain so even if the electric car will fail to hit the mass market. After all, It’s not impossible for Tesla to start to be profitable. It has just to accept its true objective: to serve the richest people on the planet. This goes for Tesla as the rest of Musk’s projects.

If you want to know more about Tesla vehicles you can read the monster article published on Absolute Reg.

Strong Euro and weak Dollar: why they will not last for too long

Recently, the Euro-Dollar has hit values that we didn’t see from January 2015. The pair breakup the 1,20 on 6 September and the day after it reached an high at 1,2095.

The week US dollar and the super Euro have become a factor of nervousness for many actors. Especially in the European Union, where the recovery of peripheral countries is still very week. A stronger Euro is a source of worries for many European companies. The appreciation of the Euro will damage the export of those companies which have a weak international position. It means that the economic recovery will slow down again in some countries. Even ECB’s number one Mario Draghi has expressed concern over a stronger Euro. He remarked that a value of 1,20 is still sustainable but a further appreciation will damage his plans.

It was less then a year ago when many analysts announced the parity between the Euro and the US Dollar. And on December 2016 the exchange rate arrived quite near this level: it touched a low at 1,03522 on December 20 and then a new low at 1,03403 on January 3. But the parity became an illusion when in March the pair inverted the direction. We are now within an upward channel and the bullish trend doesn’t give any signs of weakness.

Why the US Dollar is getting weak and the Euro is getting strong

There are two main reasons on why the exchange rate changes its course. First of all, the monetary policies of the ECB and the FED aren’t too divergent anymore. One year ago the expectations were quite different: the FED should have been rise the interest rates quite fast due to the US recovery while the ECB would have keep the quantitative easing programme for some time. The European Union was also seen quite unstable due to the populist movements that threatened the union.

However in a few months the picture has changed. Good economic data begin to arrive and the recovery in Europe seems more convincing. At the same time, the populist parties have been beaten one by one in their respective countries. The turning point was in May, when Emmanuel Macron won the presidential elections, pulling away the spectre of Marine Le Pen. It was then when the Euro accelerated upward. The rise of oil’s prices also gave an hand to Mario Draghi to stimulate the inflation within the Eurozone.

With the populists in a corner, the economic recovery in action and the inflation near the target level, the European Union looks now more stable. At the opposite, there is some uncertainty in the United States, despite the economic rebound. It’s becoming evident that it will not be easy for the President Trump to make the fiscal reforms that he promised during the campaign. It will be difficult with such administration to translate words in action. Since Trump took office at the White House  at least 10 top-level people have been fired or resigned. 

What the technical analysis can tell us

Euro-US Dollar, 11-09-2017
Euro-US Dollar’s monthly chart updated to the 11-09-2017. Credit: TBGlobalist/XTB

 

The Euro-US Dollar has completed a pullback on the 2012’s low. The pair has broke the horizontal channel and it is now approaching the trend line drawn from the highs of 2008, 2011 and 2014. So, we can expect in the short term a further appreciation of the Euro. The change Euro-US Dollar will continue to rise in case of breakup. In this scenario the change could rise in the range 1,30-1,40.

Euro-US Dollar, daily chart 11-09-2017
Euro-US Dollar’s daily chart updated to the 11-09-2017.
Credit: TBGlobalist/XTB

 

We can see the bullish trend clearly on the daily chart. The change is in this upward channel since April 2017 and as long as it stays in this channel we can’t expect a trend change. 

In short, from a technical point of view, the Euro should continue to appreciate in the short term against the US Dollar. Soon we can expect a throwback on the breakup of the horizontal channel. However, the change will fill the April’s gap only after the breakdown of the upward channel.