Bonehead Questions

Embed from Getty Images


On earnings reporting day, companies issue an earnings… you guessed it: report! Later that day, the top-brass of a company hosts an earnings call.  The format of the call is usually a succession of small statements from the CEO, followed by the CFO, and any other officer that has something interesting (or otherwise) to say.  The next stage is usually a Q&A session.  Just to be clear, Q&A stand for Questions and Answers. Answers being the key word.

The people attending the earnings call are investors, reporters, and research analysts who put their well thought highly relevant questions to the company’s executives, and would expect a truthful answer.

Apparently, nobody informed Mr. Elon Musk of this small fact.  During last week’s call he lashed out at analysts with comments such as: “Boring, bonehead questions are not cool. Next!” or “…these questions are so dry, they are killing me”, followed by a baffling: “I am not here to convince you to buy our stock”. Continue reading

Posted in Bonds, Capital Markets, Stocks | Tagged , , , , , | 1 Comment

A Little Push to the Right

Click aquí para la version en Español

Embed from Getty Images


If you want to see what 10 years of XXI Century Socialism does to a country, you don’t need to look any further than Venezuela.  Since Hugo Chaves took power in 1999 the country started on a steady path towards self-destruction.  By 2009, it was obvious that the only way out would be the removal of Chavez.  Four years later Venezuela was dealt a lifeline: Chavez passed away. Most political and economic analysts around the world considered this to be a turning point because, seriously there couldn’t be anyone worse than Chavez to run the Venezuelans… or could there? Enter his successor: Nicolas Maduro.

Disciple of Chavez, and worshiper of Cuba’s Castro, Maduro finished nailing Venezuela’s coffin shut.  There are riots in the streets, there is no food, no medicine, no jobs, and no prospects.  Any Venezuelans who could, left the country, driving the biggest brain-drainage in the country’s history, all this while comfortably sitting on top of the world’s largest oil reserves.

Venezuela seems to be a country that doesn’t learn from its mistakes.  Another country that doesn’t learn from its mistakes is Ecuador. Continue reading

Posted in Bonds, Economy, Emerging Markets, Foreign Trade | Tagged , , , , , , , , , , , , | Leave a comment

Un Empujoncito a la Derecha

Click here for the English version

Embed from Getty Images


Si quieres ver lo que 10 años de Socialismo del Siglo XXI le hace a un país, no necesitas buscar más allá de Venezuela. Desde que Hugo Chávez asumió el poder en 1999, el país comenzó a caminar en un sendero hacia la autodestrucción. Para el 2009, era obvio que la única salida sería la eliminación de Chávez. Cuatro años mas tarde, Venezuela recibió un salvavidas: Chávez falleció. La mayoría de los analistas políticos y económicos al rededor del mundo consideraron que este era un punto de inflexión porque, fuera de bromas, no podría haber nadie peor que Chávez para gobernar a los venezolanos … ¿o lo habría? Hace su ingreso, el sucesor de Chávez: Nicolás Maduro.

Discípulo de Chávez, e idólatra de Castro, Maduro terminó de ponerle los clavos el ataúd de Venezuela. Hay disturbios en las calles, no hay comida, ni medicinas, ni empleo, ni prospectos de trabajo. Cualquier venezolano que pudo, abandono el país convirtiendose en la mayor fuga de capital humano en la historia del país. Todo esto mientras Venezuela ostenta la mayor reserva de petróleo del mundo.

Venezuela parece ser un país que no aprende de sus errores.  Otro país que no aprende de sus errores es Ecuador. Continue reading

Posted in Bonds, Economy, Emerging Markets, Foreign Trade | Tagged , , , , , , , , , , , | Leave a comment

What’s With All the Chips?

Embed from Getty Images


Back in 1995, semiconductors was the play of the town.  If you invested in Intel, Micron or National Semiconductors, you just couldn’t go wrong.  Then came the crisis, prices were reassessed, and the whole system was re-evaluated.  Intel (NASDAQ:INTC) ceased to be a growth stock, started paying a dividend and joined the Dow Jones Industrial Average.

Intel, along with Cisco Systems (NASDAQ:CCO), another casualty of the high valuations of the dot-com era, traded at a very repressed price for the better part of 15 years.  Suddenly, last year they both broke their long-term technical resistance, and began to rise.  The only other Dow component that has recently done a similar feat was Microsoft (NASDAQ:MSFT), and boy! it has gone up. Continue reading

Posted in Stocks | Tagged , , , , , , , | Leave a comment

What is Wrong With Valuations?

Embed from Getty Images

The recent IPO of Dropbox (NASDAQ:DBX), the subsequent rise of 35.6% in its price, and the fact that Dropbox is yet to turn a profit brings me memories of late 1999.  During the dot-com bubble, valuations went berserk: Companies without any profits, or any prospects of profits were trading at outrageous multiples, while profitable companies were also valued at P/Es of several hundreds.  Fast forward 18 years and you may find that times have changed and investors learned their lessons… or did they? Continue reading

Posted in Stocks | Tagged , , , , , , , , , | Leave a comment

The End of an Era

Embed from Getty Images


Several industries have been disrupted by internet commerce over the past two decades. The most prominent casualties were movie rentals and music shops.  The bankruptcy of Blockbuster was the end of an era for video rental stores.  Music shops like HMV have been reduced to the minimum expression, while others have outright closed.  Now the only retail music stores you find are specialized places dealing in vinyl, or old/collectible records.

Everybody blames Amazon (NASDAQ: AMZN), but the truth is there is a lot more convenience in buying a CD online, being able to download the music and listen to it immediately while the CD gets shipped to you, and all of that in the comfort of your own home.

Until recently, toy stores seemed to have an edge.  As a parent of young children, especially those who still can’t communicate properly, finding the perfect Christmas or birthday present can be a daunting task.  Fortunately, our friendly neighborhood Toys’R’Us provided us with a playing field where our kids can go, wander around, play with the toys they like while you just take note of what they liked the most and get it for Christmas.  As they grow, they can explore new toys, and decide which ones they want in their list. Continue reading

Posted in Economy, Stocks | Tagged , , , , , , , , , , , , , | 1 Comment

Ahhh… Tariffs (sigh)

Embed from Getty Images


I grew up in Ecuador, in the 80s, at a time where foreign trade was terribly restricted.  Both imports and exports were controlled by the Central Bank, and there wasn’t a free floating currency.  Heavy tariffs were applied to “protect” local industries, while certain imports were outright banned, because they would result in a flight of foreign currency.

In the early 90s, Neo-liberalism took ahold of the economy, and it was liberalized.  The Sucre was allowed to float – not quite freely, but freeishly: upper and lower bands, with a small gradient that would allow for a maximum and minimum level of devaluation (a phenomenon referred to as ‘a snake in a tube’).  Imports were open, and you could buy a plethora of foreign products.  Although tariffs were still in place, the economy looked a lot more open.

The beauty of free trade:

Anybody who is a free-market advocate such as me, would agree that free trade between countries allows for market forces to set prices, and let supply and demand take care of business.  Some of the benefits of global free trade include: Continue reading

Posted in Commodities, Economy, Foreign Trade | Tagged , , , , , , , | 1 Comment

A Guide to Brexiting

Embed from Getty Images


Here is my guide for any country willing to get out of the EU:

  1. Vote to leave
  2. Leave

It shouldn’t be harder than that.

Of course, there are many things that need to be addresses, but they can be addressed at a later stage. Remember that every single country in the world except those in the EU aren’t in the EU, and they seem to get on very well. Countries as small and far away as Singapore manage to trade with the rest of the world and don’t go around whining because they are not in the EU (or the large trade block du-jour).

The truth is the politicians in the UK don’t want to leave the EU (regardless of what was decided in the referendum) and the politicians, bureaucrats and technocrats of the EU don’t want the UK to leave, so they set out a 2 year negotiation period, now they are thinking of a further few years of transition, and keep making it more complicated than it needs to be. Continue reading

Posted in Economy, Foreign Trade | Tagged , , , , , , , , | Leave a comment

20 Billion, 100 Billion, or more?

Embed from Getty Images

If you read last week’s post: Brexicon, you’d notice I dropped a lot of definitions. Well, today I’d like to elaborate on that of the Divorce deal/settlement. Why divorce? I mean David Cameron wasn’t married to Angela Merkel, they are not deciding how to share custody of their 26 children.  The term divorce implies that there was some kind of marriage of equals, and that it was the UK, and not the remaining 27 that has the largest income and therefore needs to support the party with the lesser income.  That is true neither on an individual, nor on a group level.

The reality is that far away from being a marriage, the true relationship between the UK and the EU is that of a members club.  When you leave a club, you stop paying your dues as of the day in which you leave, and you stop enjoying the benefits of the club. Continue reading

Posted in Economy, Foreign Trade | Tagged , , , , , , , , | Leave a comment


Embed from Getty Images


It’s been a while since my Brexit-Schmexit series in 2016.  Back then, the concept of the UK leaving the EU was as remote as that of President Trump.  Fast forward a couple of years, and we are a bit over 13 months away from Brexit actually happening.

I’d like to revisit some of the current developments; however, I thought I’d devote this post to getting everybody up-to-speed with the new words and phrases coined around Brexit.  Considering that my audience is growing largely outside the UK, I figured a quick refresher won’t do anybody any harm.  So, let’s get to it.

I once read that writers are allowed certain latitude for creating their own words.  Well, here goes mine: Brexicon

Brexicon: /ˈbrɛksɪk(ə)n/

noun: brexicon

  1. The vocabulary of a British member of parliament, member of the public or member of the British or European bureaucracy in regards of the impending British exit from the European Union.
  2. A dictionary of terms regarding directly with Brexit.

I figured, since the Brexit vote in 2016, there have been many Brexit specific words and phrases coined around it, but very few people have stopped and thought about what they really mean, and why where they said in the first place.  Let’s look into some of the most frequently used: Continue reading

Posted in Economy, Foreign Trade | Tagged , , , , , , , , | Leave a comment