by | December 3, 2014 · 1:59 pm

Digital Ally up +45,2% yesterday!

Digital Ally skyrocketed yesterday, up +45,2%. What a jump! The market cap was just $28M before the big jump, but now it`s up $40M. This big jump comes after the White House announced it`s providing $75M in funding for the purchase of 50K body cameras by U.S police departments. There are currently 750K police officers in the U.S.

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The White House`s program provides matching funds for local and state agencies buying body cameras, and that`s a similar program for vests which has led to over 1,1M vest purchases. Police Foundation president Jim Bueermann said; “In five years, this will be ubiquitous. It will be more unusual to see officers not wearing a body cam than wearing one”.

The main reason for all this is the death of Michal Brown in Ferguson, Missouri. It is a tragedy. A young teenager died. Shot by a police officer, and whatever your opinion, the riots and destruction that followed the grand jury`s descision not to indict the police officer who shot him have ravaged businesses and upended lives.

The result is that tensions between law enforcement officials and the communities they serve are higher than they`ve been in decades. Whatever you belive happened to Michael Brown when he was killed, it would be without a doubt that the evidence would be strengthened if there were a video camera on the officer.

President Obama has proposed a $263 million solution over the next three years, and it`s just a matter of time before we see police officers and other law enforcement personnel in the U.S fitting cameras.

What a great idea!

There will be a radical reduction in the use of police force and citizen complaints against the police when you have video from the event to prove the evidence. Police officers and other professionals will be more polite when they know that the video-camera is recording.

What kind of fool can be against surveillance like that? No one I guess, and that`s why investors have reacted quickly to the news right now.

Another company that can profit from this is Taser (TASR), which is known for their taser guns. The non-lethal weapons that police use to incapacitate suspects. It accounts for over 90% of the firm`s revenue.

But they has another business, and that`s police cameras. The good part of this story is that their business includes independent cloud storage of footage and data collected on cameras. A third-party will store the data, and that will reduce the cost, and it will reduce suspicions that when police misbehave, the evidence will «mysteriously» get lost.

It seems like an expensive stock as it trades at over 60 times earnings, but this it is an exception and could be worth it. There`s plenty of room for the stock to rise.

Taser is one of the few number of companies who will benefit from this trend. That company looks better than Digital Ally with better market position and a better management.

Another large players among Digital Ally is L-3 Communications (LLL). They are too big for their stocks to fully benefit, so Taser is the only company out there that`s already worked through difficult issues like privacy and data security concerns. What about GoPro? They know what action camera is…..

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | December 1, 2014 · 3:30 pm

Switzerland said no to Gold

The central banks are holding the gold prices up, and without their buying power the prices would probably trade lower, so the central banks are one of the greatest demand components for the gold prices.

Gold

Yesterday, Switzerland could boost the gold price, but they didn`t. Switzerland had a referendum yesterday, and voters rejected a referendum requiring the Swiss National Bank to hold 20% of its 520 bullion franc balance sheet in Gold. Switzerland already have the worlds highest amount of bullion per capita.

If they voted yes, they would have to purchase at least 1,500 metric tons of gold over the next five years, and could have helped the gold price to skyrocket. Two third of the population in Switzerland voted no, and with lower oil prices, and imminent raising rates in the U.S, the demand for gold is declining as a hedge against inflation.

There was some support for the gold right before the vote, and there is some pressure on gold now. Right now, the gold is trading at $1,171,00 and is down followed by silver which is plummeting at the moment. The outlook for gold is not looking good right now, and signs of dangerous deflation have also made the gold less attractive.

Gold is also a reliable safety net that a country can have against an impending crises or a currency meltdown, but that is not the scenario right now, because the U.S dollar is increasing. The U.S dollar has been your safe heaven for months, not the gold which I talked about months ago.

The investor sentiment is negative and gold prices are once again headed for the trading area at $1,150, which is a support level that have been in focus for a while now.

It shouldn`t be like that, because what we see now is massive quantitative easing, Ebola, turmoil in the Middle East and rebellion in Ukraine. This is normally enough to make the gold prices to skyrocket, but not this time.

The question is when the gold price will start to climb, not if. Unfortunately, I don`t think that the price will increase next week or in the near future. I like gold, but I can`t hide the fact that the gold has been in a bear market for years.

We are at levels putting many producers in a dangerous zone which is below break-even. We know the demand for gold is there. Huge demand from China and India, but more important is to look at the supply.

You buy gold when there`s less supply than demand. You buy gold when the U.S dollar and other currencies are doomed to lose value due to inflation. You buy gold when the money printing machine is heating up, and you buy gold when the debt is increasing.

This is the key. Take a look at the supply, and you know that this will change in the future. It is the opposite of what we see in the oil market right now. The oil shale revolution added billion of barrels of supply to the oil market that have pushed the oil prices down.

The supply in the gold market will not increase. Many gold miners will face problems when the gold price is declining and it is too expensive to start a new mine which cost hundreds of millions. I will look for bold bullion, gold ETF and quality gold stocks as a solid play in the future. Bearish in a short-term, bullish in a long run.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 26, 2014 · 11:01 pm

OPEC meeting in Vienna on thursday

OPEC is having a very important meeting on thursday and that can move the oil markets. The 12-member group is bickering over who should cut oil output, and by how much in order to pump up the prices. The meeting in Vienna is the groups most watched session in many years.

gspen

The U.S oil shale revolution is a game changer. (Read my article titled; American shale revolution – from January 27, 2014). The oil supply have increased and the oil prices is declining, and that have opened up the market. Countries that once had to submit to OPEC`s prices can now look for other suppliers. The oil king is about to lose.

China has for a long time been at the mercy of OPEC for twenty years, and the economic giant imports about 7 million barrels of oil per day, while the U.S imports about 8 million barrels of oil per day.

China`s demand for oil will continue to increase as its population is growing and so are the demand for oil-related items such as cars, plane traffic and motorcycles. As the U.S oil shale production makes the country more self-reliant, China has become more important to OPEC.

OPEC has a monopoly on the market and China pay about 10% more for the oil than the market price. As the oil prices plunge, many other suppliers in other countries will vie to undercut that monopoly. OPEC is slowly losing its second biggest customer as China now can pursue oil from countries outside of OPEC such as Brazil, Venezuela, Colombia and some countries in Africa.

This is just the beginning. China bought a lot of oil from Colombia this year, and China Petroleum and Chemical Corp (SNP) processed oil from Brazil`s Ostra field for the first time earlier this year. OPEC`s shipment to China fell 11% and the average cost per barrel was 10% lower.

China`s oil production and oil refining companies will benefit from the changing import sources. They`re already bumping up their refining capacity and shooting for a 20% increase in the next 5 years, and there`s a little doubt that China will purchase more crude oil from Russia as the West deepens their economic sanctions. The sanctions on Russia have led to increase China`s purchases from its communist brethren by about 60% in September.

WTIC

The energy sector is the worst performing sector in the S&P 500 this year, but the shift started years ago, so what we see today should not be a surprise for some one. It started in 2008 when Crude oil peaked at $147 a barrel, but the oil price have plummeted to about $73 a barrel now.

The energy sector has been the leading sector since 2000, but today its the worst performing sector beaten by the health care sector. I talked about the health care sector at the beginning of this year and I said I expected that sector to be a great investment opportunity.

Read my article from January 8, 2014, titled; Health-care bull. I told you to keep an eye on the health-care sector. I also said that the oil price is a risky bet, and that the oil price can plunge and Opec can face huge problems.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 24, 2014 · 8:46 pm

Airbnb IPO

Sharing economy has become very popular and companies like Uber and Airbnb has caused a paradigm shift in the travel business, and Airbnb are now planning to go public. That can happen as soon as next year.

airbnb

The privately owned company Airbnb is founded in 2008 by Brian Chesky (CEO), Joe Gebbia and Nathan Blecharczyk. The firm is headquartered in San Francisco, California.

Airbnb is a website for people to rent out lodging. Users of the site must register and create a personal online profile before using the site. Every property is associated with a host whose profile includes recommendations by other users, reviews by previous guests, as well as a response rating and private messaging system.

Airbnb have just completed its latest round of fundraising, giving it a valuation of more than $10 billion. The company serves 1 million guests each month, with over 800,000 listings in more than 190 countries.

As of July 2011, the company had raised $119,8 million in venture funding from different partners. In April 2014, Airbnb closed on an investment of $450 million by TPG Capital at a valuation of approximately $10 billion.

Revenue is expected to reach as much as $1 billion in 2015, and that`s a big jump from $250 million in 2013. Airbnb could be the worlds second largest «hotel» company if it surpasses Starwood and Marriott, trailing only Hilton. It`s already bigger than Wyndham and Hyatt hotel chains with their valuation of $10 billion.

Airbnb is growing. In May 2011, they acquired a German competitor, Accoleo. That`s their fist international Airbnb office in Hamburg. In October same year, they established its second international office in London.

In 2012, they opened six more offices in cities like Paris, Milan, Barcelona, Moscow, Sao Paulo and Copenhagen. Their European headquarters would be located in Dublin. In 2012, they said they had focus on Australia, the second largest Airbnb market behind the United States, as well as Thailand and Indonesia.

They have earlier announced its strategy to move more aggressively into the Asian market with the launch of their newest headquarers in Singapore. The company`s goal is to acquire an additional 2 million properties within the continent.

I have earlier talked about Uber and their challenges. Some people say their business is illegal and so is it about Airbnb. Other people say their business model has raised legal concerns. Especially in New York, where state Attorney General Eric Schnederman launched a probe into the business. He suggest that more than half of Airbnb`s New York listings could be illegal.

Airbnb still belive in their business model and continue to work on an IPO.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 21, 2014 · 8:40 pm

High-yield bonds vs the stock market

High-yield bonds became very popular in the 1980`s and is better known as junk bonds, and that is an interesting investment which is widely used for corporate takeovers. It became popular because high-yield bonds outperformed traditional bonds on average.

30 years earlier (1950`s), high-yield bonds were fallen angels. Companies that had issued bonds when they were healthy was falling on hard times, and high-yield investors were buying bonds in turnarounds.

High-yield bonds were financed unproven businesses in the 1980`s, and was issued for speculation, and now those bonds are issued by highly leveraged companies. High-yield bonds on the market today is with a high degree of variety, and they trend with the stock market, but can act like bonds other times.

To show this, I have printed out iShares iBoxx $ High Yield Corporate Bond (HYG) with SPDR S&P 500 (SPY).

Chart

The Yield line is inverted. If yields on corporate bonds rise, then stock prices will fall, and in times when money leaves corporate bonds, it can flight to safety, which sometimes could be Treasuries. That money would also leave stocks. That means stocks can go up in periods of flat or rising yields. The key to this anomaly is risk.

This has happened before. During periods of rising risk appetite among investors. We saw it in 1998, the dot-com boom and during the subprime boom. Two of them were the building of bubbles, but all of them correlated with times when the investors hunger for risk rose.

It happens because money leaves bonds during periods of risk appetite and goes into stocks, which means stocks don`t fall when corporate bonds yields rise. The stock market is booming because investors aren`t afraid to take reasonable risks. The money flows into stocks, not Treasuries. Yields are 50% greater compared to 10-year Treasuries.

HYG is not acting like stocks but it`s not acting like a bond investment either. SPY is moving higher while HYG is declining. It was a correlation before 2011, but after that it all changed. The above should be on every investors mind. Many investors said the rally in junk-rated bonds is in a bubble or close to one, and HYG ETF and the SPX should be in the forefront of Equity Traders minds.

Some say that high-yield isn`t an good opportunity anymore. Watch out for this chart and look out for RS of HYG to SPY for signals of a market top. Look out for HYG outperformance. Weakness in equities is often preceded by a loss of momentum in credit markets. HYG need to stabilize. If not, equities will tumble. The disconnect between stocks and bonds probably means more pain ahead. Will the junk bond bubble burst, or stocks tumble? I`m exited about the end of the trading year. China cut the rate today, and the U.S markets are all up.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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