Trump Update

What’s coming?

1. Hope Hicks. She is likely talking with Mueller’s team right now. If I had to predict, I think she will be charged with obstruction of justice for lying to the FBI, and conspiracy against the United States of America, or as an accessory after the fact to this charge, for participating in the development of the cover story for the June, 2016 meeting between Kushner, Manafort, Trump Jr., and the Russians. She was Trump’s confidant during this entire period of time, and may be able to link Trump to the June meeting. She likely has many other shocking tidbits to reveal.

2. Firings. Expect a few members of Mueller’s team to be fired by Sessions for various reasons – they will all be blamed for being Clinton stooges. They can’t fire Mueller himself, but they can whittle down his bench strength.

3. Sessions. He will resign soon. He should have resigned months ago.

4. A Second Special Prosecutor. Another one will be appointed to investigate the Clintons, their foundation, the Uranium One scandal, her e-mails, etc., in order to try to deflect from the Mueller investigation. There is much for the Clintons to answer for…but this person will be authorized to look into the activities of Obama’s White House as well.

5. Trump’s Lawyers. It is slowly occurring to Trump that he is losing “the lawyer battle”. His normal response to situations like this is to just fire people. You will see a change in his personal legal advisors, with one or two going and three or four joining.

6. Other Diversions. Trump will try to change the content of the news cycle. Will it be North Korea, Euro-bashing, NAFTA lies, baiting sports figures? We shall see.

7. Fox News. We will learn that the White House and Fox News have been collaborating on stories, with Fox News perhaps even getting talking points from Trump’s team.

Putin Wins!

OMG! It looks like Putin won another election! I didn't see that one coming! And with 74% of the vote!

Вы не можете оставить хорошего тирана!

Addicted to Public Debt

After ten years of the lowest interest rates in recorded human history, how do we break the worldwide addiction to leverage? 

The Need to Deal with Public Debt: Many countries in the West are within a hair's breadth of insolvency. The next recession could put them over the brink - picture ten to twenty countries in the position of Greece, where creditors dictate public policy. 

If everyone is in trouble at the same time, there may be no one who can act as a lender of last resort to limit the damage in the next downturn - welcome to The Great Depression, Redux. 

Here are a few ideas for how we may be able to deal with this....

a) All Indebted Countries Run Surpluses: Surpluses and paying off debt must become the norm. If not, then those countries that continue on the road to financial ruin may be barred from the relief outlined below. 

Note - Keynes is not the answer for Keynes run amok. And yes, in an era when Keynes is King, I know that suggesting surpluses would widely be considered absolute madness. "Fool!! How can an economy run if it is not based in large part on perpetual borrowing from the future!?  

b) Intra-Country Debt Forgiveness: Where public debt of one country is held by private and public institutions and individuals in another country, and where the public and private institutions and individuals in that second country hold public debt issued by that first country, these countries should each forgive the debt of the other until one country holds no debt in the other. This could wipe out trillions of dollars worth of debt, worldwide. 

Yes, I realize that thus would be a massive gift to the less credit-worthy countries from the more credit-worthy ones - consider Germany and Italy swapping debt where German debt is obviously far more valuable. If the alternative is default - and it is - I would suggest this should be palatable, especially if running a surplus is a condition for this type of relief.

A swap like this would require the acquisition of public debt in private hands. OK, this would not simply wipe out debt! 

Rather than pay these debt holders outright, they could be issued perpetual bonds of their home country with coupon rates equal to the rates on the bonds that they would have been paid on the debt they were forced to give up, but with no requirement to pay the base principal amount owing on the bonds....see immediately below. 

c) Conversion to Perpetual Bonds: Even with a swap as proposed above, it is likely that for many nations their existing debt is so large that it cannot be paid. The only option for dealing with this, other than mass default, is to convert part or all existing government debt to "perpetual bonds", where governments will pay the coupon rates of interest yearly, but will not have to pay the principal until they have the financial wherewithal to do so. 

The fact is that there is no intention to pay the principal on almost all pubic sector debt now anyway. This scheme would accurately reflect the current political/financial situation and formalize the fact that when bonds come due, countries just issue more bonds and borrow more cash to pay for them. Instead of doing that, we should accept that governments will not have to pay at all, as long as the interest is paid. The effect of this should be to partially address the unhealthy cycle of borrowing only in order to cover past debts.

d) New Debt: Run balance budgets!? OK, many countries will not be able to move to surpluses in the short run. Any new borrowing should therefore be internal only. If your people are willing borrow from themselves for a short while, then fair enough. 

e) That Other Option: Or...we could just default on all debt everywhere, and start again! This was the norm every fifty years in the Middle Ages. 

What could possibly go wrong?

March Break!

Friday Fracas!

The Markets: Who is buying this market? Trump is about to trigger an international trade war; both the European and Japanese central banks are planning to end their versions of QE; all while interest rates are on the rise, everywhere. Stock markets should be tanking worldwide. They will. Stay tuned.

Trump!: Hope Hicks walked out of a nine hour grilling by the Senate committee looking into possible collusion, and resigned. She had previously met with the FBI to answer their many questions, and has openly admitted to telling “little white lies” on behalf of Trump. She would only walk out of a meeting and do something like immediately resign if she strongly suspected that she was about to be indicted and she did not want to be part of the administration when that happens. 

Hicks worked with Trump personally to craft the cover story for the June, 2016 meeting between Trump Jr., Kushner and Manafort and a purported representative of the Russian state, the point of which was to subvert a US presidential election. Hmmm…can you say “accessory after the fact to a conspiracy”? If anyone will sing like a canary, it may be a woman who apparently kept detailed notes of her entire time with Trump. Get used to Hope Hicks. You will be hearing about this person in her many different guises for the next 25 years.

Blue Jays: They are slightly under .500 in Spring training, but the fact is that they do look pretty good! Martin and Travis look healthy. The bullpen looks excellent. Granderson can contribute. Sanchez seems to be back to form, and Happ and Estrada also look very good. If they stay healthy, Stoman’s shoulder issue is a “nothing burger”, and Garcia can pitch 200 innings to even a 4.25 ERA, then this team should at least be competitive – maybe third in the AL East, with a shot at a second wild card? OMG - I think I am actually optimistic! Go Jays Go!

Ontario: Elliott will take the PC leadership 54% to Ford’s 46% this weekend. If this leadership race had dragged on for even another week, Ford would have signed up enough people to win. He will not run to be an MPP – it is “Premier or bust” for this clown. Elliott will then get a majority government in June, with the following results…PC – 69 seats (46%); NDP – 31 seats (29%); Liberals –25 seats (23%). Wynne will be on the board of directors of Ontario Power Generation by the end of the year making six figures.

Happy Friday!

Day Job!

Post-PDAC 2018 Update.

The stuff I sold first thing this am is up 40% today.  The stuff I bought in its place is down 20%.

I'm holding on to my day job.

PDAC, 2018

I attended the Prospector and Developers Association Convention in Toronto again this year. Observations follow.

It was busy, and people were generally upbeat. I talked to fewer companies this year, but my sense was that more of them were financed and moving ahead with their projects. Only one had truly disturbing news - they were dumped a few minutes ago.

As always, there was some desperation, and I heard a few tall tales as well. 

One non-listed company expressed a preference to do all financing with hundreds of small shareholders rather the "Bay Street Boys" and those "Vancouver Promoters". 

Hmmm....so rather than have a professional promoter raise tens of millions of dollars for an IPO, taking a 5% - 7% fee, this fellow would rather manage the expectations of hundreds of individual shareholders, and run this company like 50 Amish dudes at a barn raising. "Don't try to be cute! Just drill next to the old Gold mine, English!" 

OK, maybe even he believes this tale, or maybe he has already approached the money men, and they said "not on your life!". I have their name. When they list, I'll be a believer.

Another told a tale of the $20 Million that lenders were lining up to give him for a mill to process Cobalt - they were just comparing terms. He had previously built a mill, and one should be up and running in less than a year.  

All good, but then he mentioned that for the first three years the mill would process Gold-bearing ore from Quebec until the debt to build the mill had been paid off.  

WTF?

Why build a mill to process Cobalt if you immediately use it to process Gold for three years? Hmm...maybe you're not ready to mine Cobalt? 

And if many lenders just can't wait to lend $20 Million for this rock solid investment...well...why haven't they lent the money yet? 

Maybe this is 100% legitimate. Two close friends are in this company. I'll pass on my concerns. After chatting with them, I may even buy some!

Then there were my companies.

One has excellent silver properties in Nevada, but they don't have access to a supply of water necessary for drilling. The issue of water access is subject to litigation, so they may just drill a water hole. 

I talked to the IR lady. She was earnest, and I felt their pain. I was a litigator in a previous life, and know how long litigation can take. I have also been to Nevada - water is a tad hard to come by there even with a drill. As noted, I dumped the position this am.

Another of my companies had an empty booth. No displays...no literature available...no maps. They explained that Canada Customs does not work on Sundays, so they could not get their material in from Nevada. I noticed that everyone else, including companies from Africa, Chile and Mexico had their booths ready.  

Here is the website for Canada Customs at Pearson International. You'll notice that they are open 24 hours a day, 7 days a week.

https://www.cbsa-asfc.gc.ca/do-rb/offices-bureaux/853-eng.html

I have a buddy back home who has a position in this particular company as well. I want to chat with him before dumping. If a management team can't set up a booth, how the hell can they run a mine?

I did manage to walk through Toronto, and to marvel at the changes since I moved to Ottawa in 1995. 

The condos have sprouted like so many raised hands at a memorial for Kim Jong il...higher and higher, like their lives depended on it!

Does anyone in Toronto have a coffee maker at home? There is now a coffee shop on virtually every single street corner.

The money was swamping out the poverty for a while - Yonge Street was quickly being converted from head shops to condo heaven, but I have noticed that the grime, and no doubt the crime, is slowly creeping back in. You can't keep a bad man down for long!

Finally, I took the train. 

Long ago, when I was in university, I would go to the "Choo-Choos" pub in the train station, as it was the only pub that was open on Sundays in Toronto. I have not had a drink in over two decades now, but I decided to take a stroll down what I thought would be something akin to Bad Memory Lane to see how the old, sad pub is doing. The pub is gone. Today, it is The Detox Market. How appropriate.

I saw old friends and family, and was glad to have done so...the primary reason for my trips!

Until next year!