England has kept the gains from Trading and Investment Banking... EU had proposed for London to allow tax on these transactions depending on where they landed. England said no!. EU said GO!
My reading is that England will either be pushed out 100% . Just like banking in West cannot go to China to do an IPO of their company in China. Or England will have to pay FEES to EU...
Guess what ? England will have to fold. Period.
The sooner they come to a working arrangment, the sooner the issue of immegration will find a resiolution in EU contries.
Meanwhile buy US banks who know can win deals over the EU and ENgland Investment Banking banks.
Second, every unit of currency will be needed to restart the world economy. So buying dead , non-productive assets ( Gold an LAND, or digging for oil to leave it under the ground ...) will not pay current earnings. Productive assets ( generating EARNINGS) will be bought more and more. So more M&A in those segments. Less money under the mattress since bank is paying negative interest. Less INFLATION : no need to drive up Gold pile.
This may take another 10 years for BRexit Smooth Sailing!
(Canada took 7 years in calm waters! )
England needs to produce REVENUES
to SHARE WITH EU countries ( via TAX on transactions).
They cannot afford to stash their currency in NON-PRODUCING ASSETS ( like GOLD).
Wake up and see that the WORLD cannot longer HIDE or expect to DO NOTHING to get paid with interest rates, or appreciation of non-producing assets.
If you have oil under-ground, pump it and sell it! Otherwise Technology will eat your non-production with sun, wind.
If you have money, work it! No more 'INCOME from interest rates' for doping nothing. Or else, eat up slowly.
If you have CURRENCY, place it in production or else watch it go down!
If you have NON-PRODUCING ASSETS( like Gold), move out of it or back into the Ground until next 'panic'
Sentiment: Strong Sell
Gold is just a heavy metal with negative rates in this environment.
So what if England has to share the spoil of invetment banking with other EU contries!
Greedy is what what about the SCHEDULING of the Referendum vote as a NEGOTIATION position. then some FOOL uses xenophobic reasons to win the vote!
THEN they had no plan, and NO LEGS to negotiate!
LOOSERS are loosing their PANTS.
Sell non-producing assets, buy PRODUCING ASSETS.
Gold is just a negative return on cash !
Andersen, a common adjustment when you folks do the calc...
o use cash price on both sides ( corn and ethanol)... Not cash rpice on one side and next month future price on the other side of the equation
o if you are projecting next quarter trends, then use future prices on both sides as a quide( not absolute sinceeach company chooses to be in, out or tiing of contracting futures).
o When using ' cash corn price', remember basis is local to where buyer is... big difference between LOCAL cash price and on avg quoted future price ( next month price)
Good for PEIX who has the highest corn basis of all the ethanol company... due being out west versus mid-west/cornbelt. So this is a key variable for them. Good when corn prices are headed down or low with transportation cost stable.
Corn aplenty due to 94+mil acres planted and 2Q stock(in bins) higher than forecast.
Happy summer driving!
2Q Margins positive better than Q1.
DDG much higher
Inventory much better
Can they get a refinance package (lower rates) to put cherry on the cake?
K needed for refinance package.
To Keep refinance COST out of current quarter, only report deal early in next quarter, although already negotiated.
Try to record Refinance cost when margins and volume are best as to absorb cost.
Financing Management 101
( not every 8K is prep for refinance package, but every refinance package requires official numbers)
FMV at option grant date is used to estabkish Capital Gains or Loss when and if the opion is excersized.
So on Day 1 of grant FMV is $10. If N years later you actually get the stock ( become vested) and the day you sell it at vakue Y, then your gain or loss is based on $10.
In the case of Merger, you get Vested due an event. . Gain or Loss is based on the FMV when option was granted.
Cas received h is still based on current market price at time of SELLING ... ( not at time of event trigerring Vesting))
Yeap, interest rates are to stay low for a long time. The window for PEIX to write bonds and to restructure its debt ( from Buying Aventine) will stay open wider and longer. The RATES to be paid by PEIX will look SWEEEET to the banks vs alternatives.
See article on Vietnam buying DDG to ffed the Hogs to be bought by China!
The other isde of the coin, export is taking ethanol fuel away in volume.
Corn oil used for buifuel mix
Industry running on all cylinders
Ok, ok, ok.... day after MARKET reaction... all stocks move one way to finance the bets going wild. Need for cash cause all stokcs to be put on the block to raise cash. But what next for PEIX?
PEIX next BIG driver is the WINDOW TO RESTRUICTURE the debt that it holds in order to LOWER its cost, raise earnings and P/E.
How does BREXIT HELP or HURT PEIX specifically?
o with interest rates NOW staying lower for longer, PEIX refinancing package LOOKS BETTER
o It happens just when Demand is high ( summer), Industry has production under control
o Export has the potential to INCREASE, thus keep price higher. Why will export increase? Sugarcane is suffering from dry weather in Brazil, keeping US export prospect up.
o EU took down Ethanol barrier against US producers.
From 1Q conference call on May 12:
" Following the restart of isobutanol production in March, Gevo has produced approximately 50 thousand gallons of isobutanol. In addition, Gevo’s iDGsTM, or the distiller grains produced as part of the isobutanol process, are being blended with the distiller grains coming from the ethanol side of the plant, and being sold on par with traditional ethanol distiller grains."
Plant operations in 1Q was at a lost, so was the industry.
2Q slightly better
But company is burning cash at a rate of $2.5M+
No cash to expand,
Not enough Licensing business to grow.
Converting Debt to equity dilute shares
Only way to keep R&D going is to issue new shares, diluting further.
Need a stronger partner to adopt cost of ISO.
Sentiment: Strong Sell
The nominal price per gallon heavily depends on the cost of the debt assumed with the cash value.
The higher the interest rate being assumed, higher cost per gallon paid.
For PEIX, no one will buy PEIX with this high a debt load at high rate.
You are looking back AGAIN... when prices of ethanol were LOWER than gasoline.
Check prices today and look forward!
Back in January, with inventpry ramping up, and oil going down, I called 1Q - going down ! Surprise, I was right/ 2Q is tight but will break even with DDG saving the day, corn is holding dow crush margin to be FLAT!
Volume production is good. But export is done way ahead of daily prices... so low 1Q margins will impact 2Q profits.
Industry will get by. but no run away gains!
Corn price trends?
If you were a farmer, had a probable dry period ahead (LaNina), would you sell your inventory cheap?
Whoever does not have the cash to secure corn supply now is risking a crunch later:
corn up, oil steady to down...
Good thing DDGS is also softening the blow... but is it enough if corn explodes? For expensive DDGS, there is natural grazing, just in the middle of crunch.
Yeap 10cents. was it 14c before when LCFS was 124? Just to keep track here.