The Daily Alpha - 09.24.15

The Daily Alpha - 09.24.15

Garrett Baldwin

Here are your five quotes of the day on Alternative Investment and the Global Markets

“Mauricio Cardenas [Minister of Finance and Public Credit of Colombia] was so sure that the 2015 budget was created with the assumption that oil would not drop below $100 a barrel.”

Many people don’t think of the Colombian peso as a petrocurrency. Given that Colombia is 19th in the world in terms of oil production, it’s 1 million barrels per day makes a very little scratch in terms of global demand. However, oil and gas shipments comprise roughly 58% of the nation’s exports.

And like all major producers, Colombian officials anticipated that oil prices would remain above $100 per barrel. They built their annual budgets, welfare systems, infrastructure spending, and social programs on the expectations that their energy producers would flood the government coffers.

Then came along U.S. shale production, and a battle between OPEC and non-member nations.

Around the world, national budgets are under water. Libya needs oil prices to be at more than $180 just to breakeven. Iran’s breakeven price sits around $130. 

Venezuela, which is currently experiencing inflation, goods shortages, and all the other wonders of socialism, requires oil prices to be at $120. While the nation continues to burn, it’s ignorant President can’t wrap his mind around supply and demand metrics, and continues to tell his people that falling oil prices are a conspiracy by the United States to punish Vladimir Putin.

Oh, and speaking of Putin, Russia requires oil prices above $100 to afford its massive budget, 50% of which relies on income from the oil and gas sector.

We’re only in the second inning on this story. Falling oil prices are the most important economic story happening around the world right now. This could have serious geopolitical consequences. We could see unrest in producer nations, eroding confidence in leadership, and potentially the failure of social safety nets.

It’s clear that leaders understand the consequences.

Today, Colombia announced plans to create new incentives for oil producers to develop in their nation to help offset the decline in prices. 

But it gets worse – unless new development comes and comes fast – the nation will run out of oil by 2020. For a nation that relies on the energy sector as such a large share of its export portfolio, the feel good story about Colombia’s economic turnaround from the years of Pablo Escobar could come to an end.

"I don't want to be attached to that person."

By now the entire nation knows Martin Shkreli, a young man who decided to purchase a 62-year-old drug called Daraprim and jacked up the price from from $13.50 to $750 per tablet.

The hedge fund founder and CEO of Turing Pharmaceuticals managed to do something that not even Hillary Clinton was able to do this week with her opposition to the Keystone Pipeline.

He got on the front page of the internet during the Pope’s first visit to the United States.

Shkeli hasn’t handled the public relations very well. And the backlash has even spread into other businesses that he has backed with his money. It turns out that he’s a music producer as well.

The front man of a Philadelphia-based rockband called. Nothing has said that Shkeli better atone for his actions…by giving away the drug for free for the next five years. Otherwise, the band will walk away from its recording contract.

But it gets worse than that. The most hated CEO in America has allegedly been hit by hackers, pictured below.

And they’ve exposed all of his public contact information, according to CNN Money.           

"Firms must adopt written policies to protect their clients' private information and they need to anticipate potential cybersecurity events and have clear procedures in place rather than waiting to react once a breach occurs."

Speaking of hackers… The Securities Exchange Commission announced it charged an investment adviser with failure to adopt the proper security policies prior to a major breach of personally identifiable information (PII). 

A 2013 attack R.T. Jones Capital Equities Management exposed the information of 100,000 individuals. The company had completely failed to adopt written policies and procedures designed to protect personal data. The never conducted risk assessments. They didn’t have a response plan for attacks, and they didn’t even have a firewall.

Cyber security is fast becoming the most important issue of the 21st century economy. In just the last week alone, Apple’s digital store was breached by malware developers and the U.S. government had 5.6 million fingerprints stolen.

That’s why Modern Trader went deep into the world of hacking this month to discover How Hackers Think, why any company and every worker is at risk, and what companies must do right now to stave off this ever-growing threat.

Read the cover story, Assume Breach, right here

“We’ve been fairly vocal about our concerns with the BitLicense, especially in its initial incarnation.”

Despite concerns from some regulators, New York regulators approved the first license to a company dealing in the virtual currency space. 

It’s big news, especially for Bitcoin enthusiasts. The timing is also perfect because Modern Trader will be focusing its feature editorial space on the future of bitcoin. We sat down with some of the leading minds in the space, and they gave us the inside scoop on where the profits can be made on this growing industry.

Be sure to visit Moderntrader.com to learn how you can get access to these stories and more long before it hits newsstands.

"What is very good, and what I look at, at the moment, is the net inflows that we have in what we call the future platforms."

Finally, It looks like Bill Gross was wrong again. 

One year after his divorce with Pimco, the company that he founded, Gross’ new mutual fund at Janus Capital sits at negative 2.5%.

Meanwhile, investors who stayed with the Pimco Total Return fund remain up 1.7%.

Things haven’t gone as planned.

Now, he’s banging on the desk demanding that the Fed raise interest rates. Following his anti-equity calls over the last four years, it’s clear that ZIRP is no friend of Bill Gross. 

About the Author

Garrett Baldwin is the Managing Editor of the Alpha Pages and the Features Editor of Modern Trader. He has covered the financial markets since the onset of the RBS collapse in 2007. An author and Baltimore native, he earned a BS in journalism from the Medill School at Northwestern University. He holds an MA in Economic Policy (Security Studies) from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University and will finish an MBA in finance from Indiana University in 2015. Twitter: @garrettbaldwin, @alphaeditors, @TheAlphaPages, Sound Off: Editorial@alphapages.com


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