Subsidizing the destruction of Can/AM manufacturing – the role of the Post Office

A bold statement, but it’s true.  The thought came to me after ordering a product from Ebay that was to be delivered from China with “FREE SHIPPING.”  How is it possible, I wondered, for a company to produce a product and absorb the cost of shipping it all the way fro China to Canada and still make a profit.  The answer is that they really weren’t absorbing the cost of shipping — they had an “edge” that our manufacturers did not.

The way international mail delivery works is that the domestic post office charges what it charges to mail goods and the receiving jurisdiction simply delivers them without payment as the cost/hassle of an accounting would be prohibitive and stifle international communication and trade.  What that means is that the cost for a Canadian or American to mail a package to China can be hundred times more than the cost of mailing that same package back along the same route, but this time from China to Canada and the U.S.  In short, our Post Offices and the international understandings on mail delivery are undermining our manufacturing base by subsidizing foreign competitors who can ship products from China for less than it would cost a Canadian or American manufacturer to ship the same product within their own country.

You would think this would be an Election issue, but I’m still waiting for delivery on that.


The Peak in Bonds: Sell Your Government Debt

If there was any doubt that we are in a bubble in Government debt, that was removed last week when Italy was able to sell a 50-year Bond on the assumption that the European Central Bank would soon add long bonds to its misguided buying spree.

Buyers of these bonds have no more faith than anyone else in the Italian or EU economy; but, are instead betting that they can sell these bonds back to the ECB for a profit. To make bets of that size on something that, on its face, looks to be a farcical investment would only done if someone in the ECB advised them of the ECB’s future bond repurchase schemes — “inside information” if you will at the expense of EU taxpayers.

All financial bubbles pop and this one in Government debt will be no different. While you can wait for the last dollar at its top (Ireland’s 100-year bond sale scheduled for March might be it), prudence would dictate that you get out while you can and move those funds to the only vehicle that can absorb the outflow of capital when it does pop — the US Stock Market.

An NFL bet where one piece of non-public information — a response to weather — could be a license to print money

On Sunday afternoon the Miami Dolphins are scheduled to play the Tennessee Titans in Miami. As I write, the betting lines show the Dolphins as a  -3.5 home favorite. What is not yet reflected in the betting lines, however, is that the City of Miami and surrounding area is a likely landing spot for a Category 4 hurricane.  Depending on the strength of the hurricane, the game will either go ahead in Miami as planned on Sunday, be moved from Sunday to Monday in Miami, or remain on Sunday; but, be moved to Tennessee.

NFL betting lines, generally, award 3 points to a home team; regardless, of how good the team is or who their opponents.  A line that shows Miami as a -.3.5 favorite at home would likely see them become  a +3 underdog on the road in Tennessee which is a near 6 point swing.  To professional sports bettors, such a move would allow them an incredible opportunity to profit with zero risk.  A bettor that knew with certainty that the game would involve a switch of home venues would bet Tennessee today at +3.5 based on the assumption that the game will be in Miami and then, once the game is move to Tennessee, bet Miami at near +3 giving him a “middle” of at least 6 points.  Middle bets allow a bettor — if the margin of victory by either teams falls into that gap — to GUARANTEE a win of both bets while making losing both bets IMPOSSIBLE.

In short, the final decision on where and when the Dolphins and Titans’ game will be played in response to the impact of Hurricane Mathew is incredibly valuable in the right hands (tens of millions of dollars valuable). Look for swings in the betting lines on this game just before the NFL’s decision is publicly announced on where and when the game is to be played.  Such line moves will demonstrate to those that know how to interpret them that the decision leaked beforehand and that huge financial bets were made with that “inside information” in hand.

Still no decisions have been made about Titans-Dolphins game

[October 7 Note: Fortunately, Hurricane Mathew did not have the impact predicted and the game will remain in Miami for Sunday afternoon. The line in the Carolina/Tampa game did have such a move as discussed above when it was announced that Carolina’s QB who had been under the NFL concussion protocol would not be playing on Monday.  With that news, the line went from -7 Friday morning to -4, a 3-point opportunity to middle for all those that bet Tampa earlier in the week with such a possibility in mind.]

“So What’s Wrong with Insider Trading Anyway?”

Where once it was far easier to obtain a conviction for insider trading in the US than in Canada (unfortunately, about the same time that I was charged in both countries), recent Court decisions have left the American jurisdiction in a state of flux and in need of guidance.  The US Supreme Court is expected to do just that as it hears arguments this week and later rules in the case of Salman v. United States.

Here’s an easy to read overview on the current state of “lawlessness” and the implications for the capital markets

Betting the US Election

I have been a proponent of betting on TRUMP since late last year, largely because of how “undervalued” such a bet appeared to be in betting Markets.  When one juxtaposed those odds against his obvious marketing and persuasion skills and the passion of his supporters (even in the face of initial social scorn and, recently, the violence directed at them from supporters of his opponent) they just seemed “wrong” and out-of-line from where they should be in, realistically, a two-person race.

My participation as a bettor on the Election only became serious on September 11th after seeing video of his Democrat Party opponent, Hillary Clinton, collapse at the site of 9/11 before being dragged cold, toes-down, into a van, leaving a shoe behind.  Upon seeing those visuals and concluding that in the age of the internet they would be replayed millions of times, I rushed to bet TRUMP to win the Election at odds of +200 (bet $100 to return $300) and to win the State of Ohio at odds of +260 (bet $100 to return $360).  Candidly, better value was found on such “State bets” as they would almost certainly be necessary preconditions to a General Election win.  Had I to do it over, I would have focused my capital in that area over a bet on the General Election.

What is my inside information, you ask? No, not video of Hillary’s collapse; though, I did act very quickly after its release and before betting odds were lowered to reflect the impact of such a visual.  What I am relying on, instead, is something called the “enthusiasm gap” and its absence from traditional polling.  If, for example, polls show Clinton at 52% and TRUMP at 48% (yes, I am discounting third-party candidates for the sake of argument) one would conclude that Hillary is likely to win the General Election when those percentages are translated into actual votes (Chicago-style voter fraud aside) and Electoral College wins.  But what of the “enthusiasm gap?”

If, again for the same sake of argument, TRUMP is able to turn out 100% of his supporters and Hillary only 90% then in the above example TRUMP would win the votes of 48% to 46.8% of possible voters.  Obviously, I have simplified the argument for the sake of math, but the enthusiasm gap — the percentage of people that want to vote for you that actually vote for you — is something that I expect to have a real impact on the Election.  And,  as it can’t  be reflected in the Polls (and, because of that, the odds) it may skew the betting lines sufficiently to allow you to profit from the undervalued nature of a “surprise” TRUMP win much like occurred with the BREXIT vote where polls the day of the vote showed it losing by a substantial margin.

For more on the enthusiasm gap, read