Wednesday, August 22, 2018

The "National Emergency Loophole": How Trump Could Intervene In The Market To Crush The Dollar

Following a series of attacks on the Federal Reserve's rate hike policy and complaints about the strong dollar, some Wall Street observers are saying the possibility that Trump himself will launch a sustained campaign to weaken the dollar as a way to reduce the U.S. trade deficit can no longer be dismissed.
While a strong-dollar policy has been a cornerstone for successive U.S. administrations, Trump - like with many other things - has shown a penchant for upending the currency status quo. Since taking office in 2017, he has routinely talked about wanting a weaker dollar to support U.S. manufacturing. Additionally, Trump's administration has been lukewarm toward America’s traditional strong-dollar stance.
As Bloomberg notes in a Wednesday article, in recent months Trump has further stepped up the rhetoric as the dollar has bounced off its lows. In an interview published by Reuters this week, Trump once again accused China and the European Union of manipulating their currencies. Last Friday, he also complained to wealthy Republican donors that he was “not thrilled” with the Federal Reserve’s interest-rate increases under Chairman Jerome Powell, which have boosted the dollar.
As a result, after a flurry of tweets in which Trump complained that the dollar is blunting America’s “competitive edge,” Wall Street has started to pay attention: in a report this month, JPM's chief US economist, Michael Feroli, wrote in a report this month that he can’t rule out the possibility the administration will intervene in the currency markets to weaken the greenback. Both Deutsche Bank and OppenheimerFunds echoed the view, saying dollar intervention was no longer far-fetched.
Zach Pandl, co-head of global FX strategy at Goldman Sachs, recently said that "we haven’t had a deliberate effort to weaken the U.S. dollar perhaps since the Plaza Accord in 1985, so it is very unusual and against established practice over the last several decades. A deliberate policy to pursue a weaker currency could cause foreign investors to shy away from U.S. assets -- including Treasury bonds -- raising interest costs for domestic borrowers."
In a note from Nomura's Richard Koo, the strategist asks "how President Trump might respond if uncertainty did worsen, raising the likelihood of a slowdown in the US economy" and answers that "one possibility is that the administration would shift from tariffs, which require a separate staff to handle exemption requests for each product category, to the use of exchange rates, which would allow simultaneous adjustments to prices for all imported products."
Here is why Koo is confident that it is only a matter of time before Trump directly intervenes in the FX market:
A protectionist policy that must be individually tailored to each product category requires large numbers of administrative staff, and a period must be established during which companies can apply for exemptions. Exchange rate-based adjustments, on the other hand, entail no such costs.
In that sense, the more problematic administrative delays become and the more industry opposition mounts, the greater the likelihood that President Trump will replace tariffs with exchange rates as his main tool for addressing US trade imbalances.
The loudest warning to date that Trump could rock the currency world has come from Charles Dallara, the former U.S. Treasury official who was one of the architects of the Plaza Accord, the 1985 agreement between the U.S. and four other countries to jointly depreciate the dollar. "The trade debate will increasingly include the currency issues," he told Bloomberg "It’s inevitable."
As Bloomberg adds, a shift to a more protectionist and interventionist policy, à la 1985, would not only reverberate across the $5.1 trillion-a-day currency market and undermine the dollar’s status as the world’s reserve currency, but could also weaken demand for U.S. assets.
But can Trump really intervene unilaterally in the currency market, and what tools does the president have at his disposal if he wanted to go beyond mere talk?
The most direct choice for Trump would be to order the U.S. Treasury (via the New York Fed) to sell dollars and buy currencies like the yen and euro using its Exchange Stabilization Fund, according to Viraj Patel, an FX strategist at ING. But because the fund only holds $22 billion of dollar assets, the impact would likely be minimal. Any direct intervention that is larger and more ambitious in scope would also require congressional approval, he said quoted by Bloomberg.
Then there is the nuclear option: according to Patel there is one loophole Trump could exploit to get around the fund’s constraints and bypass Congress altogether: by declaring FX intervention a “national emergency.” He could then force the Fed to use its own account to sell dollars.
Such a move would be a long shot by any stretch of the imagination, but with Trump invoking national security to impose tariffs, Patel says he can’t “completely rule out” the possibility.
Such a move would certainly roil the market and potentially lead to a USD crash, not only due to Trump's intervention but due to the sudden collapse in faith in the global reserve currency; the result would be a flood of Treasury sales from global custodians around the globe who currently hold over $6 trillion in US Treasuries. To be sure, Trump’s persistent jawboning of the dollar may already be having an adverse effect on foreign demand for U.S. assets. While overall demand at auction has been up and down this year, foreign holdings of Treasuries have slumped to an almost 15-year low of 40%, forcing domestic investors to become the marginal buyer of US Treasurys. China, the largest overseas creditor, has pulled back this year. Japan, the second biggest, has reduced its share to the lowest level since at least 2000.
A less extreme, and more plausible, option would be for the Trump administration to include currency clauses in any new trade deals, like it did with the updated U.S.-South Korea trade agreement in March, although enforcement would be complicated and the implementation lengthy.
There is also the suggestion of a global accord on currencies, broached in the past by White House trade adviser Peter Navarro, however the chances of a multilateral agreement on the dollar are remote. Plus, there’s always the threat of retaliation by other nations if the U.S. goes it alone.
While it remains unclear what Trump will do, keep a close eye on China, where the yuan has tumbled nearly 10% since April, when the trade war with Beijing started in earnest.  The magnitude of the decline, the fastest since the 1994 devaluation, boosted speculation the People’s Bank of China is deliberately weakening the yuan to offset the tariff impact.
Even though China has denied it is "weaponizing the Yuan", many are skeptical, and Trump is among them: which is why the president has criticized the country for taking advantage of the U.S. by keeping its exchange rate artificially low. (However, Trump has not gone so far as to officially brand China a currency manipulator in the twice-yearly review of international foreign-exchange policies published by the Treasury).
Trump's single focus on the Yuan may explain why Beijing has pulled all stops to prevent the currency from sliding below the 'redline' of 7.00 vs the dollar (alternatively it is preparing to devalue further if and when Trump launches the next $250BN in tariffs he has warned he would). Stephen Jen of Eurizon SLJ Capital has warned that Trump may be quick to retaliate in the FX markets if it suspects that China is "playing games with its currency," which may have disastrous effects on demand for U.S. assets.
"If you’re an international portfolio manager with 30 percent of your exposure to the U.S., and you know the currency will be guided meaningfully lower as a policy tool, why would you be investing here?” he said. "The Trump administration needs to be very, very careful with its dollar policy." This was most vividly on exhibit during the Fed's QE phase when Guido Mantega, then Brazil's finance minister, siad the Fed was throwing "money from a helicopter" and "melting" the dollar.
Ironically, it is the stronger dollar that is crippling emerging markets now.
Whether or not Trump intervenes, however, Dallara is bracing for more turbulent times:
"I’ve lived through a lot of market gyrations in my career,” he said. “And I have an uneasy feeling that I can’t validate by data that tensions are going to, at some point, emerge into volatile market dynamics. This is a risk."

Sunday, August 19, 2018

Venezuela Currency Devaluation forces the first Sovereign Crypto Currency

CafeConLeche8-2018Cafe con Leche Index
Total News - 8/19/2018 - Atlanta, GA - Venezuelan President Nicolas Maduras announced Friday a massive devaluation of the existing currency, while making a verbal peg 1 "Petro" (Venezuelas new CryptoCurrency which is not yet in circulation) to $60 US Dollars, effectively wiping out the value of the existing currency and forcing the population to use the Petro.
Crypto Enthusiasts will be eager to see the Petro trade, as it will be the first sovereign Crypto Currency in the world.  IBM has disclosed that it is contracted with more than 10+ central banks to investigate the possibility of making digital sovereign currencies based on cryptographic technologies like Blockchain, but it hasn't disclosed who they are.  Venezuela is an interesting case to be the guinea pig in this digital money experiment, because Venezuela has been a unique host of an underground mining community in the past years, because electricity there is practically free.  The interesting world of underground Bitcoin mining in Venezuela has been covered in an excellent article published on Hacker Noon "Extortion, Police Raids and Secrecy: Inside The Venezuelan Bitcoin Mining World."
Maduro told viewers:

"As of next Monday, Venezuela will have a second accounting unit based on the price, the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry."
What's interesting about Venezuela is that this is an act of desperation, Maduro really has few other choices.  Venezuela has become a war zone in recent years with rolling blackouts, rampant inflation, food shortages, rise in violent crimes, and social unrest.  The Petro is Venezuela's oil backed (government backed) Sovereign Crypto Currency, based on the NEM Blockchain.  But ultimately, it is backed by whatever Maduro says it is backed by, as any fiat currency is.  In fact the word 'fiat' means 'by decree' or in plain English, because I said so.  
Fiat: a formal authorization or proposition; a decree.
Maduro said the new currency, set to enter circulation on Monday, will be called the "sovereign bolivar" and will be based on the petro, which is valued at $60 or 3,600 sovereign bolivars, after the redenomination planned for August 20 slashes five zeroes off the national currency. The minimum wage will be set at half that, 1,800 sovereign bolivars. The government would cover the minimum wage increase at small and medium-size companies for 90 days, Maduro added. It was not clear what happens after.  "They've dollarized our prices. I am petrolizing salaries and petrolizing prices," Maduro explained in a Friday televised address. "We are going to convert the petro into the reference that pegs the entire economy's movements."
We will see the market reaction shortly, however Venezuela is already living in a world of it's own, even bragging about how the IMF doesn't have any 'fingers in our pies' type of speech.  Meanwhile, the population of Venezuela is forced to turn to things like Bitcoin and Alt coins in order to survive, as the national currency is completely unstable.

Thursday, August 9, 2018

Overstock.com Soars After Its Blockchain Sub Gets PE Investment At $1.5BN Valuation

Online retailer Overstock reported results which, unlike its much more famous and infinitely bigger online retailing peer Amazon, were nothing special: the company reported Q2 revenues of $483 million, generating a net loss for the quarter of $2.20 on a gross margin of 19% in the quarter.
But the company's earnings were not the reason why OSTK shares soared as much as 25% after hours: the reason was the surprising announcement by the company that Hong Kong-based private-equity firm GSR Capital had agreed to invest as much as $375 MM in exchange for equity in the retailer and, more importantly, its tZero blockchain subsidiary, which as a reminder capitalized on the cryptocurrency craze in late 2017 and concluded an Initial Coin Offering on December 18, 2017, almost to the day when Bitcoin hit an all time high of just under $20,000.
As Overstock announced in its press release, GSR agreed to:
  • i) buy $30MM in tZero tokens,
  • ii) buy up to 3.1MM shares of OSTK for $104 million (a 5% discount to the Aug. 1 closing price of $33.72),
  • iii) invest as much as $270MM for up to 18% of tZero’s equity at a whopping post-money valuation of $1.5 Billion.
And since Overstock's market cap as of Thursday's close was just over $1.1 billion, this means that with one term sheet, the company's tZero sub is suddenly worth more than the entire parent company. More importantly, the GSR transaction will boost the company's cash and equivalent holdings to over half a billion dollars.
Some more details from Byrne:
Having concluded its Security Token offering, tZERO has raised aggregate consideration of $134 million. This figured includes $30 million from repayment of intercompany debt between tZERO and Overstock. GSR has signed a repurchase agreement to acquire these tokens. As I will diagram in our earnings call, we have designed quite an ecosystem with a scale that matches the enormous opportunity in front of it. When GSR completes its planned investments, we should have over half-a-billion dollars. We believe this will provide ample capitalization with which to build a company that can upend global capital markets.
Back in December, when Overstock launched its tZero ICO, it said that it was hoping to raise at least $250 million - and as much as $500 million - "to build out a blockchain system that the firm said would allow it to create an exchange to trade blockchain-based assets, like ICOs." In the end it raised aggregated funds of just approximately $134 million, and today's transactions adds to that and enables CEO Patrick Byrne to pursue his Security Token ambitions.
As a result of the deal, OSTK stock has jumped and was trading as high as $46/share after hours.
Even with the surge however, the stock remains well below its highs hit in late 2017 and early 2018, when its share price more than doubled to a high of $86.90 in January, due to its blockchain investments rather than its online retailing activities, which have seen it categorised as a cryptocurrency "play."
Overstock has been one of the few retailers that has aggressively pursued cryptos as both a method of payment and as a means by which to grew the company with its own unique token. As we reported recently, following a burst of adoption of cryptos by various vendors, as the price of bitcoin has tumbled in 2018, so has the rate of adoption. Which is why Overstock's experiment with cryptos and tokens will be closely watched to determine if the digital currency has any chance of becoming useful in practice instead of just in theory.

cryptos

Wednesday, August 8, 2018

PODCAST: EXPLOITING ANOMALIES IN FINANCIAL MARKETS · DR. WILLIAM ZIEMBA

Past performance is not necessarily indicative of future performance.


Past performance is not necessarily indicative of future performance.

The risk of loss in trading commodity interests can be substantial. You should carefully consider whether such trading is suitable for you in light of your financial condition. This material does explain all the risks involved in futures and options trading. Please refer to the following for a fuller disclosure and our risk disclosure statement: https://alphazadvisors.com/risk-disclosure-statement/

About this podcast: EP 137: The horse bettor exploiting anomalies in financial markets – Dr. William Ziemba Dr. William Ziemba’s an academic, a practitioner, gambler, trader and an author. He’s worked with and consulted to many well-respected names in the field, such as; Edward Thorp, Blair Hull and the very successful horse bettor, Bill Benter. In the beginning, horse betting was William’s field of expertise (he even published a book titled, Beat The Racetrack!) And in many ways, for William, horse betting worked as a gateway to trading financial markets—which he’s been doing since 1983.

Visit AlphaZAdvisors.com for more info.
  alphaz options strategy

Sunday, August 5, 2018

Crypto Day Trading the next big traders market

Crypto Day Trading - Electronic Day Trading became popular in the mid 1990's with the rise of 'retail' stock trading, meaning that anyone with $50,000 could open an account and trade with "Level 2" access which was purportedly the same access the market makers had.  Of course day-traders were no match for professional market makers but suddenly the .com bubble happened and stocks like (AMZN) and many others.  After the .com bubble burst, day traders looked for other electronic markets to trade, some gravitated to Futures & Forex.  Forex day traders thrived for a long time, until the Dodd-Frank regulations ended the hope of having a profit from a Forex strategy in the USA (and in the same action, effectively blocked access to decent honest brokers for US Citizens.  This void was filled with the Binary Options scam that continues to this day (people still believe that someone, somewhere is making money with Binary Options, contrary to forensic evidence).
Enter Crypto Currency which was relatively undeveloped as a traders' market until the huge rise of BTC/USD in the fall of 2017.  Now there is a quickly growing community of Crypto Day Traders and Total Cryptos is here to facilitate that.  The problem with trading Crypto vs. other markets is there is a huge amount of fake data in Crypto.  As any trader knows, information is king - which is why it's important to have real-time information that matters.  Just like in FX, that may mean looking at multiple exchange prices.  It means having multiple sources of news and data.  It means paying for information.  How bad is the problem of bad data?  Just look at today's news, from Coin Desk, where 'A CoinMarketCap "data issue" caused significant artificial inflation of several coins listed on the platform on Friday, with some prices inflated by nearly 1000 percent.':
While bitcoin's price spiked 12 percent on the crypto data site, other coins saw more drastic increases. The price of aeternity, the eighth most valuable cryptocurrency, increased more than 951 percent, while MOAC increased by 905 percent and bitcoin diamond saw an 876 percent jump on the site. The site's exchange tracker feature was also affected, and falsely indicated that bitcoin was trading above $73,000 on some exchanges.  While crypto Twitter speculated about potential price manipulation, bugs and hacking, CoinMarketCap told CoinDesk that the inflation was caused by a data error.  "There was a price calculation error on tether which caused any listing with a tether market to become artificially inflated," marketing vice president Carylyne Chan said in an email.  While most of the data appeared to have normalized at press time, the 24 hour change percentage for VeChain's VET token was listed as a question mark and its price graph was unavailable on the home page. The VeChain page also had no historical data listed.  The popular analytics platform has promised to release a "post-mortem" with further details in the near future.
Imagine that happened in the stock market.  So the good news, any new market presents new and uncharted opportunities.  With that as always comes big risks, but it is a traders job to manage and maintain control of those risks.  Having the right tools is par for the course.  Or take a look at this article "Why intra-day trading crypto can be better than holding":
If you are relatively new to trading crypto currencies, then this tutorial is what you need. In this tutorial I will try to explain how you can use crypto to grow your capital base by at least 1% per day.The reason why holding isn’t a very practical move for well established coins is because of their volatility. For instance, Bitcoin (see chart below), increased by ±30% over a period of ±20 days. But it doesn’t mean it had a linear increase of 1.5% per day, some days went down while others went up.
Of course, it's easy to go back and say if we had just bought at the low and sold at the high every day for the past 30 days we would have made a fortune, the reality is that trading is not so easy.  However, there are tools out there so advanced and sophisticated that it helps the Crypto Day Trader.
Total Cryptos is extensively researching this new market as well as working on our development of real time trading systems for Crypto Day Traders.  We've opened a public forum on the topic for open discussion which can be found here: https://portal.totalcryptos.com/forum/trading-cryptos Registration is free so join the discussion today!


Thursday, August 2, 2018

Companies from Wall Street continue to innovate in the Crypto Space

  • Private Equity investors or Pre-IPO investors may want to look at this hot new Crypto option.
  • Cornucopia is an example of how Blockchain is really innovating the alternative investment space.
The pace of new Crypto Currency offerings has increased dramatically in recent years. First, there were ICOs, then there were STOs, and now there is a mix of many kinds of new token offerings. Sites are popping up that track the prices of new Crypto Currencies just like for stocks. The nuances of regulation, as in anything new, have been the focus of the debate. What makes a securities token vs. a utility token, or if proof-of-stake is better than proof-of-work. We’re going to skip that in this article to focus on essence not form, to get to the heart of what this token is and why it represents a real new type of token based on an existing model. We are going to contrast this model, not the token, with others of a similar nature. Many who have been enchanted by the allure of Bitcoin have lost touch with what Blockchain really is – a technology. The blockchain is very innovative for banking but compared with what Silicon Valley has been inventing recently it really isn’t such a great achievement. The reason Blockchain is such a ‘revolution’ is mostly because of the lack of technological innovation in the financial services industry in general. For example in the United States, the “Fedwire” system used to send ‘wire’ payments in between financial institutions, was designed and implemented before World War 2, actually before 1940. The reason it is called a ‘wire’ payment is because this was a world where not everyone had a telephone, but every business had a telegraph, which was connected by copper wire. It is important to understand this history, in order to see that Blockchain itself isn’t something so innovative like lasers or fiber optics, or the microprocessor. But in a world where payments are made by ‘wire’ – Blockchain is a new paradigm which really changes the entire global financial system.
One more important elaboration before we dig into this token offering is the mature pre-IPO sector of ‘unicorns.’ During the .com boom IPOs were the hottest rage – get a business plan, buy a .com name, and go public. Very similar to what has happened with many ICOs, many of them fail to vet their underlying business model (in many cases they do not care to, they just want to raise funds as a means to another end). After the .com bubble burst, new IPO issues were on the decline, and since the 2008 credit crisis, they declined even more (for a number of factors which is the subject for another article). Companies that are worth more than $1 Billion in private markets but are still not public are called “Unicorns” because they are rare, but Unicorns are not so rare like they were 5 years ago. Now many companies continue to operate as private companies without going IPO, some notable examples include Uber, AirBnB, SpaceX, Palantir, Lyft, and others. The pre-IPO space is opaque, as companies are not publicly listed, they are not subject to the same reporting requirements as public companies. For example, financial statements which they do of course produce, are based on what the company says only (no third-party oversight). Financial reports produced by public companies are the opposite – they are subject to audits, third party checks, and if a mistake is made – there can be a liability for the financial officer who is responsible for the reports and/or for the company itself. In private equity, none of this applies. So, it’s a unique type of investing.
The obvious upside is that if and when a Unicorn does go public, there can be an event which will produce a 10x or 20x return. So as you can imagine, there are a number of companies that offer sale of pre-IPO stock in mature companies that have revenue. The rules are different, all investors must be accredited generally, and there can be restrictions on the stock (for example you can’t sell your shares until the IPO event). Some companies, like PTN – offer accredited investors more liquidity that it is possible to buy and sell pre-IPO shares in what could be called a dark pool.
Enter the world of Cornucopia, a token offering that provides retail investors access to these companies based on a ratings system. Horn tokens act like a private equity index fund but require community participation. Here’s how it works. Users buy Horn tokens and then vote on which issues should be included in the fund. While most everyone knows Space X, there are more than 150 such companies that are Unicorns or close to the $1 Billion mark that are all good candidates for IPO. Many of them will never go IPO because they will be bought by larger companies (but that is a positive event for shareholders too). The voting system will reward more intelligent votes with a higher allocation of tokens, so for example if you vote for Space X and it ends up being the biggest winner, you will receive more tokens than if you vote for Uber and it ends up bombing.
What is unique about this model is that it’s simple – it can be explained in a few minutes. There’s no moving parts – it’s just as simple as that. It basically opens up access to companies like Space X to investors through the use of a token they are calling HORN. Token investors should love it. Wall St. investors, maybe not. Because they can get access to these companies directly or through the brokerage services like PTN. But what Cornucopia does is it tokenizes the offering – and it’s all wrapped into one token. In the future, there will likely be other similar tokens but for now, this is the only one. HORN is the only token offering pre-IPO mature companies to token investors.
We are not claiming here that Cornucopia has done anything new or unique – on the contrary, they have taken the pre-IPO model which is now very popular on Wall St. and tokenized it. The underlying ratings system, powered by Ignite Ratings, incentivizes users to participate in the process because they will be rewarded for doing so (and rewarded more for making better decisions).
Many have been claiming that Wall St. tokens are coming – while this doesn’t represent Goldman Sachs (GS) coin, this is a Wall St. model that will certainly attract copycats. Cornucopia doesn’t have a patent on this model nor would it be possible to patent a ‘business model’ – but as with any new standard, he who makes the standard has the most to gain from it (such as HORN token holders).
To compare this to other token offerings in the financial sphere, few can compare. For this reason, we believe that Cornucopia is going to make a big splash, and have no problem raising their $15 Million hard cap.
Lastly, let’s take a look at our favorite component (or potential component) to HORN – Space X. This is a bit of a controversial company, but we like it. We want to explain why – and then conclude that HORN is a great way to get exposure to Space X and other companies.
Since World War 2, which was the first time the United States invested massive resources in research and development of technology, the US Military has been a world leader in technology research and development, mostly led by DARPA, but also CIA, NSA, Navy, Army, Air Force, et. al. all working under the Director of Central Intelligence. The types of research projects are so vast we would need a library of books just to dig into them, covering all fields of science and even pseudo-science. If there was a guy who could bend spoons, the CIA had a guy there looking into it. Those who are interested in this topic can watch George Clooney’s “The Men who Stare at Goats” for some of the more bizarre and paranormal research experiments. The strategy is simple really – fund thousands of projects with more budget than needed and get the best minds in the world and even if 9 out of 10 projects fail, the 1 out of 10 that work, they will create something like the Atom bomb. The Manhattan project was perhaps the most ambitious and purposeful research effort in human history, the success of which won the war. Because of this, Military leaders understood the value of advanced weapon technology and this ethos is in the Pentagon to this day.
There is one side benefit for Corporate America to this strategy. Once technology has become ‘declassified’ and where there is clearly no military use, the technology is leaked to corporations (for free) and ultimately sold to the public. Most of what Silicon Valley has ‘invented’ can be credited to this cozy relationship. Technologies are leaked via research labs like ‘SPARC’ labs and others. Companies like XEROX, IBM, Microsoft, Apple, and recently Google and Facebook, participate in these programs.
Often how they acquire the technology is overlooked by investors, but it really is irrelevant, the US Military is not a for profit business per se, like many parts of the US Government it enables for-profit commercial enterprises to profit. As US Citizens are the indirect owners of this IP, transferring it to Corporations that are mostly in the average American’s 401k is widely appropriate (plus it stops the question ‘where all this money is going?’)
Due to the secret nature of much of this technology, this transfer is not something widely publicized – but we can see tangible benefits such as the internet itself, actually designed and built by the US Military. Space X has contracts for delivering rockets and launching them – but do they have something more? We have developed a hypothesis based on nothing other than the previous behavior of this relationship between the Military and Big Business – dating back to the 70’s, 80’s, and 90’s. Space X could have been the recipient of some of this IP, and if they were – it wouldn’t be something they could say publicly. This could explain Musk’s wild claims and his arrogant behavior (because if he had one of these transfers, it would make any competition impossible). One bright example is provided by the potential uses of Helium 3 as an energy source. Everyone knows and widely discusses about Oil – it’s use and utility for military purposes. But this is really a simplistic explanation for common folk to understand the larger doctrine, that energy is a key military resource – perhaps the most important.
For this reason, the US Military not only collects intelligence on new energy systems, but engages in their own research on potential alternative energy sources, such as “Zero Point” energy, Thorium Reactors, and Helium 3. Helium 3 only exists in places such as the moon and is difficult to extract and refine. If Space X had a way to do it, it will in 5 or 10 years be the biggest company on planet Earth. We do not have information to back up that statement it is a hypothetical mind experiment, to show the logic based on our hypothesis. There may be a far different story that we don’t know and will not know until it is revealed, however Helium 3 provides a good example of something that if Space X had IP about how to mine it, transport it, and convert it to Energy, it would be so profitable that the valuation of Space X would go parabolic. And if they were able to do it, they would be the exclusive provider.
Some of Musk’s claims such as colonizing Mars don’t really have a direct business benefit – Helium 3 does. If Space X does have such IP, these other businesses such as launching rockets and giving rides to Billionaire’s in space would be irrelevant. And again, this is just a hypothesis, based on history – we have no direct information that this is the case. For those of us who remember things like ‘the internet’ and the ‘Personal Computer’ that came out of nowhere, we remember a group of select companies having access to such technology and running with it. Remember, Apple (AAPL) didn’t invent the PC, they popularized it. Steve Jobs was not a technology guru or an engineer, he was a marketing genius that created a ‘cult of Mac’ based on his leadership and God-like personality he picked up while studying in India. We can agree that Woz was an engineer, but Apple didn’t invent the micro-processor, they were mostly a design and marketing firm that wanted to create a retail product from assembly. This is not a critique of Apple (AAPL) which is the obvious success of the century, but to point out a past example of a company that created an Empire from something they didn’t build or engineer themselves.
This is a ‘long shot’ hypothesis meaning it is a low probability high impact event. If it is true, the announcement of such news would shoot the value of Space X to the Stratosphere. If it is false, Space X would be evaluated based on its current public claims. But one thing is sure, Space X has exclusivity on this niche in the Aerospace/Defense Sector, and there’s only one place to access it with a token: Cornucopia.  www.cornucopia.io