Month: June 2022

Will Sell off Impact Russell Reconstitution Investor Strategies?

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Image Credit: Todd F Niemand (Flickr)


Investors and Traders that Jumped in Early to FTSE Russell Trade May Have Gotten Soaked

How has the stock market sell off impacted the FTSE Russell Reconstitution? A sudden rise in a stock’s price is almost always demand-related. And demand for a few hundred stocks has been expected to come a week from Monday when the market opening bell rings on June 27. The FTSE Russell 3000 will include 300 new names for the next year or more. The FTSE Russell will also be recalibrating its Microcap Index. Fund managers that manage index funds tied to these benchmarks will need to eliminate their holdings in what is exiting the index related to the fund they manage, and on a balanced weighting, take on some new names to their holdings. Hedge funds and individual investors know this and it has become popular to front-run the late June shift in demand. But an unexpected selloff might be gunking up investor strategies.

Background

Inclusion in a major market index is exciting for the management of a publicly held company, while it can cause dislocations and wild price swings that may not wind up with the stock price being higher, they can count on higher trading volume, which increases liquidity and reduces bid/ask spreads. 

For investors, since the 1990s, it has signaled a period where hedge funds and individuals alike try to take advantage of the short-term dislocations and adjustments. It’s important for all involved to remember that much of the list of names included or excluded for the first time in a Russell Index may just be moving from one index classification to another. In these cases, it may be difficult to gauge whether there will be higher demand or lower. Market forces also play a large part; the market has been bearish recently, so performance is relative.


Source: Koyfin

Reconstitution June 2022

There is no indication of how monetary policy, inflation, investor appetite, and market weakness is going to affect the final days of the rebalancing. The Russell 3000 Index (shown above using VTHR) is down 11.12% since rank day. The Russell 2000 is down 9.99%. Rank day is when the FTSE Russell looks at all stock’s closing prices and determines the top 3000 stocks by market value.

For investors and traders that were looking to, and even have acted to cash in on an early entry strategy, and even portfolio managers that got an early start rebalancing, they may have been caught by all the fall off in the markets; some may have even amassed oversized losses.

Typical Pre-Rebalance Day Strategy

The basics of the strategy involves buying up shares in companies slated for inclusion in an index and selling short the companies about to be removed. Trillions of dollars in passive investment funds like Mutual funds and ETFs are designed to mimic these indexes. Knowing this, traders, hedge funds, and savvy individuals have noted the changes announced by Russell weeks in advance, purchases some of those expected to be added, and then wait until late June and early July to sell these positions. The result over the years has at times been significant, with high probability of price moves. The added stocks on average rise and the deleted stocks wane. 

Not Your Typical June

This strategy has been around a while, but it has gotten crowded over the past five years. Investors and traders in 2022 may need to temper their enthusiasm with this rebalance. This year there may already be far more than average that are holding stocks in these names that will soon be lined up to unwind. This could cause weakness in the very stocks purchased to rise. Plus, investors may already be down double digits in these names.


Source: Koyfin

The nearly 300 stocks scheduled to join the index on June 27 include Airbnb (ABNB), Lucid Motors (LCID), SoFi Technologies (SOFI) , WeWork (WE), and many others that have gone off a cliff this month. The S&P 500 and Russell 3000 are each down 9%.

It’s not the first time the index-rebalance trade has soaked participants. In 2020, specialists in the strategy started off in disarray as fallout from COVID-19 late Spring altered many of the rebalance participants that hedge funds had presupposed. What was strong became weak and what was weak became strong just before the rank date.

Take Away

There are investors that look to determine which companies may be added to an index and which may be removed. Although being right doesn’t always mean huge gains, the rewards, on average, make this a legitimate approach for stock picking. This year the Russell 3000 index may have undermined strategies to get in early unless those that got in early shorted stocks being removed.

The sell off prior to the June 27 reopening could leave many who looked at their Russell Index play as a short term holding taking a huge loss, or keeping the money tied up while hoping for a 30% rally. Tax considerations aside, if any holding becomes dead money for any length of time, while there are better opportunities, taking a loss should be considered.

Be careful out there.

Paul Hoffman

Managing Editor, Channelchek

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Russell Reconstitution 2022, What Investors Should Know

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Has Summer Driving Season Been Cancelled by High Gas Prices?

Is Crumbling Trust in the Financial System Leading to a Flight to Real Assets?

Sources

https://www.ftserussell.com/press

https://www.businessinsider.com/overcrowded-index-rebalance-trade-leads-to-losses-for-hedge-funds-2022-6#

https://www.sec.gov/fast-answers/answersindiceshtm.html

 


Sources

https://twitter.com/elonmusk/status/1501449525831081987

https://www.cnbc.com/2022/06/14/bitcoin-plunge-spells-trouble-for-michael-saylors-microstrategy.html

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Release -Defense Metals Diamond Drilling Update – Pit Slope Geotechnical Preparations Underway

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Defense Metals Diamond Drilling Update – Pit Slope Geotechnical Preparations Underway

News, and Market Data on Defense Metals


News Release – Vancouver,
British Columbia – June 17, 2022: Defense Metals Corp. (“Defense Metals” or the “Company”) (TSX-V:DEFN / OTCQB:DFMTF / FSE:35D) is pleased to provide an update for ongoing  diamond drilling at its Wicheeda Rare Earth Element (REE) deposit. The 2022 diamond drilling campaign commenced in the northern resource area with the first two resource delineation drill holes totalling approximately 615 metres now nearing completion.
 

The initial two drill holes were collared from the same site oriented southwest at -50 and -60 degree dips. The holes are designed to establish the eastern carbonatite contact near surface, and for the purpose of resource infill near 2021drill hole WI21-33 that yielded 3.17% TREO over 196 metres;
including 4.29% TREO over 55 metres[1] at depth that expanded high-grade REE mineralization beyond the mineral resource pit shell. Both holes intersected significant intervals of visually REE mineralized dolomite carbonatite between as predicted by the geological model (Image 1).

 

[1]The true width of REE mineralization is estimated to be 70-100% of the drilled interval

 

 

Image 1: Visibly REE Mineralized Dolomite Carbonatite from
Drill Hole WI22-62 (approximately 120 metres downhole)

 

As announced in its June 7, 2022, drilling commencement news release, the Company plans to complete up to 5,000 metres of diamond drilling designed to further delineate existing resources, assess near deposit exploration targets, collect geotechnical and hydrogeological drilling for the purpose of optimization of open pit slope design, and generate additional REE mineralized material for continued metallurgical testwork.

Kristopher Raffle, P.Geo., Director and QP of Defense Metals commented:

“With the second drill hole of our 2022 resource infill
campaign nearing completion, we look forward in the coming days to
initiating co-purposed infill and pit slope geotechnical drill holes in
the main deposit and PEA mine schedule pit highwall areas, in addition to
continuation of pad building for planned exploration holes. With 2022
drilling operations once again based at the Wicheeda Deposit site field
camp, we expect to be able to take advantage of logistical efficiencies;
most notably a reduction on helicopter utilization.”
 

Other Company Updates
 

The Company attended the Prospectors & Developers Association of Canada Convention (PDAC) in Toronto, Ontario from June 13, 2022 to June 15, 2022 and met with several industry stakeholders including shareholders, investment firms, and strategic industry companies.
 

Defense Metals recently staked additional mineral claims contiguous to the Wicheeda REE Property. The 100% owned Wicheeda REE Property is now 4,244-hectares.

 

Further to the Company’s news release dated May 24, 2022, the Company paid US$100,000 to Digitonic Limited, an arm’s-length party to provide investor relations services and to provide content creation, digital and video marketing services.
 

About the Wicheeda REE Property
 

The 100% owned 4,244-hectare Wicheeda REE Property, located approximately 80 km northeast of the city of Prince George, British Columbia, is readily accessible by all-weather gravel roads and is near infrastructure, including power transmission lines, the CN railway, and major highways.
 

The Wicheeda REE Project yielded a robust 2021 PEA that demonstrated an after-tax net present value (NPV@8%) of $517 million, and 18% IRR[1]. A unique advantage of the Wicheeda REE Project is the production of a saleable high-grade flotation-concentrate. The PEA contemplates a 1.8 Mtpa (million tonnes per year) mill throughput open pit mining operation with 1.75:1 (waste:mill feed) strip ratio over a 19 year mine (project) life producing and average of 25,423 tonnes REO annually. A Phase 1 initial pit strip ratio of 0.63:1 (waste:mill feed) would yield rapid access to higher grade surface mineralization in year 1 and payback of $440 million initial capital within 5 years.
 

Qualified Person
 

The scientific and technical information contained in this news release as it relates to the Wicheeda REE Project has been reviewed and approved by Kristopher J. Raffle, P.Geo. (BC) Principal and Consultant of APEX Geoscience Ltd. of Edmonton, AB, a director of Defense Metals and a “Qualified Person” as defined in NI 43-101. Mr. Raffle verified the data disclosed which includes a review of the sampling, analytical and test data underlying the information and opinions contained therein.  
 

About Defense Metals Corp.
 

Defense Metals Corp. is a mineral exploration and development company focused on the acquisition, exploration and development of mineral deposits containing metals and elements commonly used in the electric power market, defense industry, national security sector and in the production of green energy technologies, such as, rare earths magnets used in wind turbines and in permanent magnet motors for electric vehicles. Defense Metals owns 100% of the Wicheeda Rare Earth Element Property located near Prince George, British Columbia, Canada. Defense Metals Corp. trades in Canada under the symbol “DEFN” on the TSX Venture Exchange, in the United States, under “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.
 

For further information, please contact:
 

Todd Hanas, Bluesky Corporate Communications Ltd.
Vice President, Investor Relations
Tel: (778) 994 8072
Email: todd@blueskycorp.ca
 

Neither the TSX Venture Exchange
nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this news release.

 
Cautionary Statement Regarding “Forward-Looking”
Information
 

This news release contains “forward?looking information or statements” within the meaning of applicable securities laws, which may include, without limitation, statements relating to advancing the Wicheeda REE Project, completion of drilling, receipt of drill results including anticipated timeline of such results/assays, the Company’s plans for its Wicheeda REE Project, expanded resource and scale of expanded resource, expected results and outcomes, the technical, financial and business prospects of the Company, its project and other matters. All statements in this news release, other than statements of historical facts, that address events or developments that the Company expects to occur, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the price of rare earth elements, the anticipated costs and expenditures, the ability to achieve its goals, that general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed and on reasonable terms. Such forward-looking information reflects the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including the risks and uncertainties relating to the interpretation of exploration results, risks related to the inherent uncertainty of exploration and cost estimates, the potential for unexpected costs and expenses and those other risks filed under the Company’s profile on SEDAR at www.sedar.com. While such estimates and assumptions are considered reasonable by the management of the Company, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks. Factors that could cause actual results to differ materially from those in forward looking statements include, but are not limited to, continued availability of capital and financing and general economic, market or business conditions, adverse weather and climate conditions, failure to maintain or obtain all necessary government permits, approvals and authorizations, failure to maintain community acceptance (including First Nations),  risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of personnel, materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), risks relating to inaccurate geological and engineering assumptions, decrease in the price of rare earth elements, the impact of Covid-19 or other viruses and diseases on the Company’s ability to operate, an inability to predict and counteract the effects of COVID-19 on the business of the Company, including but not limited to, the effects of COVID-19 on the price of commodities, capital market conditions, restriction on labour and international travel and supply chains, loss of key employees, consultants, or directors, increase in costs, delayed drilling results, litigation, and failure of counterparties to perform their contractual obligations. The Company does not undertake to update forward?looking statements or forward?looking information, except as required by law.
 

 

[1] Independent Preliminary Economic Assessment for the Wicheeda Rare Earth Element Project, British Columbia, Canada, dated January 6, 2022, with an effective date of November 7, 2021, and prepared by SRK Consulting (Canada) Inc. is filed under Defense Metals Corp.’s Issuer Profile on SEDAR (www.sedar.com).



Release – Seanergy Maritime Announces Proposed Spin-Off

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Seanergy Maritime Holdings Corp. Reports First Quarter 2022 Financial Results and Declares Dividend of $0.025 Per Share

June 17, 2022 – Glyfada, Greece – Seanergy Maritime Holdings Corp. (the “Company” or “Seanergy”) (NASDAQ: SHIP) announced today that it intends to effect a spin-off of the Company’s oldest Capesize vessel, the M/V Gloriuship, through a wholly-owned subsidiary. The newly formed subsidiary, United Maritime Corporation (“United”), will act as the holding company for the M/V Gloriuship. United has applied to have its common shares listed on the Nasdaq Capital Market and is expected to adopt a diversified business model, with investments across various maritime sectors.

Seanergy is contributing the vessel-owning subsidiary of the M/V Gloriuship to United and intends to distribute all the common shares of United pro rata to the Company’s shareholders of record as of June 28, 2022, which coincides with the previously-announced record date for Seanergy’s cash dividend of $0.025 per share for the first quarter of 2022. The distribution of United common shares is expected to be made on or around July 5, 2022. United common shares are expected to commence trading on a standalone basis on the Nasdaq Capital Market on the first trading day after the date of distribution, under the ticker “USEA”. 

The transaction remains subject to the registration statement on Form 20-F being declared effective and the approval of the listing of United’s common shares on the Nasdaq Capital Market. There can be no assurance that the transaction will occur or, if it does occur, of its terms or timing.

Stamatis
Tsantanis, the Company’s Chairman & Chief Executive Officer, stated:

“The spin-off of 100% of the common shares of United Maritime Corporation represents a significant return of value to our shareholders. Our board of directors believes that the distribution of shares of a separate, publicly traded shipping company that will pursue a diversified business model and greater exposure to different shipping segments will further enhance shareholder value.”

“Seanergy will continue its successful course as a pure-play Capesize owner, and we intend to substitute our oldest vessel, the Gloriuship, with a younger Capesize vessel.

“At the same time the uninterrupted payment of cash dividends by Seanergy over the last two quarters is a solid indication of our stated intention to continue rewarding our shareholders.”

Seanergy shareholders do not need to take any action to receive United shares to which they are entitled, and do not need to pay any consideration or surrender or exchange Seanergy common shares. Seanergy common shareholders will receive one United common share for every 118 Seanergy common shares held at the close of business on June 28, 2022, the record date for the distribution. Fractional common shares of United will not be distributed. Instead, the distribution agent will aggregate fractional common shares into whole shares, sell such whole shares in the open market at prevailing rates promptly after United’s common shares commence trading on the Nasdaq Capital Market, and distribute the net cash proceeds from the sales pro rata to each holder who would otherwise have been entitled to receive fractional common shares in the distribution. It is not anticipated that a “when-issued” trading market in United common shares will be established, and therefore it is not anticipated that United common shares will begin trading on a standalone basis until the trading day following the date of distribution. Shares of Seanergy common stock are expected to trade with due bills from the record date through and including the date of the distribution of the United common shares. Accordingly, Seanergy common shareholders as of the record date must continuously hold such Seanergy common shares through and including the distribution date in order to receive common shares of United in the proposed spin-off. Holders of Seanergy common shares are encouraged to consult with their financial and tax advisors regarding the specific implications of the proposed spin-off, including the implications of trading in Seanergy common shares prior to the distribution date and the U.S. federal, state and local or foreign tax consequences, as applicable, of the proposed spin-off.

United has filed a registration statement on Form 20-F pursuant to the Securities Exchange Act of 1934 with the Securities and Exchange Commission, which includes a more detailed description of the terms of the proposed spin-off transaction. A copy of the registration statement on Form 20-F is available at www.sec.gov. The information in the filed registration statement on Form 20-F is not final and remains subject to change.

About
Seanergy Maritime Holdings Corp.

Seanergy Maritime Holdings Corp. is the only pure-play Capesize ship-owner publicly listed in the US. Seanergy provides marine dry bulk transportation services through a modern fleet of Capesize vessels. The Company’s fleet consists of 17 Capesize vessels with an average age of 12.3 years and aggregate cargo carrying capacity of 3,011,083 dwt.

The Company is incorporated in the Marshall Islands and has executive offices in Glyfada, Greece. The Company’s common shares trade on the Nasdaq Capital Market under the symbol “SHIP”.

Please visit our company website at: www.seanergymaritime.com.

Forward-Looking
Statements

This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events, including statements regarding the anticipated spin-off of United, including transaction timing and certainty, the planned record and distribution dates our and United’s anticipated competitive positioning and positioning for future success following the spin-off. Words such as “may”, “should”, “expects”, “intends”, “plans”, “believes”, “anticipates”, “hopes”, “estimates” and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the impact of regulatory requirements or other factors on the Company’s ability to consummate the proposed spin-off; the Company’s operating or financial results; the Company’s liquidity, including its ability to service its indebtedness; competitive factors in the market in which the Company operates; shipping industry trends, including charter rates, vessel values and factors affecting vessel supply and demand; future, pending or recent acquisitions and dispositions; business strategy, areas of possible expansion or contraction, and expected capital spending or operating expenses; risks associated with operations outside the United States; broader market impacts arising from war (or threatened war) or international hostilities, such as between Russia and Ukraine; risks associated with the length and severity of the ongoing novel coronavirus (COVID-19) outbreak, including its effects on demand for dry bulk products and the transportation thereof; and other factors listed from time to time in the Company’s filings with the SEC, including its most recent annual report on Form 20-F. The Company’s filings can be obtained free of charge on the SEC’s website at www.sec.gov. Except to the extent required by law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

For further
information please contact:

Seanergy Investor Relations
Tel: +30 213 0181 522
E-mail: ir@seanergy.gr 

Capital Link, Inc.

Paul Lampoutis
230 Park Avenue Suite 1536
New York, NY 10169
Tel: (212) 661-7566
E-mail: seanergy@capitallink.com

Why Understanding the Metaverse isn’t Common Sense

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Image Credit: Kimberly Winnington


How We Describe the Metaverse Makes a Difference – Today’s Words Could Shape Tomorrow’s Reality and Who Benefits from It

Quick, define the word “metaverse.”

Coined in 1992 by science fiction author Neal Stephenson, the relatively obscure term exploded in popularity during the COVID-19 pandemic, particularly after Facebook rebranded as Meta in October 2021. There are now myriad articles on the metaverse, and thousands of companies have invested in its development. Citigroup Inc. has estimated that by 2030 the metaverse could be a US$13 trillion market, with 5 billion users.

From climate change to global connection and disability access to pandemic response, the metaverse has incredible potential. Gatherings in virtual worlds have considerably lower carbon footprints than in-person gatherings. People spread all over the globe can gather together in virtual spaces. The metaverse can allow disabled people new forms of social participation through virtual entrepreneurship. And during the early days of the COVID-19 pandemic, the metaverse not only provided people with ways to connect but also served as a place where, for instance, those sharing a small apartment could be alone.

No less monumental dangers exist as well, from surveillance and exploitation to disinformation and discrimination.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It was written by and represents the research-based opinions of Tom Boellstorff, Professor of Anthropology, University of California, Irvine.

But discussing these benefits and threats remains difficult because of confusion about what “metaverse” actually means. As a professor of anthropology who has been researching the metaverse for almost 20 years, I know this confusion matters. The metaverse is at a virtual crossroads. Norms and standards set in the next few years are likely to structure the metaverse for decades. But without common conceptual ground, people cannot even debate these norms and standards.

Unable to distinguish innovation from hype, people can do little more than talk past one another. This leaves powerful companies like Meta to literally set the terms for their own commercial interests. For example, Nick Clegg, former deputy prime minister of the U.K. and now president of global affairs at Meta, attempted to control the narrative with the May 2022 essay “Making the Metaverse.”

 

Categorical Prototypes

Most attempted definitions for metaverse include a bewildering laundry list of technologies and principles, but always included are virtual worlds – places online where real people interact in real time. Thousands of virtual worlds already exist, some gaming oriented, like Fortnite and Roblox, others more open-ended, like Minecraft and Animal Crossing: New Horizons.

Beyond virtual worlds, the list of metaverse technologies typically includes avatars, nonplayer characters and bots; virtual reality; cryptocurrency, blockchain and non-fungible tokens; social networks from Facebook and Twitter to Discord and Slack; and mobile devices like phones and augmented reality interfaces. Often included as well are principles like interoperability – the idea that identities, friendship networks and digital items like avatar clothes should be capable of moving between virtual worlds.

The problem is that humans don’t categorize by laundry lists. Instead, decades of research in cognitive science has shown that most categories are “radial,” with a central prototype. One could define “bird” in terms of a laundry list of traits: has wings, flies and so on. But the prototypical bird for North Americans looks something like a sparrow. Hummingbirds and ducks are further from this prototype. Further still are flamingos and penguins. Yet all are birds, radiating out from the socially specific prototype. Someone living near the Antarctic might place penguins closer to the center.


This representation of radial categories shows that the prototypical bird for most Americans is a sparrow, and that while ostrich legs are bird parts, they aren’t part of every bird. Credit: Tom Boellstorff

Human creations are usually radial categories as well. If asked to draw a chair, few people would draw a dentist chair or beanbag chair.

The metaverse is a human creation, and the most important step to defining it is to realize it’s a radial category. Virtual worlds are prototypical for the metaverse. Other elements of the laundry list radiate outward and won’t appear in all cases. And what’s involved will be socially specific. It will look different in Alaska than it will in Addis Ababa, or when at work versus at a family gathering.

Whose Idea of Essential?

This matters because one of the most insidious rhetorical moves currently underway is to assert that some optional aspect of the metaverse is prototypical. For instance, many pundits define the metaverse as based on blockchain technology and cryptocurrencies. But many existing virtual worlds use means other than blockchain for confirming ownership of digital assets. Many use national currencies like the U.S. dollar, or metaverse currencies pegged to a national currency.

Another such rhetorical move appears when Clegg uses an image of a building with a foundation and two floors to argue not only that interoperability will be part of “the foundations of the building” but that it’s “the common theme across these floors.”

But Clegg’s warning that “without a significant degree of interoperability baked into each floor, the metaverse will become fragmented” ignores how interoperability isn’t prototypical for the metaverse. In many cases, fragmentation is desirable. I might not want the same identity in two different virtual worlds, or on Facebook and an online game.

The 13-year-old computer game Minecraft lets players build virtual worlds, which makes it a prototypical element of the metaverse.

This raises the question of why Meta – and many pundits – are fixated on interoperability. Left unsaid in Clegg’s essay is the “foundation” of Meta’s profit model: tracking users across the metaverse to target advertising and potentially sell digital goods with maximum effectiveness. Recognizing “metaverse” as a radial category reveals that Clegg’s claim about interoperability isn’t a statement of fact. It’s an attempt to render Meta’s surveillance capitalism prototypical, the foundation of the metaverse. It doesn’t have to be.

Locking in Definitions

This example illustrates how defining the metaverse isn’t an empty intellectual exercise. It’s the conceptual work that will fundamentally shape design, policy, profit, community and the digital future.

Clegg’s essay concludes optimistically that “time is on our side” because many metaverse technologies won’t be fully realized for a decade or more. But as the VR pioneer Jaron Lanier has noted, when definitions about digital technology get locked in they become difficult to dislodge. They become digital common sense.

With regard to the definitions that will be the true foundation of the metaverse, time is emphatically not on our side. I believe that now is the time to debate how the metaverse will be defined — because these definitions are very likely to become our digital realities.


Suggested Reading



The Metaverse is Under Construction, Here’s What is Known

Microstrategy’s Bitcoin Position and the Past, Present, and Future of Crypto





Cathie Wood and the Risk of Trying to Get Someplace Fast

Metaverse: Is the Future Real? – Panel Presentation from NobleCon18

 

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Investor Leverage is Decreasing, is this Bullish or Bearish?

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Image Credit: Peat Bakke (Flickr)


Market Leverage Swings Both Ways

There is a direct correlation between large increases in margin debt and increases in stock prices. This makes sense since the increased borrowed money allows higher demand for stocks. The uptrend and borrowing may even feed on itself for a while. If the market later unwinds, as it sometimes does, investors may find themselves required to shore up their accounts financially or sell affected positions. This mechanism, called a margin call, can have overall market implications, especially if it’s widespread and impacts widely held stocks. In the past, there have been major stock market events associated with sharp declines in leverage. According to recent FINRA data, margin has been decreasing since last year.

Some Data

Margin debt dropped by $20 billion in May from April to $753 billion, according to FINRA. FINRA is charged with oversight over brokers in the U.S. . Margin debt peaked in October 2021 at $936 billion. The following month it began to decline. The Russell 2000 and the Nasdaq 100 both peaked in November. The small-cap index is now down 31.5% from its high, and the Large Cap Nasdaq 100 is down 32.5% from its November high.

There are also other forms of margin debt, it is smaller in size, but these figures are more difficult to attain accurate information on. They could include opening a brokerage account with revolving credit, even home equity loans, personal loans, and bank securities-based lending.

Forced selling in widely held stocks is likely to have impacted names like Amazon (AMZN), down 45% from its high, Netflix (NFLX), down 76% from its peak, and Meta (META), which slid 57% from its high, Nikola (NKLA) is down 93%, and even Peloton (PTON) experienced a 94% decline.

Some Charts

Data Source: FINRA

Margin debt nearly doubled from March 2020 to November 2021 as borrowing reached its high. The levels have now shaved 20% from the highest balance. Below is a Nasdaq chart of the same period. The trend closely tracks the change in margin outstanding in brokerage accounts overseen by FINRA.


Source: Koyfin

Some Insight

Margin has an impact on market movements, just as any other factor that may increase or decrease cash available to invest. These factors could include stimulus checks, taxes, increased household costs, higher employment situation, etc. Investors should keep aware if margin debt levels are higher than normal and growing or shrinking – especially when the market begins to lose ground. The same is true for investors that see increased use of margin debt at an increased rate. This could create momentum on the upside.  

For investor insights and to explore and discover lesser-known opportunities, sign up for
emails from Channelchek.

Paul Hoffman

Managing Editor, Channelchek

Suggested Content



Margin Debt Increases are Eye-Popping

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Will Investors Keep Reducing Leverage?


Source

https://www.finra.org/investors/learn-to-invest/advanced-investing/margin-statistics

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Could Blockchain Technology Thrive Without Crypto?

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Image Credit: beatingbetting.co.uk


Could Blockchain Survive if Unchained from Digital Currency?

Bitcoin, Ethereum, Ripple, and even Dogecoin would not exist without blockchain technology. But can blockchain technology exist without cryptocurrencies? Cryptocurrency has been having a bad year; most of the currencies hit a high against the USD in November of last year and have slid to a fraction of that high point since. A research director at CoinDesk named Nolan Bauerle says 90% of cryptocurrencies today will not survive a crash in the markets. He does, however, believe that the few survivors will thrive. But there are naysayers like Berkshire Hathaway’s Charlie Munger, who said he “admires the Chinese” for banning cryptocurrencies. Munger has also been quoted as saying that digital currency “is going to zero” and has described it as a “venereal disease.”

Recent problems with bitcoin (BTC.X) and smaller cryptos, including price-driven margin calls, central bank interference, the SEC and other regulators exploring ways to tighten controls, a failed bitcoin-based bond offering in Ecuador, and current investor fear put the future in question. Hypothetically, what if bitcoin and all non-central bank-sponsored digital currency disappeared? Would blockchain technology still have blossoming applications in other areas?

 

About Blockchain

The technology now serves a very wide range of applications. At its core, blockchain is a distributed digital ledger that forever stores data of any kind. A blockchain can record unique information about cryptocurrency transactions, non-fungible token (NFT) ownership, DeFi smart contracts, and far more.

While any conventional database can store this sort of information, blockchain is unique in that it’s completely decentralized. Rather than being maintained in one location by an administrator, many identical copies of a blockchain database are held across a network (nodes).

The majority of nodes must verify and then confirm back the legitimacy of new data before a new block can be added to the ledger. For a cryptocurrency, this protects against fraud and confirms that a coin has not been spent more than once by the holder. Transactions are kept secure using cryptography at the node level.

Blockchain Use Beyond Cryptocurrency

The theory that created blockchain is rooted in the theoretical
paper that launched bitcoin. Since then, the security and verifiability of ownership provided have caused its applications to spread from everything from agriculture to fine wines. The most widespread non-crypto adoption is in banking, payments or asset transfer, contracts, supply chain oversight, voting, and NFT art. These are the larger current uses explained.

Banking, blockchain is being used to process
transactions in fiat currency, like US dollars and euros. This is often faster than sending money through a bank or other financial institution as the transactions can be speedily processed even outside of normal business hours.

Asset Transfers, blockchain can also be used to record and transfer the ownership of different assets. This is popular with digital assets like NFTs, a representation of ownership of digital art, videos, in-game items or anything else deemed unique.

The technology is also used to process the ownership, like the deed to real estate, vehicles, and other “titled” assets. In a transaction, both parties would first use the blockchain to verify that one owns the property and the other has the money to buy; then, they could move forward and complete and record the sale on the blockchain.

Using this process, there is the ability to transfer titles without manually submitting paperwork to update any government records; it would be simultaneously updated in the blockchain.

Contracts (Smart Contracts), another innovation, is self-executing contracts commonly called “smart
contracts.” These digital contracts are executed automatically once conditions are met. For instance, a payment might be released instantly once the buyer and seller have met all specified parameters for a deal.

Supply Chain Monitoring, supply chains involve massive amounts of logistics and information, especially when it involves several stops around the globe, as a computer chip does. With traditional data storage methods, it can be hard to trace the source of problems and slowdowns. Storing this information on the blockchain would make it easier to review. There are products in use today that monitor food stages from harvest to just before consumption.

Voting, as blockchain is a superior verification system, it is being considered to be implemented to prevent fraud in voting. In theory, blockchain voting would allow people to submit votes that couldn’t be tampered with. 

Blockchain Companies With Low Cryptocurrency Baggage

One company early-stage company that exemplifies what it is to have a primary focus on non-currency products but instead embrace future efforts like Web 3.0, Staking, gaming, NFTs, DeFi, and metaverse applications is Tokens.com ($SMURF). Read the most recent analyst
report on SMURF from the Noble Capital Markets analyst that covers this industry.

Another is TAAL Distributed Information Technologies ($TAALF). TAAL, blockchain services, provides professional-grade, highly scalable blockchain infrastructure and transactional platforms that support businesses building solutions and applications and developing, operating, and managing distributed computing systems for enterprise users. Read the most recent analyst
report on TAAL from the Noble Capital Markets analyst that covers this industry.

 

Take-Away

The technology that gave birth to cryptocurrency has taken on a life of its own, it provides efficiency in asset transfer, added security against fraud, ownership verification, round-the-clock and round-the-globe transactions, proof of stake, and proof-of-work, like no other system or technology. It’s likely to expand as it finds its way into helping our lives improve and will certainly be a staple in business dealings in the near future. And it can do this with or without private cryptocurrencies or stablecoins.

Paul Hoffman

Managing Editor, Channelchek

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Release – SKY Perfect JSAT Jointly with Kratos Awarded Contract to Build C-band Spectrum Monitoring Facility for the Japan Ministry of Internal Affairs and Communications

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SKY Perfect JSAT Jointly with Kratos Awarded Contract to Build C-band Spectrum Monitoring Facility for the Japan Ministry of Internal Affairs and Communications

Research, News, and Market Data on Kratos Defense & Security Solutions

SAN DIEGO, June 16, 2022 (GLOBE NEWSWIRE) — Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a leading National Security Solutions provider, announced today that it was awarded a contract to build a state-of-the-art C-band Geostationary Orbit (GSO) Satellite Spectrum Monitoring Facility. Kratos is implementing this solution as part of a joint project with Japan’s main satellite operator, SKY Perfect JSAT Corporation (SKY Perfect JSAT), for the Ministry of Internal Affairs and Communications (MIC) in Japan.

The system will address MIC’s need to implement a new location for spectrum monitoring, protected from 5G interference, that will help in assuring the spectrum and reducing the potential for signal congestion, RF interference and illegal usage. Kratos is working closely with SKY Perfect JSAT, the prime contractor who is coordinating with the Japanese government to implement the project and to host the C-band antennas. Kratos hardware and software products incorporated in this turnkey integrated ground system include Monics® for spectrum monitoring, satID® for geolocation of satellite transmitters, Compass® for network Monitor & Control (M&C), Geomon for ITU missions automation and a big data analysis platform for ground system analytics. This platform will enable operators to collect performance data across ground systems and use business intelligence to analyze satellite measurements from both regulatory and technical perspectives. These products and solutions will be integrated with Kratos antennas covering C frequency band to provide an end-to-end management solution. “Increasing space traffic continues to impact spectrum reliability worldwide,” said Susumu Fujimoto, President of Kratos Communications Japan. “Kratos will help the MIC and regulators around the globe to minimize interference, check licensing and assure the spectrum. The MIC’s new spectrum monitoring facility will enable the delivery of reliable, interference-free licensed satellite services.” Kratos has worked with numerous government spectrum regulators around the world to build advanced spectrum monitoring solutions. Kratos offers comprehensive turnkey capabilities and a broad portfolio of products for end-to-end ground operations including networks, RF management, and Space Domain Awareness (SDA) from office locations around the globe. About SKY Perfect JSAT SKY Perfect JSAT Corporation is Asia’s largest satellite operator with a fleet of 16 satellites, and Japan’s only provider of both multi-channel pay TV broadcasting and satellite communications services. SKY Perfect JSAT delivers a broad range of entertainment through the “SKY PerfecTV!” platform, the most extensive in Japan with a total of approximately 3 million subscribers. SKY Perfect JSAT’s satellite communications services, which cover Asia, Indian Ocean, Middle East, Pacific Ocean and North America, play a vital role in supporting communications infrastructures for mobile backhaul, government, aviation, maritime, oil & gas and disaster recovery. For more information, visit its corporate website (https://www.skyperfectjsat.space/en/) and Space Business website (https://www.skyperfectjsat.space/jsat/en/). About Kratos Defense & Security Solutions Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative, affordable technology, platforms and systems for United States National Security related customers, allies and commercial enterprises. Kratos is changing the way breakthrough technology for these industries are rapidly brought to market through proven commercial and venture capital backed approaches, including proactive research and streamlined development processes. At Kratos, affordability is a technology and we specialize in unmanned systems, satellite communications, cyber security/warfare, microwave electronics, missile defense, hypersonic systems, training, combat systems and next generation turbo jet and turbo fan engine development. For more information go to www.KratosDefense.com. Notice Regarding Forward-Looking Statements Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Kratos and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Kratos undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Kratos believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Kratos in general, see the risk disclosures in the Annual Report on Form 10-K of Kratos for the year ended December 26, 2021, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the SEC by Kratos. Press Contact: Yolanda White 858-812-7302 Direct Investor Information: 877-934-4687 investor@kratosdefense.com

Release – Tonix Pharmaceuticals Announces Ribbon-Cutting Ceremony for its Advanced Development Center (ADC) for Vaccine Programs in Massachusetts

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Tonix Pharmaceuticals Announces Ribbon-Cutting Ceremony for its Advanced Development Center (ADC) for Vaccine Programs in Massachusetts

Research, News, and Market Data on Tonix Pharmaceuticals

The ADC is
Expected to Accelerate Clinical-Scale Manufacturing of Live Virus Vaccines,
Including Vaccines for Monkeypox, Smallpox and COVID-19

Internal Manufacturing
Capabilities Expected to Support U.S. Pandemic Preparedness

CHATHAM, N.J., June 16, 2022 (GLOBE NEWSWIRE) — Tonix Pharmaceuticals Holding Corp. (Nasdaq: TNXP) (Tonix or the Company), a clinical-stage biopharmaceutical company, today announced it will hold a ribbon-cutting ceremony at the Company’s 45,000 square foot clinical-scale manufacturing facility in the New Bedford Business Park in North Dartmouth, Massachusetts on June 21, 2022 at 1:00 pm ET. The new facility houses Tonix’s Advanced Development Center (ADC) for accelerated research, development and analytical capabilities, as well as the production of clinical trial quality vaccines for infectious diseases, including monkeypox, smallpox and COVID-19 as well as other infectious diseases for pandemic preparedness. The ceremony marks the formal opening of the New Bedford site.

U.S. Representative Bill Keating; the mayor of New Bedford, Mass., Jon Mitchell; Seth Lederman, M.D., President and Chief Executive Officer of Tonix Pharmaceuticals; and other prominent community members and employees plan to attend the event.

The ADC includes single-use bioreactors and purification suites with equipment for Good Manufacturing Practice (GMP) production of vaccines for clinical trials, including the capability of producing sterile vaccines in glass bottles. The ADC is Biosafety Level 2 (BSL-2). At full capacity, the facility can employ up to 70 researchers, scientists, manufacturing and technical support staff.

“Tonix Pharmaceuticals is making good on their promise to bring jobs to the New Bedford area, and we should be proud to host this new facility that has the potential to impact lives all over the world,” said Congressman Bill Keating. “Thanks to the hard work of Tonix, the town of Dartmouth and City of New Bedford, this facility opening further cements the role that the South Coast is playing in biotech. The continued private and public sector investments in our region are paying dividends, and the ribbon-cutting for this facility serves as yet another positive indicator of continued economic growth on the South Coast.”

“The addition of Tonix Pharmaceuticals to the growing biotech community in Greater New Bedford is a strong indicator of the quality of the region’s workforce. We have the talent to compete in a variety of sectors,” said Jon Mitchell, Mayor of the City of New Bedford.

“The opening of our new manufacturing facility in the New Bedford Business Park is a significant milestone for Tonix and we are excited to be part of the growing biotech industry in the South Coast region of Massachusetts,” stated Dr. Lederman. “The ADC greatly enhances our ability to progress our pipeline of vaccines for infectious diseases, including monkeypox, smallpox and COVID-19. We believe that the recombinant pox virus platform technology underlying our key vaccines in development, TNX-801, TNX-1840 and TNX-1850, coupled with our capabilities at the Tonix R&D Center (RDC) for research and development, will be rapidly deployable for addressing potential novel or emerging pathogens, with simplified distribution and administration, relative to modified mRNA-based vaccines. Our goal is to be able to design and test new recombinant pox virus vaccines against novel pathogens within the 100 days of recognition of a potential emerging pandemic threat, consistent with the criteria set forth by the White House Office of Science and Technology Policy. With high quality people, systems and processes, we intend to be a center of excellence for vaccine development.”

The facility is located in the New Bedford Business Park in a section of the park that is located in the Town of Dartmouth, Massachusetts. The two municipalities work together to accommodate businesses located in the Dartmouth portion of the park as the roads are inaccessible through Dartmouth and municipal services are provided by the City of New Bedford.

Tonix
Pharmaceuticals Holding Corp.1

Tonix is a clinical-stage biopharmaceutical company focused on discovering, licensing, acquiring and developing therapeutics to treat and prevent human disease and alleviate suffering. Tonix’s portfolio is composed of central nervous system (CNS), rare disease, immunology and infectious disease product candidates. Tonix’s CNS portfolio includes both small molecules and biologics to treat pain, neurologic, psychiatric and addiction conditions. Tonix’s lead CNS candidate, TNX-102 SL (cyclobenzaprine HCl sublingual tablet), is in mid-Phase 3 development for the management of fibromyalgia with a new Phase 3 study launched in the second quarter of 2022 and interim data expected in the first quarter of 2023. TNX-102 SL is also being developed to treat Long COVID, a chronic post-acute COVID-19 condition. Tonix expects to initiate a Phase 2 study in Long COVID in the second quarter of 2022. TNX-1300 (cocaine esterase) is a biologic designed to treat cocaine intoxication that Phase 2 ready and has been granted Breakthrough Therapy Designation by the FDA. TNX-1900 (intranasal potentiated oxytocin), a small molecule in development for chronic migraine, is expected to enter the clinic with a Phase 2 study in the second half of 2022. Tonix’s rare disease portfolio includes TNX-2900 (intranasal potentiated oxytocin) for the treatment of Prader-Willi syndrome. TNX-2900 has been granted Orphan-Drug Designation by the FDA. Tonix’s immunology portfolio includes biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500 which is a humanized monoclonal antibody targeting CD40-ligand being developed for the prevention of allograft and xenograft rejection and for the treatment of autoimmune diseases. A Phase 1 study of TNX-1500 is expected to be initiated in the second half of 2022. Tonix’s infectious disease pipeline consists of a vaccine in development to prevent smallpox and monkeypox called TNX-801, next-generation vaccines to prevent COVID-19, and a platform to make fully human monoclonal antibodies to treat COVID-19. Tonix’s lead vaccine candidates for COVID-19 are TNX-1840 and TNX-1850, which are live virus vaccines based on Tonix’s recombinant pox live virus vector vaccine platform.

1All of Tonix’s product candidates are investigational
new drugs or biologics and have not been approved for any indication.

This press release and further information about Tonix can be found at www.tonixpharma.com.

Forward
Looking Statements

Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words such as “anticipate,” “believe,” “forecast,” “estimate,” “expect,” and “intend,” among others. These forward-looking statements are based on Tonix’s current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, risks related to the failure to obtain FDA clearances or approvals and noncompliance with FDA regulations; delays and uncertainties caused by the global COVID-19 pandemic; risks related to the timing and progress of clinical development of our product candidates; our need for additional financing; uncertainties of patent protection and litigation; uncertainties of government or third party payor reimbursement; limited research and development efforts and dependence upon third parties; and substantial competition. As with any pharmaceutical under development, there are significant risks in the development, regulatory approval and commercialization of new products. Tonix does not undertake an obligation to update or revise any forward-looking statement. Investors should read the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2022, and periodic reports filed with the SEC on or after the date thereof. All of Tonix’s forward-looking statements are expressly qualified by all such risk factors and other cautionary statements. The information set forth herein speaks only as of the date thereof.

Contacts

Jessica Morris (corporate)
Tonix Pharmaceuticals
investor.relations@tonixpharma.com

(862) 904-8182

Olipriya Das, Ph.D. (media)
Russo Partners
Olipriya.Das@russopartnersllc.com

(646) 942-5588

Peter Vozzo (investors)
Westwicke/ICR

peter.vozzo@westwicke.com

(443) 213-0505

 


Vera Bradley (VRA) – Shares in the Discount Bin; Initiating Coverage with An Outperform Rating

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Thursday, June 16, 2022

Vera Bradley (VRA)
Shares in the Discount Bin; Initiating Coverage with An Outperform Rating

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Initiating Coverage. We are initiating research coverage on Vera Bradley, Inc. with an Outperform rating and an $8.00 12-month price target. Vera Bradley is the owner of two unique lifestyle brands. With the recent overall market sell-off, VRA shares are selling at all-time lows, outside of the COVID induced panic in mid-2020. With significant organic and inorganic growth opportunities, we believe VRA shares present an attractive risk/reward situation.

The Brands. The iconic Vera Bradley brand is a leading designer of women’s handbags, luggage and other travel items, fashion and home accessories, and unique gifts. The Company operates through a network of retail, wholesale and e-commerce sites. Pura Vida is is a rapidly growing, digitally native lifestyle brand. The Pura Vida brand has a differentiated and expanding offering of bracelets, jewelry, and other lifestyle accessories….

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

June’s Fed Meeting Concludes With a Big Step Toward Lowering Inflation

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Image Credit: Federal Reserve (Flickr)


The FOMC’s Big Decision on Rates

The Federal Open Market Committee (FOMC) voted to raise overnight interest rates from a target of 0.75%-1.00%. to the new level of 1.50% – 1.75%. The monetary policy shift in bank lending rates was greater than originally telegraphed by the Fed, but in line with many Fed watchers’ expectations that were swayed after the CPI release last Thursday. The Wall Street Journal and many primary bond dealers increased their forecast on Monday of this week to a 75bp increase from 50bp (nearly double the target rate at the time). The early reaction from the US Treasury 10 year was to increase by 2 basis points to yield 3.43% after trading 8bp lower most of the day (2:15pm EST).

The statement accompanying the policy shift also included a discussion on U.S. economic growth being stronger in the second quarter compared to the first. The central bank said overall economic activity appears to have picked up after edging down in the first quarter. Also, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

The release discussed inflation risk and shaped an understanding of the many places higher prices are coming from. The release stated, “The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions.” It added, “The Committee is highly attentive to inflation risks.”

There was no change in quantitative tightening. It will follow the exact schedule outlined earlier. For Treasury securities, the cap of securities allowed to roll off the balance sheet will be set at $30 billion per month and, after three months, will increase to $60 billion per month. The decline in holdings of Treasury securities under this monthly cap will include Treasury coupon securities and, to the extent that coupon maturities are less than the monthly cap, Treasury bills.

For agency debt and agency mortgage-backed securities, the cap will initially be set at $17.5 billion per month beginning June 1, and after three months will increase to $35 billion each month.

Take-Away

Higher interest rates can weigh on stocks as companies that rely on borrowing may find their cost of capital has increased. The risk of inflation also weighs on the markets. Additionally, investors that would prefer the “known” result of investing in the bond market or other interest rate products may pull assets out of stocks if they are attracted by the fixed income alternative. Investor money leaving the stock market reduces demand.

The next FOMC meeting is also a two-day meeting that takes place July 26-27. If the pace of employment and overall economic activity is little changed, the Federal Reserve is expected to again raise interest rates.

Paul Hoffman

Managing Editor, Channelchek

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Cannabis Tourist Destinations Growing

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Image Credit: Teodor Savin (Pexels)


Cannabis Tourism: How a New Travel Trend is Taking Off

Legal cannabis consumption rose in the US and Europe during the COVID pandemic, with some people turning to marijuana to help them cope with lockdowns and broken routines. Meanwhile, fewer people today view the drug as harmful compared to previous decades.

These factors may have contributed to a trend toward cannabis-related tourism, with destinations developing new holiday products to tempt customers and rising travel bookings to destinations where cannabis is legal. But there are risks for both destinations and tourists in embracing this trend.

Work by MMGY Travel Intelligence found that 29% of leisure travelers are interested in cannabis-related tourism. A study by the Dutch government revealed that 58% of international tourists choose Amsterdam in order to consume drugs. And business in Dutch coffee shops has increased since the start of the pandemic.

Nine months after Illinois legalized recreational cannabis in January 2020, nearly 30% of purchases were by non-residents. Thailand has just announced it has legalized cannabis and is hoping this will boost tourism.

The tourism sector and specific destinations have reacted quickly to the demand for cannabis, hemp, and CBD-related products by designing experiences that include those elements. They are also responding to the expected economic potential related to increased hotel occupancy, tax revenues, increased land values, business expansion, jobs, and public health and safety benefits that could be connected to cannabis sales.

Yet, although tourism to other destinations with legalized cannabis is growing in popularity, data is only beginning to be collected. And so far, no destination is ready to be labeled as the “next Amsterdam”.

Big Potential

While cannabis-related travelers are believed to be high-spending and well-educated, authorities don’t want to replicate the Dutch model, which led to a massive concentration of cannabis coffee shops in Amsterdam and raised concerns over hard drug use and criminality.

New business models are focusing on agri-tourism (meet-the-farmer sessions) and culinary tourism, and events such as cannabis festivals. Tourists can choose from farm tours, “bud and breakfast” hotels, city tours, cannabis festivals, cannabis trails, food, wine and marijuana pairings, “ganja yoga,” and packages that combine accommodation and cannabis experiences.

The potential for cannabis tourism is widespread around the world. More than 19 US states and Washington DC have now legalized recreational cannabis, along with Canada, Mexico, Uruguay, and others. In Europe, Luxembourg allows the consumption of personally cultivated cannabis, while Switzerland is trialing cannabis sales from pharmacies for recreational purposes.

Malaysia and Thailand have made initial steps toward legalizing recreational use. Costa Rica and Morocco have also approved legalization for medicinal purposes.

Risks for Tourists

However, few countries have clarified the legality of cannabis use by tourists with legislation directed at recreational use by residents. This means tourists risk breaking the law unintentionally by interacting with street dealers and police as well as the health implications of consuming real and fake drugs.

There is some evidence cannabis can improve some mental health conditions and provide pain relief. But tourists with pre-existing mental health disorders, for example, may risk their physical and psychological wellbeing. Cannabis-related mental health events, including depression, can also occur among those who have not been diagnosed with mental health issues.

A patchwork of complicated laws and regulations regarding recreational cannabis use by overseas tourists means questions remain about the legality of consumption, the transport of cannabis vape pens overseas as well as issues of insurance cover and health care during and after travel.

While Uruguay is planning to allow consumption by tourists, countries like Portugal, where cannabis has been decriminalized since 2001, still doesn’t allow them to buy it legally. In Spain, cannabis clubs allow visitors to donate to the club instead of purchasing a product. But Spain and other large markets like South Africa are focused on domestic cannabis tourism rather than international visitors.

Few countries have carried out a cost-benefit analysis around legal cannabis and tourism or fully discussed issues of land and water use, police powers, and benefits to local communities. While cannabis tourism can generate tourism and jobs, and reduce the power of organized crime, the goal of sustainable development is threatened by theft, racism, and a market stacked against small local operators who often can not secure funding or insurance. There are also possible increases in pollution and public health and safety concerns.

Mexico and Canada have promised funding for indigenously owned businesses to aid social and racial equality, while New York plans to create a US$200 million (£162 million) public-private fund to support social equity goals. Resident support and continual conversations with communities on how to plan the sustainable development of cannabis tourism should be a vital part of the development of the sector.

While it appears that the COVID pandemic helped stimulate and legitimize the use of marijuana, with dispensaries declared an essential service in parts of the US during the pandemic, tourism could expand and normalize acceptance of its use.

Perceived risks may fade and tourist guilt may dissipate. Cannabis tourism is likely to become just another segment of the holiday industry.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It was written by and represents the research-based opinions of Michael O’Regan, Senior Lecturer in International Tourism Management, Swansea University.


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A Primer on the Fed’s Efforts to Extinguish Roaring Inflation

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Image Credit: Pixabay (Pexels)


Five Things to Know About the Fed’s Interest Rate Increase and How it Will Affect You

The Federal Reserve is expected to raise interest rates for the third time this year, on June 15, 2022, as it seeks to counter inflation running at the fastest pace in over 40 years. The big question is how much it will lift rates. Before the latest consumer prices (CPI) report on June 10, most market watchers and economists expected a 0.5-percentage-point hike (50 basis points). But now, more are anticipating a 0.75-point increase – which would be the largest in nearly 30 years. The risk is that higher rates will push the economy into a recession, a fear aptly expressed by the recent plunge in the S&P 500 stock index, which is down over 20% from its peak in January, making it a “bear market.”

What does this all mean? Brian Blank, a finance scholar who studies how businesses adapt and handle economic downturns, was asked to explain what the Fed is trying to do, whether it can succeed and what it means for you. His thoughts and advice are packaged neatly in answers to five questions many people are asking.

 

1. What is the Fed Doing and Why?

The Federal Open Market Committee, the Fed’s policymaking arm, is currently pondering how much to raise its benchmark interest rate. The stakes for the U.S. economy, consumers and businesses are high.

In recent weeks, Fed Chair Jerome Powell has signaled that the U.S. central bank would likely increase the rate by 0.5 percentage point to a range of 1.25% to 1.5%. But markets and Wall Street economists are now anticipating a larger 0.75-point hike because the May consumer price data suggest inflation has been unexpectedly stubborn. Some Wall Street analysts suggest a 1-percentage-point hike is possible.

Since the latest consumer price index data came out on June 10, the prospect of a faster pace of rate hikes has led to financial markets plunging 5%. Investors worry the Fed may slow the economy too much in its fight to reduce inflation, which if left unchecked also poses serious problems for consumers and companies. A recent poll found that inflation is the biggest problem Americans believe the U.S. is facing right now.

 

2. What is the Fed Trying to Achieve?

The Federal Reserve has a dual mandate to maximize employment while keeping prices stable.

Often policymakers must prioritize one or the other. When the economy is weak, inflation is usually subdued and the Fed can focus on keeping rates down to stimulate investment and boost employment. When the economy is strong, unemployment is typically quite low, and that allows the Fed to focus on controlling inflation.

To do this, the Fed sets short-term interest rates, which in turn help it influence long-term rates. For example, when the Fed lifts its target short-term rate, that increases borrowing costs for banks, which in turn pass those higher costs on to consumers and businesses in the form of higher rates on long-term loans for houses and cars.

At the moment, the economy is quite strong, unemployment is

low, and the Fed is able to focus primarily on reducing inflation. The problem is, inflation is so high, at an annualized rate of 8.6%, that bringing it down may require the highest interest rates in decades, which could weaken the economy substantially.

And so the Fed is trying to execute a so-called soft landing.

 

3. What’s a ‘Soft Landing’ and is it Likely?

A soft landing refers to the way that the Fed is attempting to slow inflation – and therefore economic growth – without causing a recession.

In order to stabilize prices while not hurting employment, the Fed is expected to increase interest rates rapidly in the coming months – and it currently forecasts rates to be at least 1 percentage point higher by 2023. It has already lifted its benchmark rate twice this year by a total of 0.75 percentage point.

Historically, when the Fed has had to raise rates quickly, economic downturns have been difficult to avoid. Can it manage a soft landing this time? Powell has insisted that its policy tools have become more effective since its last inflation fight in the 1980s, making it possible this time to stick the landing. Many economists and other observers remain uncertain. And a recent survey of economists notes that many anticipate a recession beginning next year.

That said, the economy is still relatively strong, and I’d say the the odds of a recession beginning next year are still probably close to a coin flip.

 

4. Is there Any Way to Tell What the Fed Might do Next?

Each time the Federal Open Market Committee meets, it seeks to communicate what it plans to do in the future to help financial markets know what to expect so they aren’t taken by surprise.

One piece of guidance about the future that the committee provides is a series of dots, with each point representing a particular member’s expectation for interest rates at different points in time. This “dot plot” has previously indicated that the Fed will raise interest rates to 2% this year and 3% soon.

Given the inflation news since the last meeting, investors are now forecasting an even faster pace of rate hikes and expect the target rate to be over 3% by 2023. Long-term interest rates, such as U.S. Treasury yields and mortgage rates, already reflect these rapid changes.

And so investors and economists will be watching to see how the Fed’s dot plot changes after it announces its rates decision on June 15, which will determine how quickly committee members expect to lift interest rates in the coming months.

 

5. What Does this Mean for Consumers and the Economy?

Interest rates represent the cost of borrowing, so when the Fed raises the target rate, money becomes more expensive to borrow.

First, banks pay more to borrow money, but then they charge individuals and businesses more interest as well, which is why mortgage rates rise accordingly. This is one reason mortgage payments have been rising so rapidly in 2022, even as housing markets and prices start to slow down.

When interest rates are higher, fewer people can afford homes and fewer businesses can afford to invest in a new factory and hire more workers. As a result, higher interest rates can slow down the growth rate of the economy overall, while also curbing inflation.

And this isn’t an issue affecting just Americans. Higher interest rates in the U.S. can have similar impacts on the global economy, whether by driving up their borrowing costs or increasing the value of the dollar, which makes it more expensive to purchase U.S. goods.

But what it ultimately means for consumers and everyone else will depend on whether the pace of inflation slows as much and as quickly as the Fed has been forecasting.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It was written by and represents the research-based opinions of D. Brian Blank, Assistant Professor of Finance, Mississippi State University.


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Release – Cypress Development Progress on Feasibility Study

Posted on by Admin




Cypress Development Progress on Feasibility Study

Research, News, and Market Data on Cypress Development

June 15, 2022 –
Vancouver, Canada – Cypress Development Corp. (TSXV: CYP) (
OTCQX: CYDVF) (Frankfurt: C1Z1) (“Cypress” or “the Company”) is pleased to provide an update on the progress of the ongoing Feasibility Study for the Company’s Clayton Valley Lithium Project, in Nevada, USA. The Feasibility Study is under the direction of Wood PLC (“Wood”) and Global Resource Engineering (“GRE”) and all related work is proceeding well, and it remains on track for completion in late 2022.

Activity Highlights:

  • Geotechnical study in progress
  • Continued operation of the Pilot Plant
  • 500-ton bulk sample collected for further metallurgical material
  • Sonic drill program completed consisting of 580 meters in eight drill holes
  • Resource model updated with data from recently acquired property

Geotechnical Program

Wood personnel conducted on-site visits in supervising the collection of geotechnical data for the foundation design of the Company’s processing plant site and tailings storage facility. The samples collected for Wood’s geotechnical program were shipped to materials testing laboratories, and additional on-site work is planned in the next month.

GRE personnel conducted site visits in preparation to work on the Project’s resources and reserves. GRE personnel supervised the collection of a suite of large-diameter core samples for assay and geotechnical testing, which will provide further information for GRE’s work on the mine design.

Lithium Extraction
Facility (“Pilot Plant”)

Testing continues at Cypress’ Pilot Plant in Amargosa Valley, 100 miles southeast of the Clayton Valley Lithium Project site. The Pilot Plant is now working in its 12th cycle of continuous 24-hr per day testing. The tests are ongoing to examine efficiencies in processing, testing various configurations in equipment and operating conditions, and the plant continues to produce concentrated lithium solutions for use in downstream product testing.

Wood’s process engineering team is working with Continental Metallurgical Services and the data from the Pilot Plant, to develop mass balance and equipment sizing. Wood’s engineers are also working on the overall project infrastructure, including selection and design of access roads, plant equipment, power, and water supplies.

Bulk Sample

To support continued testing, a 500-tonne sample of claystone was excavated in late April from an engineered test-pit and transported to the Company’s operations headquarters at the Tonopah airport, where it will be crushed, screened, and bagged in preparation for treatment at the Company’s Pilot Plant. The sample was collected near DCH-1, and in the vicinity of the planned starter-pit for mining in the Feasibility Study.

“We are pleased with the bulk sampling work. The size of the bulk sample may be larger than necessary for the Pilot Plant to provide adequate information for the Feasibility Study” said President and CEO Bill Willoughby. “This sample, however, allows us to examine lithium grade and other properties in the claystone over a larger volume. It also ensures we have material on hand, should we need it, for future tests or continued operations.”

Sonic Drill Program

Cypress is continuing to log and sample core from a sonic drill program which commenced and was completed in May. The purpose of the drill program was to obtain large-diameter (6-inch) continuous core. Eight locations were selected for metallurgical, geotechnical, lithological purposes. Each hole yielded 1.9 to 2.3 tonnes of claystone which will be used in metallurgical testing at the Company’s Pilot Plant to examine if there are any variations in performance due to depth, location, or material type in the deposit.

Four of the holes (CSV-1 through CVS-4) were completed in the central portion of the project in the vicinity of the proposed starter-pit and the 500-tonne bulk sample.  Four other holes (CVS-5 through CVS-8) were completed in the northeast portion of the project on and near the parcel of property recently acquired from Enertopia Corporation (“Enertopia”). In addition to providing metallurgical sample material, these latter four holes will provide confirmation of the data from Enertopia’s previous drilling.

“The drilling program proceeded better than expected and was very successful in this first application of sonic drilling in Clayton Valley” stated Daniel Kalmbach, Cypress Manager, Geology and QP. “The quality of the large-diameter core samples are excellent and will provide further valuable data for the Feasibility Study.”

Resource Model

The recent addition of land acquired from Enertopia (see news release dated May 5, 2022) resulted in the addition of five core holes which were drilled by Enertopia in 2018. This property comprises 17 unpatented mining claims totaling 160 contiguous acres immediately adjacent to Cypress’s Project. A March 2020 NI 43-101 compliant technical report (published by Enertopia) on the property shows an Indicated resource of 82 million tonnes (mt) of 1,121 parts per million (ppm) Li and an Inferred resource of 18 mt of 1,131 ppm Li using a cutoff grade of 400 ppm Li. Cypress has not independently confirmed the resource indicated in the March 2020 NI 43-101 report.

All data received from the property acquisition has been incorporated into the project database and is expected to be used by GRE to generate the resource and reserve estimates and develop the mine plan for the Feasibility Study

Qualified Person

Daniel Kalmbach, CPG, is the qualified persons as defined by National Instrument 43-101 and have approved of the technical information in this release.

About Cypress Development
Corp

Cypress Development Corp. is a Canadian based advanced stage lithium company, focused on developing its 100%-owned Clayton Valley Lithium Project in Nevada, USA. Cypress is in the pilot stage of testing on material from its lithium-bearing claystone deposit and progressing towards completing a feasibility study and permitting, with the goal of becoming a domestic producer of lithium for the growing electric vehicle and battery storage market.

ON BEHALF OF CYPRESS
DEVELOPMENT CORP.
WILLIAM WILLOUGHBY, PhD., PE
President & Chief Executive Officer

For further information,
please contact:

Spiros Cacos | Vice President, Investor Relations
Direct: +1 604 764 1851 | Toll Free: 1 800 567 8181 | Email scacos@cypressdevelopmentcorp.com
www.cypressdevelopmentcorp.com

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE.

Cautionary Note Regarding
Forward-Looking Statements

This release includes
certain statements that may be deemed to be “forward-looking
statements”. Forward-looking statements are subject to risks,
uncertainties and assumptions and are identified by words such as “expects,”
“estimates,” “projects,” “anticipates,” “believes,” “could,” “scheduled,” and
other similar words. All statements in this release, other than statements
of historical facts, that address events or developments that management of the
Company expects, are forward-looking statements. Although management believes
the expectations expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of future
performance, and actual results or developments may differ materially from
those in the forward-looking statements. The Company undertakes no obligation
to update these forward-looking statements if management’s beliefs, estimates
or opinions, or other factors, should change. Factors that could cause actual
results to differ materially from those in forward-looking statements, include
market prices, exploration, and development successes, continued availability
of capital and financing, and general economic, market or business conditions.
Please see the public filings of the Company at www.sedar.com for
further information.