Extend & Pretend
“…in leveraged loans & middle-market credit we see lenders getting coerced by equity sponsors” - Dan Zwirn
***Editor’s Note: The International Red Cross / Red Crescent is apparently active - on the ground, in Beirut - providing humanitarian support. They are accepting donations to support the disaster response efforts.***
REGULATORS.
Ideally, regulators should function something like the Japanese train system:
Immaculately clean
Fast
And predictable, down to the second
Around the world, recent regulatory actions have resembled the mid-19th century American railroads…
Dangerous, sometimes deadly
Inept-to-corrupt
Predictably unpredictable
The explosion in Beirut is the latest tragic example.
But putting fatal tragedies asides, chaotic regulatory regimes have - both directly & indirectly - made headlines this week for a variety of reasons:
The DAPL pipeline appeal
BNP’s Trade Finance review
BP’s “managing down”of its oil business, on the basis of 2yrs worth of data
We’re not saying that there’s too much or too little regulation…
… but rather that there seems to be less-and-less of a rhyme-or-reason to regulatory action.
Arbitrary like the rules of the street.
An erratic environment that harkens back to the lyrics of a G-funk classic -
**Regulators**
We regulate any stealing of his property - Warren G
Unfortunately, there’s a growing edge in business & investing…
.. and - that edge - is in knowing / influencing what how government is going to regulate -
If you’re watching, expect to see pandering
If you’re playing, you’d better be lobbying
We don’t like it. We don’t endorse it.
We’re just saying - don’t be surprised to see private sector games become increasingly political -
LAREDO.
That’s generally not a good sign.
The reason:
“…we identified an error in the future production costs component of the estimated present value ("PV-10") of our reserves…
We’ve beat this topic to death…
So, here’s a couple noteworthy threads from others:
@TomLoughrey_LFE, from ‘18
OTHER NEWS.
Fieldwood filed for Ch.11; how decom liabilities eventually play out w/ these assets will likely be a big story… but that’s not for today.
Michael Mauboussin (now at Morgan Stanley) published a short book (PDF link) on Public Equities & PE/VC.
We blindly recommend reading anything Mauboussin publishes.
Hellfighters: Red, Coots & Boots and the story of oil well firefighters
For the Gym Rats w/ a Sweet Tooth
33yrs ago this week, the US FCC rescinded the Fairness Doctrine…
The RRC’s latest on flaring
Ring update from Josh Pollard
Champions League, Hockey, MLB, NBA… pick your poison - we’ll be back on Tuesday - catch y’all then -