Daily Archives: January 31, 2020

Pakistan improves score on Economic Freedom Index – The Nation

Posted: January 31, 2020 at 9:50 am


8:50 PM | January 28, 2020

Pakistans score on the Economic Freedom Index 2019 improved by a nominal point as judicial effectiveness and property rights outpaced modest performance in monetary freedom and fiscal health.

According to a report compiled by Washington-based Heritage Foundation, Pakistans economic freedom score improved by 0.6 point to an overall score of 55, ranking the economy 131st freest in the 2019 index.

However, Pakistan is ranked 32nd among 43 countries in the Asia-Pacific region, and its overall score is below the regional and world averages, the report added.

At a global level, Hong Kong, Singapore and New Zealand are the top three ranked countries on the World Economic Freedom Index.

The report further said that although some aspects of economic freedom had advanced modestly in Pakistan in recent years, decades of internal political disputes and low levels of foreign investment had led to an erratic growth and underdevelopment.

Excessive state involvement in the economy and omnipresent regulatory agencies has inhibited private business formation, it added.

Moreover, lack of access to bank credit undermines entrepreneurship, and the financial sectors isolation from the outside world slows down innovation.

According to the report, about 25% of adult Pakistanis have access to an account with a formal banking institution.

The report highlighted that in economically-free societies, governments allow labour, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.

The report further states that in an economically-free society, Individuals are free to work, produce, consume, and invest in any way they please.

The international foundation measures economic freedom by assessing the rule of law, government size, regulatory efficiency and access to open market. The data is also shared with investors, business and finance leaders, policymakers, academics, journalists, students, and teachers.

The report emphasised that the tax system of Pakistan is complex despite reforms to cut rates and broaden the tax base.

Over the past three years, government spending has amounted to 20.3% of the countrys output (GDP), and budget deficits have averaged 5.1% of GDP.

Progress in improving the entrepreneurial environment has been adequate. The governments 2018-2019 budgets increased spending on subsidies for the construction sector and for items such as food (especially sugar), power, water, and textiles by 36%.

The combined value of exports and imports is equal to 25.8% of GDP. The average applied tariff rate is 10.1%. As of June 30, 2018, according to the WTO, Pakistan had 66 non-tariff measures in force.

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As Access To Asylum Narrows, These Alternatives Are Some Immigrants’ Only Hope – HPPR

Posted: at 9:50 am

For most migrants fleeing violence or persecution, getting asylum protections in the U.S. has never been easy.

Since President Donald Trump took office, his administration has repeatedly tightened the rules, and narrowed who qualifies for asylum. Today, its practically impossible.

Immigration attorneys are turning away from the gold standard asylum and putting more effort into the two major legal alternatives: withholding of removal and the U.N.s Convention Against Torture.

Whether or not someone qualifies for asylum in the U.S. partly depends on timing. Those who crossed the U.S.-Mexico border before July 16 can still pursue asylum here. But people who arrived later, and traveled through another country to get here, are subject to a new rule: they must apply for asylum in a country they passed through first or theyre ineligible.

Two women from Honduras just missed the cutoff.

Last August, 24-year-old Dania, swam across the Rio Grande into the U.S. after being raped by police. Her lawyers have asked that her last name not be included in the story, they fear it could affect the outcome of her case.

Gang members were trying to convince me to work for them, Dania said in Spanish. They wanted me to be a prostitute.

Dania said she refused the gang members and went to the police to report the incident. Thats when police officers came to her house and raped her for not complying with the gang members.

The gangs and police would kill her if she stayed, she said.

Multiple incidents led a 20-year-old were calling Luisa to leave Honduras. Her lawyer asked that we not use her real name, since her case is still pending in immigration court.

Luisa is a lesbian, and said she was persecuted and mistreated because of that. A gang killed her brother, then pressured her to join.

I ended up just having to flee, Luisa said in Spanish.

She traveled through Guatemala, then Mexico, arriving at the U.S. border on July 29 less than two weeks after the transit ban went into effect.

Until recently, both Dania and Luisa would have had cases for asylum in the U.S. but not under new Trump-administration policy. Both were deemed ineligible for asylum because they both failed to apply in another country on the way here.

So their attorneys are forced to take another route.

Heidi Cerneka is an immigration attorney with Las Americas Immigration Advocacy Center, an El Paso nonprofit. She took on Luisas case.

Our...goal is to make sure we guarantee that people who are in danger if they return to their countries can actually be safe from returning to their countries, she said.

Outside of asylum, there are two main legal options.

For Danias case, her pro bono lawyer Fariha Chowdry is counting on Convention Against Torture for relief.

Chowdry, who works for the Houston-based Alcozer & Associates said this woman has been terrorized, shes been raped, which is a protected ground and considered past persecution.

Protection under the Convention Against Torture comes from a U.N. treaty the U.S. ratified in 1994, designed to protect people from being returned to countries where they would likely face torture.

Withholding of removal serves a similar purpose. This form of relief protects people from being returned to countries where their life or freedom would be threatened because of their race, religion, nationality, political opinion or membership in a particular social group.

If the immigration judge really recognizes that the person would be in danger going back home then the judge can order that person removed, say they dont qualify for asylum, and then basically put a pause on that and say but Im not going to remove you and you can stay in the United States, Heidi Cerneka said.

She thinks Luisa is a good candidate for this protection.

Immigration attorney Ruby Powers said both Convention Against Torture and withholding of removal are the backups to aslyum.

Now we are seeing people are barred from asylum because of whatever reasons and so withholding of removal and Convention Against Torture are becoming more of a focus, not just an afterthought, Powers said.

Theres a reason these legal alternatives are usually the backups. These forms of relief are harder to win, and come with fewer benefits.

In order to receive protection under the Convention Against Torture, migrants would have to prove theres more than a 50% chance that theyll be tortured if they return to their home country.

For withholding of removal, the standard of proof is just as high more than 50% and they have proof they would be persecuted because of a specific, protected identity.

To get asylum, migrants have to prove theres a 1 in 10 chance of persecution or torture.

That lowered standard of proof can be the life-changing difference between a grant and a denial.

I like to say that we dont really have a persecution-o-meter, but its much harder to prove 50% than 10%, Cerneka said.

Both Convention Against Torture and withholding of removal are granted at rates lower than asylum.

In the 2018 fiscal year, 1,334 people were granted relief under Convention Against Torture, 25,802 were denied, according to the Executive Office for Immigration Review.

That same year, 1,746 people were granted withholding of removal, while nearly 26,906 were denied a decrease of about 38% from fiscal year 2014.

And now, due to a recent Board of Immigration Appeals decision last December called Matter of O-F-A-S-, Convention Against Torture is more difficult to prove.

Under the decision, its even harder to convince a judge that police, for example, tortured in their official capacity. Wearing a police uniform, for example, isnt enough.

Attorney Dree Collopy, based in Washington, D.C., said judges will use this case as a basis to deny other immigrants.

Its decisions like this that basically give judges who are less inclined to provide due process and less inclined to interpret the law favorably for a respondent, it gives them the tools to easily just grasp on that and say no, Collopy said.

Besides the tougher odds, theres another downside to these other legal protections.

Convention Against Torture and withholding of removal arent as robust as asylum. These protections dont provide a path to citizenship or extend to other family members. People can lose their protected status by simply traveling outside of the U.S. or if the government decides that conditions have changed in their home country.

Heidi Cerneka refers to this as a state of permanent temporariness.

If asylum is the gold standard, I think of withholding of removal as the aluminum standard, Cerneka said, though she noted that many of her clients who received withholding of removal are mostly just relieved that theyre able to stay in the U.S.

Dania and Luisa technically have another option. They could apply for asylum in one of the countries they traveled through on their way to the U.S. The Department of Homeland Security has said the new asylum rule will lead to fewer individuals transiting through Mexico on a dangerous journeyand will encourage migrants to apply for asylum closer to home.

But Luisa said pursuing asylum in one of the countries she passed through doesnt feel like a legitimate option. She said Guatemala is just as dangerous as her home country and she doesnt have any family there she can rely on.

No one who could help me. No one who could open their door to me and say yes, you can stay in my house. Youll have everything you need, Luisa said.

The U.S. Department of State has deemed six of Guatemalas states as places where, violent crime, such as armed robbery and murder, is common. They advise to reconsider travel to those areas.

As for Mexico, Luisa said she was kidnapped and sexually assaulted there, just before her 20th birthday. Mexico was the place where I went through my worst experience, she said not a place to seek protection.

Both Luisa and Dania said they would likely be killed if they return to Honduras. Their fates in the U.S. are ultimately up to a judge to decide.

While she waits for her case to play out in court, Luisa is living with a friend in Michigan. Her lawyer, Heidi Cerneka, helped get her released from detention.

Everything has changed, she said. I dont have to be hiding from anyone. I know I can walk freely. No ones gonna be judging me.

She hopes this freedom isnt temporary, and she can ultimately stay in the country.

Dania will wait for her case in an immigration detention center outside Houston. Shes worried she wont get a psychologist to testify at her hearing.

Her father, Melvin, is also in Houston, where he works in construction.

It would be very painful if we didnt win this case so she can be here with us here, he said.

Melvin hasnt seen his daughter in 14 years, since he left Honduras. Hes raised her from afar. Hes sent money and called three times a week, hoping she would join him one day.

Now thats she so close, hes worried theyll never be reunited.

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As Access To Asylum Narrows, These Alternatives Are Some Immigrants' Only Hope - HPPR

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Brexit at last rejoice, finally we have our freedom, says PATRICK OFLYNN – Express

Posted: at 9:50 am

On November 25, 2010, this newspaper threw down the gauntlet to the Westminster elite sending shockwaves along the corridors of power by declaring on our front page that it was time for the United Kingdom to quit the EU and that we would, from that day on, devote our campaigning energies to securing just such an outcome.

At first it was just a tiny band of independent-minded, patriotic backbench MPs who offered us support. As one of them, Wellingborough Tory MP Peter Bone, noted: I remember walking up Downing Street to deliver the Daily Express petition to the Prime Minister. It has carried on campaigning, set the standard and the other papers followed.

Former Labour MP Kate Hoey, another who helped us deliver an enormous petition from Daily Express readers to David Cameron in 10 Downing Street early in 2011, added: The Express has been the only paper that has consistently stood up as the voice of the people.

The rapid progress our campaign made was demonstrated in October 2011, when 111 MPs including 81 Tories who rebelled against Mr Camerons three-line whip voted in favour of a motion calling for an In-Out EU referendum.

And at the end of January 2013 by which time well over half a million Daily Express readers had signed campaign coupons and online petitions as our movement spread like wildfire Cameron was forced to eat his words by promising an In-Out referendum would indeed be held were he to be returned as prime minister at the 2015 election.

What had been initially depicted as an aim of cranks and gadflies turned out to be so popular that it helped Cameron win a majority at that election, leaving him with no option but to deliver the referendum he had initially been so reluctant to embrace. And we all know what happened next. The establishment weighted the scales in its own favour by means of a taxpayer-funded Remain propaganda leaflet delivered to every door and by co-opting senior public servants into its Project Fear effort to scare the public into staying under the control of Brussels. And still the British people voted to leave.

Far from being a cause believed in only by a Right-wing fringe, Brexit was shown to be the overall wish of the British people, with 17.4 million adults voting for it the most ever to vote for any single proposition in the entire history of our country.

The desire to control our own immigration system was undoubtedly a major factor and so were public qualms at the growing cost of EU membership. But the most fundamental reason was never in doubt the desire of a proud country to become a sovereign, nation state democracy once again.

Since the original referendum on the Common Market in 1975, the true aim of elites across Europe to create a superstate via a gradual salami-slicing away of national sovereignty had become harder and harder to conceal.

A succession of EU treaties that took more and more power away from member states and transferred it to Brussels were passed without the British people being asked for permission in a further referendum; the treaties of Maastricht, Nice, Amsterdam and finally Lisbon.

The Lisbon Treaty of 2008 was key because it gave the EU the legal personality of a state and awarded the bloc the power to abolish further national vetoes. While ministers in the then Labour government tried to dismiss it as a mere tidying-up exercise, the British people clocked that it marked an irreversible step towards full political integration under the rule of the unelected European Commission.

Mr Cameron pledged, no ifs, or buts, that he would hold a referendum on it, should he make it to Downing Street. But in November 2009, he reneged on that promise.

Because, he said, the treaty had been already ratified by the Labour government, a future Tory administration would not put it to the people.

It was in the ensuing public uproar that the seeds for our campaign were planted. Enough was enough. Someone had to stand up and be counted and fight for the freedom and independence of Britain.

Accommodations with Brussels that involved specific British opt-outs on things like the single currency and the Schengen borderless zone were no longer sufficient.

With plans for an EU army already being pushed and the eurozone countries planning a full fiscal union that would have a controlling majority in all the key EU institutions, it was obvious that the ambition for ever closer union set out in the founding Treaty of Rome was no longer a federalist pipe dream, but the inevitable destination of this project.

Well, not any longer. Not for the United Kingdom at least. Because our proud thousand-year history of taking our own decisions about life on our islands, our independent spirit and our wish to connect with other countries, not merely in Europe, but also via the Anglosphere and the Commonwealth, proved too strong.

It may very well be in the years ahead that the example set by Britain of affinity and fidelity to the nation state over the superstate is taken up elsewhere in Europe and that other countries follow our lead. That will be made more likely if we make a success of Brexit.

For the rest of the year we will, of course, be stuck in a transition phase and effectively still bossed about by Brussels in many aspects of life while Britain and the EU hammer out the details of a future relationship.

But the Prime Minister is clear on the trajectory the country is set on. And a political misadventure instigated by the pro-Brussels fanatic Edward Heath 47 years ago is finally coming to an end.

As yet another Tory prime minister might have put it: Just rejoice at that news.

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Brexit at last rejoice, finally we have our freedom, says PATRICK OFLYNN - Express

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Over 380 hectares of illegally logged private forests in Japan remain abandoned: data – The Mainichi

Posted: at 9:50 am

OSAKA -- At least a combined 386 hectares of private forests that were logged illegally in 858 cases across Japan had yet to be regrown as of March 2018, the Mainichi Shimbun has found.

Owners of private forests are required under the Forest Act to notify local governments of any logging, but did not do so in the 858 cases. It is believed to be the first time that the scale of deforestation without notice across the country has been clarified.

In at least one of the cases, a landslide occurred on a piece of land that was left exposed after being logged.

The government of Prime Minister Shinzo Abe is striving to transform forestry into a growing industry, but the finding suggests that local bodies do not have the capacity to keep tabs on logging at privately owned forests under their jurisdiction.

The Mainichi Shimbun filed a freedom of information request with the Forestry Agency to obtain internal documents that the country's 47 prefectural governments had submitted on the logging of both natural and planted privately owned forests. It then tallied the number of cases in which the prefectural governments reported that illegally logged forests had not been replanted as of the end of fiscal 2017, as well as the total areas of these forests.

The northeastern prefecture of Miyagi had particularly extensive forests that remained abandoned after being logged -- 213 hectares in 679 cases. Mie Prefecture in central Japan followed with 52 hectares in 43 cases, while in the northernmost prefecture of Hokkaido there were 26 hectares in 11 cases. The central Japan prefecture of Shizuoka had 25 hectares that remained unaddressed in nine cases of logging without permission.

In contrast, 21 prefectures where forestry is thriving, including Tokyo and the northeastern prefectures of Iwate and Miyazaki have no such forests.

However, the actual scale of such abandoned forests could be much larger as the agency may have failed to grasp the whole picture due to a shortage of personnel in charge at local governments.

Privately owned forests are defined as those owned by private individuals and organizations and those owned by public organizations such as local governments.

Statistics on forests and the forestry industry show that an estimated 73,508 hectares of privately owned forests across the country were logged in fiscal 2017.

According to the Forestry Agency, the yearly number of notices on logging submitted to municipalities across the country has hovered around 60,000 over the past several years. Meanwhile, the agency confirmed only 19 cases of logging without notice across the nation between fiscal 2011 and 2017.

As part of efforts to turn forestry into a growth sector, the Abe government is promoting efficient logging of privately owned forests. In 2018, a new law regulating the management of forestry business was enacted. Under this policy, municipalities are commissioned by forest owners to integrate and manage privately owned forests and then farm out the management of potentially profitable forests to "enthusiastic and capable" business operators.

(Japanese original by Takeshi Terada, Osaka Special Reports Department)

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New thinking is needed, band-aids wont suffice – Observer Research Foundation

Posted: at 9:50 am

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The sad truth is that global economic stability and growth, including for India, now depend on the unstable predilections of a global party-pooper, who is the President of the United States till at least the third quarter of FY 2021. The International Monetary Fund has said as much, albeit in diplomatese not surprising as the United States remains its major shareholder.

This is not to say we have not had problems at home since the end of FY 2018. First the illness and then the tragic demise of one of the BJPs tallest economic assets the suave, Lutyens-friendly Arun Jaitley hit the government hard as officialdom quickly disintegrated into chaos in the absence of skilled political economic leadership.

The government has been firefighting since FY 2019 using mostly Band-Aids of the cheapest kinds. This is fine for temporary spells of uncertainty or instability. But to reverse a three-year-long slowdown requires something more than big ideas unsupported by implementation capacity and undermined by worsened political adventurism in the garb of economic policy.

First, a finance minister simply cannot function with less operational freedom and discretion that any of our six Army commanders. Make no mistake. We have been in a losing economic war since FY 2018.

When desk-bound New Delhi-based generals have not listened to Army commanders in the past, the results have been dire, like our rout in 1962 after a short skirmish with China. Diffident decentralisation of authority partly explains our recent inability to respond appropriately to the economic stress we have been exposed to.

The political-economy instincts of Piyush Goyal are sound and becoming better by the day. He had no option but to present the FY 2020 Budget proposals in February last, appropriately retaining the virtual slippers of the absent Arun Jaitley on the FMs chair, as Bharat did during the absence of Lord Ram.

Similarly, Nirmala Sitharaman, who followed Piyush Goyal, has the makings of a fine FM. But being junior in the BJP hierarchy, she is constrained from charting an independent, cohesive path for growth with stability.

The result is that brave targets think a $5 trillion economy by 2024 or doubling of farmers incomes; systematically important schemes think PM Kisan Samman for transfer of direct benefits, More crop per drop or liberalising agriculture from domestic market and export restraints, have failed to take root.

Well-intentioned executive action think ending corruption, controlling tax terrorism, reducing subsidies to PSUs or deep reform of public sector banks and systematically important insurance and pension funds have got diluted during implementation possibly due to the influence of pressure groups. Only the Prime Minister can stem this rot.

Second, dealing with a fiscal crisis requires a focused and funded agenda to unlock economic potential in the near term. Nothing we have heard publicly, thus far, convinces us that the government is even near a magic bullet for FY 2021.

A mish mash of Band-Aid type solutions exist or are hinted at deep corporate tax cuts but with no matching tax cuts for individuals or rationalisation of GST rates. Both force small business to opt for hara-kiri because of the very high tax threshold preventing them from joining the formal tax-compliant economy.

Enhanced outlays on prestige projects, disguised as infra spend statues, grand new government offices and more museums, as paens to our past glories ignore the reality that the real value of infra spend comes from the stream of future additional annual economic value as happens when a bridge is built over a congested river crossing.

Fiscal firefighting like slashing spend in the last quarter to 25 per cent of the Budget or asking the RBI to again fork out 40 per cent more than the budgeted `1 trillion is unavoidable.

But the proposal of the N.K. Singh-led Finance Commission to roll back the progressive devolution of Central taxes to states introduced by the earlier Y.V. Reddy Finance Commission from the existing 42 per cent to 32 per cent is retrogressive.

A continued allegiance to fetishes like fiscal deficit being reduced to two per cent of GDP as a performance metric from the Jaitley years reflects moribund reflexes.

Rectitude, fiscal or otherwise, is a good thing. But even the most prudent athlete takes permissible performance enhancing drugs if he/she is feeling down. The ongoing demand recession is an outcome of the slowdown caused by the big disruption by ex-RBI governor Raghuram Rajan in the chummy way business was done, leading the switch to responsible bank lending, uniform norms for recognition of financial stress and recovery of bank funds through foreclosure of debt-ridden corporations.

Fiscal loosening is necessary to transfer income to the common man to substitute for lost income, lost jobs or lower business returns. Unlike the rich who tend to save during windfalls the richest expatriate these to safe havens overseas the poor consume windfall income thereby aiding in reviving demand.

The fiscal cost can be reduced by combining it with ending the direct subsidy to the fertiliser industry, ending subsidy on cooking gas and the wasteful food procurement and supply programme which cost around `3 trillion, or 1.5 per cent of the GDP. Cost-based tariffs for irrigation and electricity supply can recover another 0.5 per cent of GDP wasted by state governments on subsidising these production inputs.

Organised industry and big farmers the major recipients of direct and indirect subsidies have grown fat at the expense of the government treasury in the name of the poor. Transferring money directly to the poor will be more sustainable, more efficient and carbon footprint sensitive because it will decrease fertiliser, water and electricity consumption without loss of productivity due to the price incentive to conserve.

The government must become a transparently, financially prudent investor and junk infrastructure projects with low social returns. Are social returns even calculated today? And if so, by whom? And why is this data not available to the public?

Winning an economic war is all about operational smarts and not high intellect. But just good intentions are never enough. Without any demonstrated commitment to allocate public capital in an economically moral manner, dwindling political gains can be expected.

This commentary originally appeared in The Asian Age.

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New thinking is needed, band-aids wont suffice - Observer Research Foundation

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Edited Transcript of INVE earnings conference call or presentation 30-Jan-20 10:00pm GMT – Yahoo Finance

Posted: at 9:50 am

SANTA ANA Jan 31, 2020 (Thomson StreetEvents) -- Edited Transcript of Identiv Inc earnings conference call or presentation Thursday, January 30, 2020 at 10:00:00pm GMT

Identiv, Inc. - CFO & Secretary

Identiv, Inc. - CEO & Director

Good afternoon. Welcome to Identiv's presentation of preliminary Q4 and fiscal year 2019 results. My name is Savis, and I will be your operator this afternoon.

Joining us for today's presentation are the company's CEO, Steve Humphreys; and CFO, Sandra Wallach. Following management's remarks, we will open the call for questions.

Before we begin, please note that during this call, management may be making references to non-GAAP measures or projections, including adjusted EBITDA and free cash flow.

In addition, during the call, management will be making forward-looking statements. Any statement that refers to expectations, projections or other characteristics of future events, including financial projections and future market conditions, is a forward-looking statement. Actual results may differ materially from those expressed in these forward-looking statements. For more information, please refer to the risk factors discussed in documents filed from time to time with the SEC, including the company's latest annual report on Form 10-K. Identiv assumes no obligation to update these forward-looking statements, which speak as of today.

I will now turn the call over to CEO, Steve Humphreys, for his comments. Sir, please proceed.

Steven Humphreys, Identiv, Inc. - CEO & Director [2]

Thanks, operator, and thank you all for joining us today. As you all have seen, today, we announced our preliminary results for the fiscal year and fourth quarter 2019 as well as our updated outlook for 2020.

Now in 2019, we established our complete security platform across access systems, video analytics, mobility, credentials and RFID. In the fourth quarter of 2018 and the first quarter of 2019, our Thursby business had $1 million-plus deployments. In the third quarter of 2019, our Premises products grew 38% year-over-year. And in our most recent quarter, our RFID products grew 62% year-over-year. So clearly, there's strength in every product line and in the total solution.

But this last quarter, our revenues came in well below what we expected. Usually, we've been able to balance quarter-to-quarter fluctuations in one area of strength than others, but that fell far short in the fourth quarter and really interrupted the path we've built towards profitability and consistent growth. And despite that, we continue to see strength in our markets and our products, so we're confident we're positioned for long-term growth, but as a public company, we can't tolerate unpredictability on the top line while we're getting to scale. We, as a team, are very disappointed that it happened. Our responsibility to our investors, our customers and our people is to build predictable, profitable growth and to create a very valuable, strategically positioned company.

We fell behind on that commitment last quarter, and we've taken the lessons from the quarter and are applying them to get back on a predictable, profitable business path. So today, I'll address 3 topics. What happened and why? What are we doing about it? And what does this mean for our business in the short and long term?

So first, what happened and why did it happen? Our fourth quarter revenues were impacted in 4 areas. First, the federal government fell behind on their acquisition plan because of the continuing resolution that carried right up to the end of the year. As a result, about $1 million of Thursby software deals and about $3 million of federal government Premises business didn't close as we expected. Now none of the business was lost as far as we know, but with the federal government churn, the budget churn, we overestimated how quickly business would close.

A second factor just came up in the last couple of weeks. One of our major customers in Mexico has been affected by the slowing Mexican economy. As they've indicated to us concerns about their ability to pay invoices, we decided to remove a large order from our accounts to make sure there's no collectibility issue in the future, and this pulled down revenues by an additional $0.5 million.

The third factor that slowed closes is right at the end of the year. We launched 2 new recurring revenue initiatives late in the quarter, our Velocity Cirrus cloud-based SaaS security platform and our subscription-based mobile app for digitally encrypted PDF signing for the Defense Department. Now these are both very positive for our business in the long run, but with Thursby in particular, instead of the large, upfront licensing deals we had in the fourth quarter of 2018, we're now receiving monthly and annual subscription revenues. And this model is great for our ongoing business and customers love the ease of adoption, but it means we didn't have a big contributor to both revenues and gross margin like the 20,000-plus onetime Thursby licenses we delivered in the fourth quarter of 2018. Similarly, in the Premises business, some of our customers saw the launch of Cirrus and wanted to assess it. We think we're getting through that, but it all impacted the fourth quarter.

Now another example of this effect is the win we announced just last week to provide cloud-based emergency electronic mustering via our Freedom Cloud Access Control as a Service platform for a large Canadian pipeline project. This, again, is cloud-based RMR, the right platform for our business and for growing recurring revenues, but in the near term, it takes a major system sale and spreads the revenues over time.

And the fourth challenge we ran into was not expanding our sales team as fast as we planned. Our goal was to nearly double our sales team, but we fell behind on hiring while also driving the business because it's particularly hard to get good salespeople at year-end. And once they finish out their year and get year-end payouts, they get much more willing to move. So we've made 0.5 dozen offers just in the past 2 weeks, but we were behind on sales hiring throughout the fourth quarter.

This revenue shortfall is particularly frustrating because growing our monthly RMR is exactly where we want to go, we're building our sales team to drive growth, and our results clearly don't reflect the strength across the business. For example, year-over-year, we expanded non-GAAP adjusted EBITDA by 17% even with lower-than-expected revenues. We delivered positive non-GAAP free cash flow for the full year as well. Our backlog has increased going into this year, 36% from the same time last year and 80% from the same time in 2018. And we've already capitalized on some of this operating momentum, including booking more than $2 million of new business in the first week of January alone.

Now what it all this adds up to is our need to get to great scale. The more we scale the business, the more resilient we become to seasonality and differing growth rates in our product segments. We made progress with our 3 acquisitions a year ago, but the shortfalls at the end of 2019 clearly showed that we're not at the level we need to deliver consistent results and to balance the transition to more recurring revenues.

So that's what happened and why. Before I go into more detail about what we've done to address these issues and why we're positive about the business' future, I'm going to turn the call over to Sandra to walk us through the financial details so there's more context for the actions we're taking and for our outlook. Sandra?


Sandra Wallach, Identiv, Inc. - CFO & Secretary [3]


Thanks, Steve.

Based on preliminary, unaudited results, we expect total revenues for the fiscal year 2019 to range between $83.5 million and $83.6 million. This revenue range includes a reserve of $0.5 million related to a 3VR shipment in Q4 2019 to a Mexican-based financial institution, which lowered our revenue for Q4 and total year 2019. Last week, we received new information from this customer regarding their anticipated economic uncertainty, and we have, therefore, fully reserved their shipments until there's more clarity from the customer. This range compares to total revenues of $78.1 million for the total year 2018. This represents a 7% growth year-over-year. Additionally, without the 23% reduction in our Access Cards business as we have continued on our previously disclosed strategy to lower -- to exit lower-margin third-party products, our consolidated growth was up 14% year-over-year.

Standalone software and services revenue comprised 13% of total revenue in 2019, up 207 basis points over 2018. Recurring revenue accounted for 9% of total revenue in 2019, up 117 basis points over 2018.

GAAP gross margin for the year 2019 is expected to be 44% compared with GAAP gross margin of 43% in 2018. GAAP net loss attributable to Identiv, Inc. for the 2019 year is expected to range between negative $1.5 million and $1.4 million or negative $0.15 to negative $0.14 per basic and diluted share. This compares to GAAP net loss attributable to Identiv, Inc. of negative $4.7 million or negative $0.35 per share basic and diluted for 2018.

Non-GAAP adjusted EBITDA for 2019 is expected to range between $6.6 million and $6.7 million. This compares to non-GAAP adjusted EBITDA of $5.7 million for 2018.

We expect positive cash flow from operations for the full year 2019 to range between $0.5 million and $0.6 million and non-GAAP free cash flow for the same period to range between $0.2 million to $0.3 million, an improvement from negative non-GAAP free cash flow of negative $6.5 million in 2018. 2019 represents the first full year in over a decade where we were able to generate non-GAAP free cash flow.

Now turning to the fourth quarter. Based on preliminary unaudited results, we expect total revenues for the fourth quarter of 2019 to range between $18.7 million and $18.8 million. The fourth quarter revenue includes the reserve of $0.5 million related to a 3VR shipment during Q4 2019, as discussed earlier. This compares to total revenues of $21.3 million in the fourth quarter of 2018.

GAAP gross margins for the fourth quarter of 2019 are expected to be 39%. This compares to GAAP gross margin of 48% in the fourth quarter of 2018. This change in gross margin was primarily driven by differences in segment mix as well as a $2.5 million deployment of Thursby software solutions with gross margins in excess of 70%, which was recognized in Q4 2018.

GAAP net loss attributable to Identiv, Inc. for the fourth quarter of 2019 is expected to range between negative $2.2 million and negative $2.1 million or negative $0.14 to $0.13 per basic and diluted share. This compares to net income attributable to Identiv Inc. of $0.6 million or negative $0.01 per share basic and diluted in the fourth quarter of 2018.

Non-GAAP adjusted EBITDA for the fourth quarter of 2019 is expected to range between $0 million and $0.1 million. This compares to non-GAAP adjusted EBITDA of $3.1 million in the fourth quarter of 2018.

We have not yet completed the preparation of our financial statements for the quarter or year ended December 31, 2019, nor has the audit of our financial statements been completed. The preliminary, unaudited financial results included in our press release and referenced on this call are based on current expectations and are subject to adjustment. Actual results may vary materially from those disclosed in our press release and referenced on this call. Complete audited financial results for the fourth quarter and year ended December 31, 2019 will be released in March 2020.

In addition, we have entered into our 12th amendment of our loan and security agreement with East West Bank. This amendment to the agreement retains the total credit of $20 million, but it includes a $4.5 million term loan component for a 12-month period and lowers the revolving credit line to $15.5 million. The composition of the loan and security agreement was modified to provide us with additional flexibility to fund our short-term growth. Additional details of the amended loan and security agreement are included in a Form 8-K, which was filed today.

With top line results for 2019, we believe it's prudent to update our guidance for the full year 2020. We now expect total revenues to range between $86 million and $90 million, which would represent an increase of 5% comparing the midpoint of both the company's updated guidance and preliminary results for 2019. Additionally, without the 8% reduction projected in our Access Card business as we have continued on our strategy previously disclosed to exit the lower-margin third-party products, our total growth assumed in our new guidance is expected to be 7% year-over-year.

Non-GAAP adjusted EBITDA is expected to range between $10 million and $11 million, which would represent a minimum increase of 58% comparing the midpoint of both the company's updated guidance and preliminary results for 2019. Included in our updated guidance is our commitment to keep expenses relatively flat year-over-year. This will be achieved by strategically shifting resources to our higher-growth, customer-facing areas.

GAAP net income attributable to Identiv, Inc. is expected to range between $2 million and $3 million and earnings per basic share to range between $0.06 and $0.12. We also anticipate being non-GAAP cash -- free cash flow positive for the full year of 2020.

With that, I'll turn it back over to Steve.


Steven Humphreys, Identiv, Inc. - CEO & Director [4]


Thanks, Sandra. So despite our underlying business strength, we clearly came in well short of where we expected. So what are we doing about it?

First, we've already taken out a layer of sales management across the board to focus our sales investment on direct, quota-carrying salespeople. As a result, communication from our individual salespeople now goes directly to our business leaders who all report directly to me. So now every direct salesperson throughout the company is only one step from the CEO. This helps keep expectations aligned with reality and also brings resources to bear more quickly to move business through the sales cycle faster. And we took these actions in the first 2 weeks of this month.

Second, we're reorganizing our sales teams to have smaller regions and more focused product responsibilities. This will help drive both SaaS and system sales. The result is that even while taking expense actions, which I'll go through in a moment, we're nearly doubling our sales and SE team and structuring them to be more focused to drive growth.

The third, as I just mentioned, we're implementing cost-alignment measures while continuing the aggressive hiring in sales. And we've got the products and infrastructure to a good point so we can be more efficient in operations, G&A and engineering. As a result, when we finish our cost-realignment actions, we expect to have implemented about $4 million of cost savings on an annualized basis.

So to be clear, we're reducing total expenses while substantially increasing the size and focus of our sales team. Within this expanded sales team, we're specializing. Selling SaaS services is different from selling systems. Selling the full value of video also needs focus. So on our expanded sales team, we're building in specialization to make sure we're aggressively selling all of our products and services.

We've also brought on a Sales Operations Director, whose team is supporting the field sales team and coordinating revenue forecasting, planning, tracking and management daily. This team is also launching demand-generation programs, tracking dealer and channel coverage and managing pipelines across all of our business.

So we've already taken action to improve our pipeline and forecasting. However, to accelerate growth and profitability, we've got to get more scale. As we mentioned in the press release, the independent directors of the Board have launched a Board initiative to explore strategic alternatives to enhance stockholder value. They started a process to retain an independent financial adviser to help look at strategic alternatives to help us get to scale and maximize shareholder value. So we're not where we wanted to be, but the market is very strong and our position leading and taking share in the market remains solid.

Even in the face of the challenges we've just had, we're building our business stronger than ever. We're expanding and specializing our sales force. We've launched our SaaS cloud platforms for Velocity and Freedom. We've launched our first subscription-priced mobile app. We're launching our Bluetooth reader and frictionless mobile app. And there's more, but this gives you an idea of how aggressively we're going after the market, all while we're tightening expenses and getting more EBITDA leverage from our top line.

So additionally, to show our commitment and our belief in the company's opportunity and also to minimize uses of cash, of course, as described in our 8-K filing, I will be taking all of my take-home pay in stock only. Now I'm sure of the opportunity here, so it's not altruism to take my compensation in stock. I think it's a great value. Similarly, all of our independent directors are doing the same, taking their Board compensation all in shares.

So despite a rough fourth quarter, we know what happened and we've taken actions to address the root causes and to put the business on a stronger footing. The opportunities ahead of us remain strong. We exited 2019 with our RFID business up 62% for the quarter and our Premises business up 20% for the year. Our EBITDA is up 17% year-over-year and we're projecting an additional 58% growth in EBITDA for 2020 with solidly achievable targets. We've entered 2020 with a strong backlog, a focus on recurring revenue launches and sales expansion, and our interests are completely aligned with our shareholders and other stakeholders to drive the business forward predictably and profitably to create and realize our business' full value.

So with that, I'd like to open the discussion to questions.


Questions and Answers


Operator [1]


(Operator Instructions) Our first question comes from Mike Latimore with Northland Capital Markets.


Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [2]


Great. So Steve, just on the federal government. Was the -- were the delays there sort of across the board? Or was there one agency in particular? And then kind of how do you think about the effects of kind of continuing resolutions as we head into 2020 year?


Steven Humphreys, Identiv, Inc. - CEO & Director [3]


Yes, good question. It was several agencies. It wasn't one in particular. And it was our integrators, which, of course, is where we get the orders directly from, Johnson Control and companies like that. And it was slow-moving through them as well as the agency demand.

I think the government is going to be catching up at least for several more months. I hope there won't be uncertainty caused by the election and budget processes there, but we'll just have to wait and see on that. But we see it getting back on a more normal basis but still definitely playing some catch-up at least for a little while.


Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [4]


And then the backlog comments being up 36%, I guess can you remind us -- I guess, one, is I assume that is affected somewhat by the delays here perhaps, but also, can you remind us like how much does backlog matter in terms of, like, an upcoming quarter?


Steven Humphreys, Identiv, Inc. - CEO & Director [5]


Yes. So we typically come into the quarter with about 1/4 of our quarter in backlog. So obviously, that's indicating that we're stronger than that in this case. And then typically -- I won't walk you through all the gory details again, but then typically, another 50% of our revenues is from long-term contracts, long-term deployments. They're not officially backlog, but they're things we have visibility to. Hence, the 25% remaining that we have to fund and close. But some of the shortfall was related to both of those second categories, some of them that were ongoing contracts and deployments that came through contracting slower and then also the new deals in closing.


Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [6]


Got it. And then just on the EBITDA guidance for '20, obviously growing a lot faster than revenue. I think you talked about $4 million -- focused $4 million reduction. Is that -- I didn't quite pick it up. Is that across the board? Is that more in R&D? Where is that focused?


Steven Humphreys, Identiv, Inc. - CEO & Director [7]


It's more in the non-sales and marketing and then -- and noncustomer-facing -- not more. It's only in noncustomer-facing functions. So no effect on tech support, sales, SEs, professional services, any of that.

And to be clear, we had planned growth in our overall expenses. And now basically, we'll be holding them flat to a little bit down. So it's not like we're doing -- not like we have to do a major deep cut in there. We can do a lot of things that we should do anyway to properly align resources and focus on customers and do some redeployment, which is, as I mentioned, we're already doing in sales.


Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [8]


Got it. And just last question, you may not want to give it now in the preliminary results here, but revenue segments, do you have Premise versus Identity in the quarter?


Steven Humphreys, Identiv, Inc. - CEO & Director [9]


In terms of the revenue numbers? We do.


Michael James Latimore, Northland Capital Markets, Research Division - MD & Senior Research Analyst [10]


Yes. Those 2 segments in the quarter, yes.


Steven Humphreys, Identiv, Inc. - CEO & Director [11]

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Former Alberta WEXIT leader joins Freedom Conservative Party – Western Standard

Posted: at 9:50 am

The UCP government has launched its $90-million tax credit for companies to make their movies in Alberta.

Its a program that has meet with scorn from the Canadian Taxpayers Federation.

Maxing out at $10 million a movie, the Film and Television Tax Creditprogram will give productions a refundable tax credit to help cover Alberta production and labour costs

Applicants may be eligible for either a 22 per cent or 30 per cent tax credit for productions that are Alberta owned, the government said in a Wednesday release.

We want our province to be a destination that attracts talent, investment and business from across Canada and around the globe. This credit, combined with our low tax environment and breathtaking landscapes, makes Alberta an attractive destination for big-budget television and film projects that inject millions into our economy and create jobs for Albertans, said Minister of Economic Development and Tourism Tanya Fir.

The tax credit has already met with some corporate approval.

Disney has a long history of creating content in Alberta. We are pleased to see that the Alberta government is launching a film and television tax credit and we look forward to working with them to continue to create stunning content using Albertas landscapes and crews. said MaryAnn Hughes, vice president, production and investment planning for the Walt Disney Company. Her statement was provided within in the government release.

But Franco Terrazzano, Alberta director of the CTA, said Wednesday Premier Jason Kenney has better things to spend taxpayers money on.

Jason Kenney has a $70-billion debt to deal with. Why is Minister Fir running around playing investment banker risking taxpayers money, Terrazzano told the Western Standard.

Stop it with this nonsense. The government has to get out of the business of being in business.

The governments has pledged to grow Albertas cultural industries by 25 per cent over the next decade.

The previous NDP government had capped their provincial film grant program at $7.5-million.

The UCP budget in October said new money for film tax credits will be $15 million in the 2020-21 fiscal year, $30 million in 2021-22 and $45 million in 2022-23.

Some Alberta film produces are worried $90 million over four years isnt nearly enough.


Every year, Alberta graduates more than 3,000 creative industry professionals from its post-secondary institutions. According to industry estimates, more than 3,200 Albertans are employed in the provinces motion picture and video industry. According to Statistics Canada data: Every $1 million of production activity in the screen-based production sector creates about 13 Alberta jobs. Every $1 million of government investment under the Film and Television Tax Credit program is expected to support about 60 Alberta jobs.

Facts from the Alberta government

Dave Naylor is the News Editor of the Western Standard


Twitter: Nobby7694

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What’s driving the economy? – Kuensel, Buhutan’s National Newspaper

Posted: at 9:50 am

Tshering Dorji

If the countrys economy is a gun, it has three triggers to fire the bullet.

This is the analogy of spike in the economic growth triggered periodically and by investments in hydropower, public expenditure (which relates to the five year planning period) and by growth in domestic credit.

This is according to the governor of the Royal Monetary Authority (RMA), Dasho Penjore.

Prime Minister Dr. Lotay Tshering, a health professional at the helm of governance is scanningn these irregular growth spikes.

When there are too many spikes in the electrocardiogram (ECG) of a patient, chances of heart failure is more, Lyonchhen said.

One of the spikes, which is not quite obvious is the transition between end of one Plan and the beginning of the other. This, he said must change to fuel a sustainable economic growth.

The context here is that the country has experienced lowest economic growth after the end of every governments tenure and it became more conspicuous after the onset of democracy.

For instance, the four-year low GDP growth of about three percent was attributed to cessation in capital expenditure for more than six months during the election period. The whole planning process must change. When the software of electronic devices like phones and laptops cannot be upgraded further, it is time to change the device, Lyonchhen said.


If the sluggish economic growth is to be related with hydropower activities, it is proportionately associated. For the last 40 years, hydropower has remained one of the key players in Bhutans economic development, Dasho Penjore said. On the back of hydrology, the country has maintained an average growth of 7.6 percent for the last four decades.

When Chukha was commissioned, economic growth leapt to 28.7 percent in 1987. Likewise, in 2002, growth increased by 10.7 percent as Tala hydropower project commissioned, and in between 2007 and 2008, Kurichhu took the economic growth to 17.9 percent.

Accelerating the construction activities in Punatshangchhu and Mangdechhu at once led to a 12 percent growth. The commissioning of Dagachhu triggered a furhter growth of eight percent.

Having hit a four-year low of 3 percent GDP growth, the RMA in its annual report has projected the economy to rebound to 6.7 percent driven primarily by the commissioning of Mangdechhu.

The low GDP is also attributed to poor hydrology contributing to a reduction in 15 percent generation, slowdown in hydropower construction activities, and declining investments in the sector by 56 percent.

This was further worsened by the delay in the two Punatshangchhu projects.

This is why the governor said economic diversification was purposely enticed to cushion the impacts that comes with hydropower development.

The second trigger is the government expenditure. Beginning the fifth Plan, the RMA annual report states that there is big shift in budget. While the budget outlay has increased substantially, there has been a decrease in capital expenditure.

For instance, 50 percent of the outlay of 10th Plan was allocated for capital expenditure, which decreased to 49 percent in the last Plan and 37 percent in the current Plan.

The consolation is that subsequent governments were able to meet the current expenditure from domestic revenue, adhering to the Constitutional mandate. Since the seventh Plan, more than 70 percent of the total outlay was met from domestic revenue.

Dasho Penjore said that this was a big achievement.

Further, he said that tax reforms, which is under the scrutiny of the Parliament, would prepare the country for LDC graduation.

Domestic credit, being a concern for growing non-performing loans (NPL), is one of the drivers of growth in its own way.

A growth in domestic credit by 20 percent between 2018 and 2019 has contributed to the growth. The gloomy part of the domestic credit, according to the governor, is that it doesnt generate employment.

A high NPL is often brought under the radar of various institutions, including the private sector itself.

Dasho Penjore, during the launch of the RMA annual report, said that it was important to delve into the details.

The Royal Insurance Corporation of Bhutan (RICBL) alone has an NPL of more than 50 percent, followed by Bhutan Development Bank at 23.4 percent. The RICBLs case pertains to various factors leading to mismanagement and embezzlement.

BDBL has been catering the financing need of the rural populace and the bank has been financing 99 percent of the agriculture loans until the initiation of PSL. The rest of the banks had maintained their NPL below the threshold of 10 percent.

The RICBL has been put under rehab and the their NPL this year has been reduced by half. RMA will render all its support and concessions to BDBL, Dasho Penjore said.

The disturbing factor in domestic credit is consumption. Dasho Penjore said that if the economy produced enough for itself, then consumption would not be an issue. However, when consumption leads to higher imports, he said that it could distort the current account balance.

NPL in the service and tourism is as high as 30 percent of the portfolio.

Some observers blame this on the governments inability to monitor the hospitality sector. Reality, according to RMA, is different.

The boom in the hotel sector has contributed a domestic credit of Nu 35B while contributing to a growth of 7.8 percent in the service sector.

This again, Dasho Penjore said, was driven by reduction in interest rate of 2.5 percent on an average and fiscal incentives.

Major defaulter in the service sector is the construction sector accounting for Nu 4B defaults compared with Nu 700M in the hospitality and tourism. When combined service and tourism has high NPL but it is also important to dissect the sector.

Even then, Dasho Penjore said that the central bank has never directed the financial institutions to stop loans in particular sector, but to tweak on the interest rates. If a banks exposure on housing is high, that bank could increase the rate to 15 percent and subsidize on other products, he said.

The principle is that if hoteliers find it profitable to construct hotels even with a financing cost of 15 percent then banks should have the freedom to raise the interest rates.

In the end, what matters according the Dasho Penjore is that the orthodox way of making economic decisions will not work in the 21st century.

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Still Too Early To Declare Longer-Term Bitcoin Trend Change – Forbes

Posted: at 9:47 am

Bitcoin's price has rallied, posting positive price structure, but it is still too soon to declare a ... [+] longer-term trend change, analyst John Bollinger explained. (Photo by INA FASSBENDER / AFP) (Photo by INA FASSBENDER/AFP via Getty Images)

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

January has yielded several bouts of upward price action for bitcoin as the asset looks back on an overall positive start to 2020. John Bollinger, financial analyst, trader, author and originator of the Bollinger Bands technical chart indicator, said he sees positive structure on bitcoins chart, but its too soon to declare a longer-term bullish trend reversal.

Im very constructive on bitcoins price right now, Bollinger told me in an interview on January 27, 2020 while bitcoins held near $8,800. Weve completed a meaningful bottom formation, he added referring to bitcoins price chart.

We broke out, pulled back from very short term, made a little test of the breakout level and rallied higher, Bollinger continued. Bitcoin then proceeded to fall back to the midline of the Bollinger Band indicator before bouncing and heading higher in price, he added.

After starting 2019 below the $4,000 mark, bitcoin experienced an exuberant price run between April and June 2019, taking the asset up past $13,800 per coin by Junes end, according to Coinbases BTC chart on TradingView.com Bitcoins price fell on difficult times in the latter half of 2019, however, posting successive lower rally attempts until the end of the year, signaling the presence of a downward bearish price trend.

In contrast, 2020 so far has yielded positive price action for cryptos pioneer asset. Bitcoin began the year around the $7,000 mark, posting a seeming bottom-like price formation, as Bollinger mentioned. The asset has since rallied in price from its chart bottom near $7,000.

Most recently, bitcoin rose from approximately $7,700 to almost $9,200 on January 19. The coin then fell down to $8,250 by January 24, finding support in that region before rallying to a press time price of $9,265.

Its a pretty constructive pattern, Bollinger said, adding to his initial comments. The expert noted bitcoin formed its price chart base pattern between November 2019 and early January 2020. So far were progressing pretty well, he said.

Bollinger pointed to a tweet he posted on January 23 which expressed that bitcoins pullback to the middle Bollinger Band near $8,300 made sense as a support level.

I pointed out on Twitter a couple days ago that what bitcoin needed to do was hold support here at the middle Bollinger Band, and thats exactly what its done, Bollinger told me.

It held support. Weve had two days of rally now and I think the price of bitcoin looks higher.

Bitcoins recent rally begs the question has cryptos top asset broken its downtrend that began last summer? I think its a little bit early to be convinced of that, Bollinger said.

We just made an intermediate term bottom and just started up we need some more evidence here in terms of a bigger picture, but I think the outlook is pretty constructive right now.

Crypto trader and Brave New Coin analyst Josh Olszewicz (CarpeNoctom onTwitter) expressed similar sentiment on January 28. Well know how bullish we are in two weeks, Olszewicz told me in a Telegram message. Mentioning multiple charting signals, including the Ichimoku Cloud and a moving average golden cross, the trader added, All trend metrics point bullish soon.

Additionally, Olszewicz said his statement applies to the entire crypto market. This is across the board on everything, not just BTC, he noted.

Despite bitcoins exuberant history and optimistic charts, some folks still remain bearish on the asset as a whole, including Berkshire Hathaway CEO Warren Buffett, who called bitcoin a gambling device in 2019, according to a CNBC report.

Disclaimer: I actively trade cryptocurrencies, as well as hold a small amount of BTC, ETH, LTC, XMR, NEO, ZEC, BEAM, BCH, DASH, LINK, XTZ andvarious insignificant other altcoin positions.

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Few Banks Will Touch Crypto Firms, but Silvergate Wants to Touch Bitcoin Itself – Coindesk

Posted: at 9:47 am

Silvergate Bank is venturing even further into a field where few financial institutions dare to tiptoe.

The La Jolla, Calif., lender made a name for itself providing hard-to-come-by U.S.-dollar banking services for businesses that deal in cryptocurrency. But now Silvergate wants to handle digital assets themselves.

While the bank has no such services on its roadmap yet, it has applied for the New York trust license with the aim of providing custody and settlement for crypto. One example of this might look like providing settlement services for their bitcoin trades, Silvergate CEO Alan J. Lane said.

In this scenario, Silvergate would be the intermediary ensuring settlement of a fiat-for-bitcoin exchange between two participants on its Silvergate Exchange Network (SEN), a payments platform that allows commercial customers to instantly move U.S. dollars between crypto exchanges.

"In order for us to be able to be that trusted intermediary, we have to be able to touch the digital assets ourselves, Lane said. "Think about it as if Silvergate also had the ability to be the SEN for bitcoin."

The service, almost certainly the first of its kind offered by a U.S. commercial bank, wouldnt apply to retail investors or institutional investors that are already comfortable with bitcoin as an asset class.

Its folks that arent quite ready to be in the business, and part of the reason is because this doesnt exist, Lane said, emphasizing the bank doesnt yet have a product in mind to solve the problem. Our current customers, theyve already figured out a way to get comfortable with this, but they tell us there are other counterparties out there that theyre not yet doing business with because they dont have a trusted way to settle.

Lane spoke to CoinDesk Thursday after Silvergates first conference call as a publicly traded company. Earlier in the day it had reported fourth-quarter results, including a 6 percent increase in crypto clients and a 4 percent decrease in deposits from those clients.

Coming soon

Silvergate Banks 2020 will be characterized by staff getting the banks bitcoin-collateralized margin lending running well and solving other pain points in the digital asset industry, Lane said.

Salary expenses climbed nearly 6 percent from a year earlier to $8.7 million in the fourth quarter. The majority of this went toward customer service and software engineers, Lane said when asked what share of the expenses was from compliance costs.

The bank does spend money on compliance, of course: Silvergate uses both Chainalysis and Elliptic, Lane said. These vendors analyze the public blockchains to flag suspicious activity, which banks are required under Federal Reserve regulations to report.

With $2.1 billion in assets, Silvergate is a relatively small institution, 0.07 percent the size of JPMorgan. The asset side of its balance sheet looks like a traditional community lender, composed mainly of real estate loans. But that may start to evolve soon.

In the immediate future, Silvergate's biggest focus is its pilot of the SEN Leverage product, which allows proprietary traders to put up bitcoin as collateral for fiat loans they can then use to buy more bitcoin.

Since the 90-to-180-day pilot will include only SEN participants, the bank will be able to monitor SEN Leverage loans more closely than it could other types of loans.

We will be able to monitor the loan, the collateral underlying the loan and the balance of the loan, 24 hours a day, seven days a week, Lane said. Well be able to monitor this much more closely than we can monitor just about any other loan we make.

In response to questions from analysts in the companys earnings call about yield on SEN loans, Lane said, The way weve thought about this initially is this would likely be a high single-digit type of cost to the borrower.

In the interview, Lane emphasized the bank wouldnt take advantage of crypto customers on SEN loans just because other banks arent offering the same product. Were certainly not going to poke their eyes out on what were charging them, Lane said.

Silvergate is also working to increase the number of fiat currencies it supports for foreign exchange transactions on the SEN to include at least the top five to 10 major global currencies. From fourth-quarter 2018 to fourth-quarter 2019, volume on the SEN increased by 150 percent to an all-time high of 14,400 transactions handling $9.6 billion.

Our customers are saying, Wed love to have the SEN for the euro and the SEN for the yen, Lane said. That involves having correspondent banking relationships with banks in those areas where those currencies are predominant and then being able to create a similar type of network as to what weve created with the SEN.

Dry powder

Taking Silvergate public has given the crypto industry a clearer window into the bank's business. It also positions Silvergate to more easily raise capital should the need arise.

Currently, Silvergate has a 10.5 percent leverage ratio, meaning the bank has more than twice the amount of capital required by banking regulators (5 percent).

"On that metric alone, we could double the size of the bank and not run out of capital," Lane said. "That's just one metric, and I'm not suggesting we would do that but if we saw that leverage ratio going down to 8 percent, we would look to raise additional capital."

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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