sancho panza

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About sancho panza

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  1. Cheers DB and @JMD for the heads up Massive revenues and very steady profits.I really hadn't thought of these.Had a quick look and there's 70 odd companies in TPYP.I'll hopefully have some time for these next week.Getting a sneaking feeling oil is getting ready to sell off which could create some great oportunities. XOP/FCG/XES/OIH all plumbing all time lows..........XLE near 2008 lows. If we get a 20% market smack,some of these will be so cheap I won't want to buy them.
  2. 44244=18 although an abnormally large profit in 2018 lifts income from 3 to 4,if I was looking more closely I'd look to find the reason for that,but that would still bring it in at 17.I checked my notes and previously scored it a 16 at the start of my endeavours with the coma scale.Many hundreds of companies later and my perpsective is broader.
  3. We're down more than 50% but we've been taking scrip all the way through.Thems the breaks.Still can't get my head around how much theyve dropped ref a lot of other euro utilities. on another matter anyone with a view on Osisko Royalties(aside from them owning 15% Minera Alamos),they've been battered recently. @@kibuc @Majorpain???
  4. Quickly did some Coma Scale scores on the doors-and remember I've not run through the whole sectoral ETF for comparison(Scoring the sector 4/5 as I would big oil&gas,and oil services),so the comparison side is against general market levels not competitiors Over 17 is where I draw the line. Co Chart Income BS FCF Sector Plains 4 4 3 4 4 =19/25 Enbridge 2 4 2 3 4 =15/25 Energy Tr 3 3 1 4 4 =15/25 Any chance of an explanation for the ones at the back as to where these businesses sit ref big oil/oil services.I noted steady profits-not gleaming but steady even in 2015/16. Is there an ETF I can run through? I generally avoid any stock that scores a 1 in any of the sectionsDB.Plains only has 10% goodwill as a %age assets.Like the look of that one. That plains looks a decent cash generative business with plenty of blue sky chart wise. Obviously dyor natch
  6. Once velocity starts running all hell will potentially break loose .As a confirmed debt deflationista,I don't think it'll happen this side of a large credit event but thereafter,who know.s As I posited a few days back,Japan has got away with it because for many years it was the only country trying it. The bit in bold is where the money moment is.When people start fearing monthly and weekly devaluation then velocity could rocket and those at the BoE who created it will be cushioned pension wise by their exposure to RPI linkers. whilst Joe Public gets mauled.
  7. Sorry to hear that DB.All your logic gets put on thread and that's that. If people are at the point of stating they're worried about capital loss then they shouldn't be investing it.Just my view. One of the reasons I run a busy short term book is to keep myself used to being in the red.All blue books are easy to run, life's not like that.
  8. Under the correlation isn't causation theme. Worth noting that the volume of actual trades funded by margin is relatively small but they always say markets are set at the margins. DYOR natch The Doug Short graphs are the best and it's a series he's been doing for eons.I can't get them to load across. Decl:short UK buil;ders plus a few randoms/long oil/gas/gold/potash....and CNA Of the total shares outstanding of the SPDR S&P 500 ETF, only 2.6% were out on loan to short sellers this week, the lowest since early October 2018, and down from 7% during the summer, according to IHS Markit data cited by Bloomberg. Meaning that short-sellers who want to short the entire market, and not specific companies, are worried that the market will break out, powered by a Brexit deal or a miraculous US-China trade deal as per presidential tweet, or whatever, and rip their faces off if they’re short the market. There are many forms of shorting the stock market. Short interest in the SPDR S&P 500 ETF serves as sentiment indicator about short bets more generally. When short-sellers are not interested in shorting the market because they fear a potentially ruinous rally – that is a sign of stock-market optimism. The last time short interest in the SPDR S&P 500 ETF was this low was in early October 2018, just when everyone was preparing for lift-off and the Santa rally and what not, and short-sellers didn’t want to be caught on the wrong side of the trade. But instead, all heck broke loose. It turned into the worst October anyone could remember, and a near-20% sell-off of the S&P 500 Index by Christmas. Short sellers borrow shares to sell them high, hoping for prices to drop so that they can buy them back later at a lower price, return them to their owners, and pocket the profit. They have to buy back those shares at market price in order to close the trade. When short interest is very high, this means that short-sellers who want to take profits after shares have plunged end up buying shares massively as shares are plunging, and they put a floor under the market. But when there is little short interest, because short sellers are afraid that shares could surge and rip their faces off, that floor does not exist. And this is what happened last October. The market started dropping on little short-interest, and short-sellers weren’t around to buy back their shares to take profits. Instead, short-sellers piled into the market to short the falling market as the month went on, and continued to do so through December before short-interest began to decline in early 2019. Conversely, when short interest is low, as it is now, there isn’t going to be much support from short-sellers when shares do rise. Shorts would lose money on a rising market, and they have to buy shares to get out from under their trades, and this can trigger very sharp short-covering rallies. But with short-interest low, this isn’t going to happen on a large scale. But it’s not that simple. Short-sellers are speculators that take big asymmetrical risks. There is another class of speculators, but they fear a sell-off and they’re deleveraging: In September, margin debt – the amount individuals and institutions borrow from their brokers against their portfolios to increase leverage – fell by $9 billion from August to $556 billion, according to FINRA today, after having already dropped $37 billion in August, which puts the margin-debt level back where it had been at the end of December 2018, after the historic plunge in margin debt during the October-December stock-market rout. At the end of last month, margin debt was down by $92 billion, or 14%, from a year ago, and down by 17% from the peak of $669 billion in May 2018. These investors are deleveraging. Over the long term, the patterns emerge. Obviously, with a chart spanning decades, such as the chart below, the absolute dollar amounts are less relevant since the purchasing power of the dollar has dropped over the period. What is important are the movements, and how they relate to stock market events, which I indicated in white. Margin debt is now back where it had first been in April 2015: There are many forms of stock market leverage, but margin debt is the only form that is reported on a monthly basis. So it serves as a sentiment indicator of stock-market leverage. This leaves us with conflicted sentiments in the market: On one hand, short-sellers fear a rally – market optimism – and so they don’t short the market, though they might short individual stocks for company-specific reasons. On the other hand, investors are deleveraging because they fear a sell-off and don’t want to get hung out to dry. This raises a question. Why is one group of risk-takers fearing a rally, while the other group of risk-takers is fearing a sell-off? In this market that has been coddled for so long, and where fundamental considerations have long gone out the window because they’ve become irrelevant, maybe it’s the fear of the next surprise that can go in either direction, whether it’s a tweet or a Chinese announcement or something spreading from a tangled-up repo market, or whatever. But even “fear” may not be the right word because the CBOE Volatility Index (VIX) is bouncing along at very low levels, below 14 at the moment, where “complacency” rules, and almost as low as early October last year, just before all heck broke loose. The Latest Margin Data FINRA has released new data for margin debt, now available through August. The latest debt level is down 6.19% month-over-month. The next chart shows the percentage growth of the two data series from the same 1997 starting date, again based on real (inflation-adjusted) data. We've added markers to show the precise monthly values and added callouts to show the month. Margin debt grew at a rate comparable to the market from 1997 to late summer of 2000 before soaring into the stratosphere. The two synchronized in their rate of contraction in early 2001. But with recovery after the Tech Crash, margin debt gradually returned to a growth rate closer to its former self in the second half of the 1990s rather than the more restrained real growth of the S&P 500. But by September of 2006, margin again went ballistic. It finally peaked in the summer of 2007, about three months before the market.
  9. I got a two word mail "nice interview", from An Industry Professional about half an hour ago. As I tend to pay heed when this particular industry pro recommends something, I've just finished watching this: People, this is obligatory viewing for anyone who invests, trades or even works in precious metals mining companies. Mr. James Rasteh of Coast Capital Management speaks a tonne of sense on a whole range of topics around the central point of this interview, "Why Gold Mining Companies Habitually Destroy Capital". I found myself nodding in agreement all the way through, Rasteh has the clarity and delivery that I'd like when I grow up.
  10. on another matter,interesting piece here.Not sure the comparison with the 1920's reichsbank is valid,but inherently,at some point,printing money should create inflation.All it needs is a turn in velocity, but that's a more psychological phenomenon and one that CB's have completely got worng thus far given QE destroyed velocity. QE for the People Myrmikan’s May letter discussed how the Fed had already begun to ease financial conditions, though the method was so subtle that few understood what the central bank was doing. Banks are required to keep required reserves at the Fed. Banks that find themselves with a deficient reserve level have to borrow reserves from those with excess reserves, and the interest rate they pay is called the fed funds rate. The fed funds rate thereby sets the minimum level of funding for the banking system. The Federal Reserve used to set this rate through open market operations: buying Treasuries would add reserves to the banking system and lower the fed funds rate (and vice-versa). Historically, reserves earned no interest, and so, before 2008, banks maintained as few reserves as possible—they could always buy a Treasury bill with any excess cash. After the Fed flooded the banking system with reserves during the 2008 panic, banks found themselves with excess reserves, which peaked at $2.7 trillion. The Fed sets the general reserve requirement at 10%, which means the banking system could have added $27 trillion of credit to the economy. In fact, certain classes of assets (such as Treasuries, mortgage-backed securities, etc.) have risk weightings that allow banks to hold as little as 2% reserves against them, which enables 50 times leverage on such assets (which is how, for example, Citicorp was able to be levered up 48:1 in 2007). In order to keep trillions of levered up credit from crashing into the economy, the Fed began paying interest on excess reserves (IOER). Given the level of excess reserves, the Fed could no longer use open market operations to manipulate the fed funds rate. The Fed thought it could control the fed funds rate by manipulating IOER instead: Since Fed deposits are by definition risk-free in nominal terms, the fed funds rate should never go below IOER because if it did, banks would withdraw their loans to other banks and deposit the funds at the Fed instead. Similarly, the fed funds rate should never go above IOER because banks could withdraw reserves and lend them to other banks. Various regulatory costs make it more expensive to lend to other banks than hold funds at the Fed, so the fed funds rate persisted roughly 0.14% below IOER (sometimes much lower) from 2009 to 2016. Yet in April 2019, the fed funds rate burst to 0.06% above IOER, or at least 0.2% above where it should have been in a smoothly functioning market. A fed funds rate above IOER means that the banks carrying $1.4 trillion in excess reserves are declining to lend them into the market to earn the spread. Myrmikan posited in April that the only reason a bank would forgo such an opportunity was that fed funds loans are unsecured and potential lenders must be worried about solvency risk—in other words the market was signalling that the banking system had solvency issues. Events in September proved Myrmikan’s analysis to be wrong, or at least incomplete. Separate from the fed funds market is the asset repurchase market, or repo for short. The repo market is the primary funding mechanism for the shadow banking system. Repo borrowers tend to be broker-dealers, hedge funds, mortgage REITs, etc., who need short-term money to finance long-term debt (a mortgage REIT, for example, might roll 3-month repo borrowing to finance 7-year mortgage-backed security tranches). Repo lenders are entities such as banks and money market funds, who provide investors and depositors a return on their cash. The way a repo transaction works is that the borrower agrees to sell an asset for cash and to buy it back a short while later at a tiny premium. That premium, annualized, is the repo interest rate. Only AAA-rated securities are active in the repo market, so (in theory) the lender has no risk of loss. On September 16, the overnight repo rate exploded to a 7% premium to the fed funds market. In other words, banks were offered 7% to withdraw excess cash from their Fed accounts to lend it into the repo market. The banks’ reticence to deploy their cash cannot have been because of solvency concerns because such loans are fully secured. The only explanation is that excess bank reserves are not, in fact, excessive. It turns out that 90% of “excess reserves” are held by just five banks, and, under Dodd-Frank, large banks must keep reserves sufficient to fund their “living will” plan of rapid and orderly resolution in case of distress. Only reserves will do, not Treasuries.* The following chart shows the growing stress in the fed funds market as the Fed engaged in quantitative tightening and reduced the amount of reserves in the banking system. This data suggests that the banking system requires at least $2 trillion of “excess” reserves to keep funding costs stable. The part of Myrmikan’s April analysis that was wrong was the motivation of the five large banks not to lend to institutions that needed funding: it wasn’t that the banks were worried about solvency; it was that they had no cash to lend. The part of the analysis that was correct, however, is that the banking system in general, and the shadow banking system in particular, is desperate for cash and willing to pay enormous premiums to get it: the abnormal pricing in the debt markets reflects lack of liquidity, not solvency. And this is the distinction that the banks themselves are pushing. BNP Paribas, for example, entitles a October 4 report: “LE Not QE, That’s Liquidity Expansion.” BNP predicts that the Fed will have to add $400 billion to banking reserves over the next year to eliminate banking reserve scarcity. In other words, looking at the chart above, the Fed must buy assets to try to get back to that cluster of black dots. And the only way to do that is through QE ( only don’t call it QE ). Money printing has already started. In order to stabilize the $2.2 trillion repo market, on September 17 the Fed itself began lending to repo borrowers. From mid- September through October 2, the Fed’s repo lending balance has gone from nothing to $181 billion, thereby expanding its overall balance sheet by the same amount. There is little difference between lending funds and continually rolling them (repo) versus purchasing them outright (QE), and on October 8, Fed chairman Powell announced: “Increasing the supply of [bank] reserves or even maintaining a given level over time requires us to increase the size of our balance sheet. As we indicated in our March statement on balance sheet normalization, at some point, we will begin increasing our securities holdings to maintain an appropriate level of reserves. That time is now upon us.” QE is here. Trump has been proven correct once again. The implications for gold are not obvious. Most gold investors operating under the quantity theory of money believed that QE1, QE2, and QE3 were the fuel to launch gold into the multi-thousands of dollars per ounce: more dollars meant each one was worth less, so gold had to go up. That theory proved to be incorrect in dramatic fashion. The Fed added reserves to the banking system through QE to entice banks to increase lending. Discount rates fell, asset prices increased, and more assets were constructed, increasing industrial commodity prices. Gold underperforms in real terms during a boom whatever it may do in nominal terms. Overcapacity then lowers prices, projects default, industrial commodities collapse, and gold outperforms. This does not mean that the Fed is powerless to devalue the dollar. When the Fed buys Treasury bonds (or entices banks to do so), the government spends that money mostly as transfer payments for consumption, and few new assets are constructed. This is, in fact, an explicit strategy that Bernanke advocated in 2002: A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. . . . A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money. Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. This quotation is especially relevant because it was corporate tax payments on September 15 that led to the explosion of the repo rate: corporations wrote checks to the Treasury Department, which withdrew the money from banks, which prompted the funding stress. Banks and shadow banks (e.g., money market funds) must of have known that tax withdrawals were coming, yet they are so short of cash they had no way to prepare for it. All markets consist of a bid and an ask—therefore, one should inquire: a cash shortage compared to what demand? The larger picture is that repo borrowers have ever more assets that they must finance. Since the latest debt-ceiling compromise in July, Federal debt held by the public has soared by $517 billion. The Congressional Budget Office (CBO) projects that that figure will increase by another $758 billion by the end of 2020, by another trillion by the end of 2021, and by another $1.2 trillion in each of the next two years. And the CBO assumes real GDP growth of 2.4%. Myrmikan’s January 2019 letter points out that historical trends suggest that a recession would increase federal deficits beyond $3 trillion per year. When the Fed lends newly-issued money into the repo market, it is effectively financing federal deficits (most of the repos are Treasuries with a smattering of mortgage-backed securities). Under the original QEs, the banking system received $2.8 trillion in new reserves and, over the ensuing decade, levered these reserves to provide $20 trillion more in credit. These QEs occurred after a credit meltdown in which the most speculative debt had been written off and during which the fed funds rate fell from 5% to 0%, making marginal projects seem profitable in the new, lower interest rate environment. The private sector thus was able to absorb half of the $20 trillion in new credit growth, and the government squirted the other half into the economy through deficit spending. The new QE will take place near the end of a credit cycle, as overcapacity starts to bite and in a relatively steady interest rate environment. Corporate America is already choked with too much debt. As the economy sours, so too will the appetite for more debt. This coming QE, therefore, will go mostly toward government transfer payments to be used for consumption. This is the “QE for the people” for which left- wing economists and politicians have been clamoring. It is “Milton Friedman’s famous ‘helicopter drop’ of money.” The Fed wants inflation and now it’s going to get it, good and hard. The Federal Reserve will then face the same Hobson’s choice that confronted the Reichsbank in the 1920s: fund the Treasury market and drive continually rising consumer inflation or don’t fund it and let interest rates rise, which would crush financial markets and the economy. QE-for-the-people is the end game of the inflationary economic cycle. Gold will anticipate it first.
  11. World Dollar Liquidity Crashes as Does Marginal Utility of Debt byMish 5 hrs-edited Lacy Hunt at Hoisington Management has another sterling post in its third quarter review and outlook. Here are some snips from the latest Hoisington Management Quarterly Review by Lacy Hunt. World Dollar Liquidity The Fed’s balance sheet constriction reduced world dollar liquidity, which is defined as the monetary base plus foreign central bank holdings of U.S. Treasuries at the Federal Reserve Bank in New York. This quantity effect also served to underpin strength in the U.S. dollar, which has had the result of draining foreign central bank holdings of U.S. Treasuries impacting foreign financial markets. World Trade Volume The more restrictive monetary conditions spread worldwide as the velocity of money fell sharply in all their countries to levels far below the United States. Not surprisingly, global economic growth moderated in concert with U.S. economic moderation. World trade volume, which has fallen over the past year, clearly points to the universal nature of current global downturn and the result has been a disinflationary pricing of goods. Debt Overhang Despite the evidence that monetary policy works with long lags, the Fed appears to be waiting for a downturn in the coincident economic indicators before attempting to “get ahead” of where the market has priced interest rates. The lags between initial inversion and recession have been variable but the market is presently within the historical lagged periods. The current overrestraint of Fed policy is why 5, 10, and 20-year Treasury security yields have not set new record lows, but it is only a matter of time. Slumping Marginal Revenue Product of Debt For the current three-year period, using the partially available data for 2019, each dollar of global debt generated only $0.42 of GDP growth in the major economic sectors, which was down 11.1% from ten years ago. This deterioration was greater in all the major foreign economies than in the United States. The largest percentage decrease in debt productivity, of more than 38%, was registered in China over the past ten years. The decline in the marginal revenue product of debt in Japan, the United Kingdom (U.K.) and Europe were all more than two and one-half times greater than in the United States. Over the current three-year period, the debt productivity in the U.S. was $0.40, versus $0.38, $0.36 and $0.34 in the Euro currency zone, the U.K. and China, respectively. Outlook The global over indebtedness has clearly restrained growth, and therefore has had a profound disinflationary impact on every major economic sector of the world. This fact, coupled with an overzealous U.S. Central Bank have created the conditions for an economic contraction in the U.S. and abroad. This has also created a worldwide decline in inflation and inflationary expectations. A quick and dramatic shift toward greater accommodation by the Fed could begin to shift momentum from contraction toward expansion. However, policy lags are long and slow to develop, therefore despite the remarkable decline in long term yields this year, we are maintaining our long duration holdings. A shift towards shorter duration portfolios would be appropriate when the forward-looking indicators of expansion, in the U.S. and abroad, begin to appear. Quiet Bond King I am pleased to have Lacy Hunt as a friend. We chat frequently.
  12. US inflation running Cleveland Fed’s Underlying Inflation Measure Hits 3.0%, Hottest in the Data. “Soft inflation?” The inflation measure by the Cleveland Fed — the “Median CPI,” which is based on Consumer Price Index data but removes the outliers in the data to reveal underlying inflation trends — jumped 3.0% for September, the highest in the data series going back to the Financial Crisis, when this measure was launched. By comparison, “core CPI,” which removes food and energy prices, hit 2.4% in August and September, the highest since September 2008:
  13. I wasn't really making a point SWO.Just saying.Dind't mean to offend I answered ref stocks and sectors in the psot below
  14. I pick through the etfs and buy a selection of stocks that pass msuter on the coma scale and then spray n pray. Cheers for the update Kibuc.I'm long these boys.......... Looking at Wesdome and wondering if we should have a few.Share price hasnt risen much on the news Reality is that portfoilios will contain losers in this bull run,you jsut got to hope the winners outrun them