Credit deflation and the reflation cycle to come (part 2)

[planit]

What is "The Scottish Play"?

 

I did try to search to see if another idiot had asked but I couldn't find anything 

 

Thanks 

[Hardhat]

Just now, planit said:

What is "The Scottish Play"?

Sometimes you buy a share and it falls a bit.

 

Oh well, you think, the fundamentals are sound, it will rally, I'll hold for now.

 

Then it falls a bit more - you're amazed! How can the market be looking the wrong way on this share? You top up and double your position. It's good to be a contrarian, and anyway, the divis will help offset any losses.

 

But then it falls some more...

 

And some more...

 

Until you can't even call it by its name anymore because you're down 80% and you missed your chance to sell...

 

TL:DR, it's Centrica

[wherebee]

BP ADR down to 22.25 close of play NY.  That's down 50cents from my sale on Thursday morning.

I'll go back in if it hits 20.  I still assess DB'd guidance for the long term as right on the money.

 

Every one of my holdings is in the red for the day except for some small silver miners.

 

2021 is shaping up to be incredibly volatile.  If the GME short squeeze continues, or another target runs out, I think the fear in the market and the forced selling to cover positions will snowball.

[Don Coglione]

@Harley,

Your posts are impenetrable, at least to me.

Can you go back to assassinating the bad guys, or speak in plain English, please?

[Sugarlips]

1 hour ago, wherebee said:

2021 is shaping up to be incredibly volatile.  If the GME short squeeze continues, or another target runs out, I think the fear in the market and the forced selling to cover positions will snowball.

SVM's latest musings suggest watching GDX, if it falls here its a proxy for short liquidity, so if GME really starts to suck in broader market it's going to push bonds way higher before they collapse...

 

[Bricks & Mortar]

57 minutes ago, Sugarlips said:

SVM's latest musings suggest watching GDX, if it falls here its a proxy for short liquidity, so if GME really starts to suck in broader market it's going to push bonds way higher before they collapse...

I disagree strongly.  GME, (for the Redditors), was basically shut down yesterday, in collusion with the hedgies, while the price went from around $480, down to $113.  The hedgies are professionals, they could keep trading on their own platforms.  Surely they put more shorts on at $480, and covered their low price shorts at, or close to, $113.  They'd be pretty shit hedgies if they didn't.

But, I do think there's a risk of a market crash.  And I think its being set up to blame the Redditors, just like an open door and an invite inside from the cops at the Capitol a few weeks back.  Joe Biden has been elected on a "build back better" slogan.  This is the Party of Davos slogan.  I think think he, or rather, the Party of Davos, are wanting a global collapse, so they can get on with it.  From the Biden admin's perspective, the sooner this happens the better, as they can shuck off more blame to the Trump admin the closer it is to that time.  And also, the sooner it is, the more of their term they have left for the voters to forget.

For me, the SEC, President, Treasury Secretary, should have come out to condemn the market manipulation of Robin Hood, Citadel, Melvin Capital and the other brokerages who followed suit.  USA is the home of the free market, and they just bent it to all hell, in my opinion.  That they didn't, even though I wasn't playing, rang all kinds of alarm bells.  When it transpired they were doubling down, and manipulating AG today, (I didn't find out until after market close), I decided to pull a large chunk from NYSE on Monday, and bring it home, probably to cash.

EDIT TO ADD - I didn't explain this well enough.  The liquidity issue, is Redditors and other investors pulling their cash from the market as it's revealed to be rigged, and the administration reveal themselves to quite like it that way.  Did you check the bitcoin price today?  That was Redditors saying, "fuck this for a game of soldiers."

[Rave]

1 hour ago, Bricks & Mortar said:

Surely they put more shorts on at $480, and covered their low price shorts at, or close to, $113.  They'd be pretty shit hedgies if they didn't.

Who were the counterparties to these trades, then? Serious question  .

[Rave]

On 24/01/2021 at 21:53, Loki said:

Daft how they've gone all in on electric with LPG infrastructure already being available and LPG plentiful.  I know the valves need flashlube etc but compared to the work needed to build a load of electric cars and associated chargers, and the electrical infrastructure for those...

Edit: Wonder if the hydrogen blend could work just as well in ICE as boilers.  Not qualified to say but fits in with their bonkers green criteria anyway 

Sorry to drag up something from days ago, I know we're all enjoying watching the GME fiasco now, but I find it hard to keep up to date with this thread.

Anyway for various reasons hydrogen makes a pretty poor fuel for internal combustion engines:

https://en.wikipedia.org/wiki/Hydrogen_internal_combustion_engine_vehicle

Extracting <40% of the energy in it by burning it in a reciprocating engine would be pretty dumb when you can get about 90% out of it using a fuel cell.

Ultimately however the main problem with compressed hydrogen as a fuel is that making it in the first place is so energy intensive that however efficiently you can extract the energy from it at the point of use, the round trip efficiency will always be poor. On a local scale where there is surplus renewable power with no way of exporting it, like on a Scottish island with a wind turbine or whatever, then producing hydrogen is better than simply wasting the power. However on a national scale the UK is a long, long way from having a surplus of renewable energy, and we are considerably more advanced, and blessed with renewable energy resources like wind and waves, than most of the rest of the world. It will be many years before hydrogen has a genuine contribution to make to reducing CO2 emissions, and indeed it might never make much of a contribution at all, particularly if, say, CO2 capture to make synthetic liquid fuels ends up offering better round trip efficiency.

I note that various 'hydrogen stocks' have multibagged over the last year. This in my opinion is very much a play on governments continuing to be run by scientifically illiterate fools in the future, rather than on a fundamentally good and viable technology. That might well continue to be a good play of course, I'm just saying  .

[Rave]

On 25/01/2021 at 13:22, Popuplights said:

Yes, used to mix it 50/50 with diesel. Couldn't tell the difference. You can't do it with modern diesels though, something to do with the pump lubrication

Another bit of minor thread necromancy. In fact the lubricity of veg oil is better than dino diesel. You might have problems with the pump if it's cold and the veg oil thickens up; it might struggle to generate the pressure that common rail systems need, or pop seals etc. But generally, a modern diesel will run OK on veg oil...for a while.

The problem is that modern diesels are 'direct injection' as in they inject the fuel straight into the cylinder, rather than burning it in a 'pre-chamber' in the head. Straight veg oil contains glycerol, which doesn't burn all that well, and will eventually get under the piston rings and gum them up. When that happens the engine will sooner or later start sucking the sump oil up past the rings into the cylinder, at which point unless you stall it or deprive it of air it will run away until it seizes catastrophically.

The process of making 'biodiesel' is simply removing the glycerol. Once that's done it's functionally pretty much equivalent to dino diesel and any engine will run on it safely (except for the fact that the residues of the methanol and caustic soda used in the cleaning process can rot fuel hoses and seals).

[nirvana]

4 hours ago, Rave said:

Who were the counterparties to these trades, then? Serious question  .

I think if you asked the rich billionaire cunt in charge of Interactive Brokers he'd say the 'clearing houses' and that's why they stopped them 'daft punters' from buying anymore shares.....to protect the collapse of these 'houses of ill repute' and therefore 'the system'

Methinks he might have been worried about the collapse of IB themselves 

Worldspreads collapsed a while ago.....can't remember the exact details....moral of the story, beware paddy firms*....notoriously dodgy gypo 'celtic tiger' snake oil salesmen 

https://en.wikipedia.org/wiki/Worldspreads

*also yankees registered in paddyland to avoid tax 

[Castlevania]

8 hours ago, Harley said:

Don't get hitting SLV, an ETF, as a strategy.  Too broad a play and plenty to break within the ETF first before hitting the wider market.  The ETF is a bit like a fire break.

SLV is a physical ETF. If more and more money flows in they have to go out and buy more physical silver.

[Castlevania]

5 hours ago, Bricks & Mortar said:

I disagree strongly.  GME, (for the Redditors), was basically shut down yesterday, in collusion with the hedgies, while the price went from around $480, down to $113.  The hedgies are professionals, they could keep trading on their own platforms.  Surely they put more shorts on at $480, and covered their low price shorts at, or close to, $113.  They'd be pretty shit hedgies if they didn't.

But, I do think there's a risk of a market crash.  And I think its being set up to blame the Redditors, just like an open door and an invite inside from the cops at the Capitol a few weeks back.  Joe Biden has been elected on a "build back better" slogan.  This is the Party of Davos slogan.  I think think he, or rather, the Party of Davos, are wanting a global collapse, so they can get on with it.  From the Biden admin's perspective, the sooner this happens the better, as they can shuck off more blame to the Trump admin the closer it is to that time.  And also, the sooner it is, the more of their term they have left for the voters to forget.

For me, the SEC, President, Treasury Secretary, should have come out to condemn the market manipulation of Robin Hood, Citadel, Melvin Capital and the other brokerages who followed suit.  USA is the home of the free market, and they just bent it to all hell, in my opinion.  That they didn't, even though I wasn't playing, rang all kinds of alarm bells.  When it transpired they were doubling down, and manipulating AG today, (I didn't find out until after market close), I decided to pull a large chunk from NYSE on Monday, and bring it home, probably to cash.

EDIT TO ADD - I didn't explain this well enough.  The liquidity issue, is Redditors and other investors pulling their cash from the market as it's revealed to be rigged, and the administration reveal themselves to quite like it that way.  Did you check the bitcoin price today?  That was Redditors saying, "fuck this for a game of soldiers."

I think it was the Treasury Secretary putting pressure on the brokers, to “maintain the stability of the system”. In other words Janet Yellen bailing out her paymasters.

[MrXxxx]

11 hours ago, TMM said:

You're not on your own! I've been reading the thread here and on TOS, if only...

I've been buying and laddering as others suggest, but I think my problem is I started in the March crash and so think anything 10% above those prices are expensive :-) :-) :-)

[nirvana]

34 minutes ago, Castlevania said:

SLV is a physical ETF. If more and more money flows in they have to go out and buy more physical silver.

ok but it's been proven the SEC have no balls and/or oversight is week, will they really purchase the silver?

sounds like the Fort Knox story, how much gold is actually in there and what proportion actually belongs to the people of 'the fatherland'? 

ie the yankees stole the nazis gold! https://www.nytimes.com/1997/11/02/world/nazi-gold-was-recast-and-issued-in-the-us.html

and the krauts got some back lol

https://globalbullionsuppliers.com/blogs/blog/why-is-germany-repatriating-gold

I guess anything goes in love, war and financial markets 

[ThoughtCriminal]

"Yeah, so I was talking to this guy called Durham Born, or as we redditors call him The Sage Of Sedgefield, and he told me about using your mortgage as leverage.........." 

 

😂

[wherebee]

So lots of chatter about a rotation into Bonds.

Does that affect our hivemind view on investment positioning?  I must confess I've never invested in Bonds (not my area of knowledge), but I bet someone on here has...

[BurntBread]

13 hours ago, DurhamBorn said:

Plus the Scottish play looks primed for a big run up 

DB, I'm looking at the balance sheet, and they really have a lot of liabilities. As a percentage of market cap.:

Total assets: 600%

Total liabilities: 540%

Current liabilities: 290%

Net assets: 60%

Net tangible assets: -74%

I've been steering clear because of that. I am guessing you have dug into the finances more deeply and found that the liabilities are relatively well-structured. Is that fair?

[Harley]

15 minutes ago, BurntBread said:

DB, I'm looking at the balance sheet, and they really have a lot of liabilities. As a percentage of market cap.:

Total assets: 600%

Total liabilities: 540%

Current liabilities: 290%

Net assets: 60%

Net tangible assets: -74%

I've been steering clear because of that. I am guessing you have dug into the finances more deeply and found that the liabilities are relatively well-structured. Is that fair?

Utilities tend to have relatively bad debt metrics, or so they like to say, but this really is bad on some bases.  Current debt to equity is c.546% but then debt to assets only 30%.  Current ratio is borderline at 1.04 (which in the old days would be considered not good).  Intangibles exceed equity by 2:1!  I suppose the one bright spark is operating cash flow is up in the last 12m after the big fall in 2019 and they have been consistently paying down debt over the last 5 years.  Me, I just want to get some of my money back!

[Harley]

2 hours ago, Castlevania said:

SLV is a physical ETF. If more and more money flows in they have to go out and buy more physical silver.

True, but an ETF with a prospectus (which I actually read once, currently a mere 44 pages!)!  That said, silver doubled trough to peak last year and early days but I've been wondering for some time now if it would follow gold's cup and handle chart pattern.  It could do well if it did.  Maybe more (or less?) likely now?

[ThoughtCriminal]

14 minutes ago, Harley said:

Utilities tend to have relatively bad debt metrics, or so they like to say, but this really is bad on some bases.  Current debt to equity is c.546% but then debt to assets only 30%.  Current ratio is borderline at 1.04 (which in the old days would be considered not good).  Intangibles exceed equity by 2:1!  I suppose the one bright spark is operating cash flow is up in the last 12m after the big fall in 2019 and they have been consistently paying down debt over the last 5 years.  Me, I just want to get some of my money back!

Come on Harley! 😂

 

[Harley]

.

[Bricks & Mortar]

6 hours ago, Rave said:

Who were the counterparties to these trades, then? Serious question  .

I've mis-written when I put the trade was shut down for the Redditors.  It was, instead, made "sell-only".  I think enough of them realised the game was up and sold while it was like that.

 

[DurhamBorn]

36 minutes ago, BurntBread said:

DB, I'm looking at the balance sheet, and they really have a lot of liabilities. As a percentage of market cap.:

Total assets: 600%

Total liabilities: 540%

Current liabilities: 290%

Net assets: 60%

Net tangible assets: -74%

I've been steering clear because of that. I am guessing you have dug into the finances more deeply and found that the liabilities are relatively well-structured. Is that fair?

I think they are just about the price setter in the market now,that would surprise most people.If they use £1.5 billion of the US sale to plug the pension deficit that removes £250 million payments they are making now and would leave the debt about £1.5 billion.Spirit Energy might bring in over £1 billion.They will be pretty much debt free.If someone wants to buy into nuclear and a huge part of the electric consumer market in the UK they would then be a nice clean takeover target.

They have vaporised 3 months of my labour though with terrible timing on them from me,and  feel a bit like its an ex telling you how sorry she is and how different things will be this time,and while saying it has her eye on a bloke at the bar.

 

[Harley]

13 minutes ago, Bricks & Mortar said:

I've mis-written when I put the trade was shut down for the Redditors.  It was, instead, made "sell-only".  I think enough of them realised the game was up and sold while it was like that.

So where next with their money?  How much?  Out of RH (whoops!) to where?  Another broker and to where?  Not sure into BTC as it stayed flat yesterday.  Still in RH and into AG, etc?  Having one big party this weekend? 

[RJT1979]

13 hours ago, Errol said:

First Majestic is the next target for WallStreetbets. They are discussing it in a variety of places.

Already tried. Opened up 30pc and fell on a few percent silver increase