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


spunko

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Democorruptcy
21 minutes ago, Noallegiance said:

I'm glad I notice that on days like this DB rarely comments.

His knowledgable silence keeps me sane.

He's back working.

More oilies, in for a penny in for a lot of pounds!

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7 hours ago, janch said:

RMG have good results and the share price up by 23% as I write.  Let's hope they can get their act together:

https://www.bbc.co.uk/news/business-54068885

John Moore, from stockbrokers Brewin Dolphin, said the company had a juggling act ahead of it.

"Royal Mail will have to move quickly to adapt and undertake some major changes, creating a more flexible business and more efficiently dealing with its legacy operations, while keeping its staff on board during this period of transition," he said.

Message is to union and regulator,we are going to hive off GLS and give shareholders stock that is probably worth more than the market cap of the whole company,then its reform or die the rest.Great time to tell the unions if you want to go into the jobs market right now fine by us.

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6 hours ago, Cattle Prod said:

Demand concerns is the trigger, but it probably just technical; personally I've been looking for a -25% correction for a couple of weeks now. That's be a very healthy pullback for the market overall, and it's moving fast. Only another ~14% to go.

The demand concerns are around floating storage in China, refinery runs and margins etc. But that is all slightly lagging. The UK is back to 2019 traffic levels this week, and if we are, given the buffoons we have in charge, much of the world probably is. India was one of the last to get infected, once they increase imports, that'll probably be it for the correction.

Dyodd, not trading advice etc etc. But I'm very pleased to see this pullback.

Hopefully the pain stays for a while yet to kill of the frac space for good.The fact traffic is getting back to normal means the integrated companies we have now have the cash flow back to trade the swings.China probably needs another 45 days to clear the oil floating around,nice ongoing spat with India should help moving forward as well.Most of that oil will be from when they filled their boots during March etc,and id expect December shipping rates to pick up.

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Just now, DurhamBorn said:

When i was at Cummins they saw Nikola as a big threat in fuel cells for hydrogen and so Cummins have teamed up with Hyundai and bought a company called Hydrogenics.

Fascinating that - the last time I looked at Nikola they were a vapourware firm with no product, no sales, but a stock market symbol.  So Cummins see them as a competitor now? 

Shame the truck is called the 'Badger' xD and has one of those massive daft touchscreens or I'd quite fancy one

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6 hours ago, Noallegiance said:

I'm glad I notice that on days like this DB rarely comments.

His knowledgable silence keeps me sane.

If i used my phone where im working at the moment i could blow up half of Co Durham without you even seeing a flame,we are building an ethanol plant.

Only thing interested me today was seeing RM blast up.I chipped out bottom ladder on them.Bit of Shell i think with that,its my lowest oil holding so il top it up.

 

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5 minutes ago, Loki said:

Fascinating that - the last time I looked at Nikola they were a vapourware firm with no product, no sales, but a stock market symbol.  So Cummins see them as a competitor now? 

Shame the truck is called the 'Badger' xD and has one of those massive daft touchscreens or I'd quite fancy one

Cummins and Hyundai will easily compete against them.

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Just now, DurhamBorn said:

Cummins and Hyundai will easily compete against them.

PLEASE tell them to fit normal tactile dials and buttons if you know anyone on the dev teams... xD

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1 minute ago, Loki said:

PLEASE tell them to fit normal tactile dials and buttons if you know anyone on the dev teams... xD

Thats for the OEM like PACCAR to decide,we just gave them the best engines in the world ;)

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XOM should be able to restructure debt to longer terms at the cheapest rates in history. At least they seem to be acknowledging the situation and adjusting, hopefully they do so quick enough..

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Well, picked up some BAT last night on a dip.

Thinking again that with the price at lows not seen in years, it's another long term hold for dividends and, once inflation kicks in and (hopefully) wage rises start arriving, the smoking and vaping sector will benefit.  I also suspect that the massive boom in legal cannabis is just starting, and BAT I think is well positioned to acquire suitable firms.  In the US, Trump has indicated support for abolishing the federal restrictions on cannabis financial flows (which stops large US banks from servicing them - once that is dealt with, I could see a big boom) 

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4 hours ago, wherebee said:

Well, picked up some BAT last night on a dip.

Thinking again that with the price at lows not seen in years, it's another long term hold for dividends and, once inflation kicks in and (hopefully) wage rises start arriving, the smoking and vaping sector will benefit.  I also suspect that the massive boom in legal cannabis is just starting, and BAT I think is well positioned to acquire suitable firms.  In the US, Trump has indicated support for abolishing the federal restrictions on cannabis financial flows (which stops large US banks from servicing them - once that is dealt with, I could see a big boom) 

Just don't confuse BATS with IMB, as performance wise they appear very different `beasts` in the six months I have owned them, the former always in the green, the latter alwa in the red.

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sleepwello'nights
53 minutes ago, MrXxxx said:

Just don't confuse BATS with IMB, as performance wise they appear very different `beasts` in the six months I have owned them, the former always in the green, the latter alwa in the red.

With a forward dividend yield of 10.88% for IMB vs 8.41% for BATS. Why is BATS more highly regarded?

 

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23 minutes ago, sleepwello'nights said:

With a forward dividend yield of 10.88% for IMB vs 8.41% for BATS. Why is BATS more highly regarded?

 

BATS has a far greater Operating Margin (c.37%) compared to IMB (c.6%) meaning that it is much better placed to pay its costs including interest on it's debts.

Operating Margin is profit divided by revenue.

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1 hour ago, sleepwello'nights said:

With a forward dividend yield of 10.88% for IMB vs 8.41% for BATS. Why is BATS more highly regarded?

 

They have a much better developing market exposure and also a much better new categories business with Glo and Vuse.Saying that Imperial should have £1billion a year spare after 2022/23 to cut debt and/or do buy backs or buy other companies.

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11 hours ago, Sugarlips said:

XOM should be able to restructure debt to longer terms at the cheapest rates in history. At least they seem to be acknowledging the situation and adjusting, hopefully they do so quick enough..

I was looking at Vodfanoes debt structure the other day.Fascinating to see theyve floated off about E/£30bn in bonds,some out at 2056 under 3%................................read thsoe last two figures

https://investors.vodafone.com/debt-investors/bonds-outstanding-eu-and-us

US debt is issued under 5%.Similar timeframes.

Inflation at 5% will kill thsoe bond holders.

 

3 hours ago, sleepwello'nights said:

With a forward dividend yield of 10.88% for IMB vs 8.41% for BATS. Why is BATS more highly regarded?

 

We're buying some baccies.Here's some Coma scores on the doors.

Company  Chart Income Balance Sheet Cash flow Sector SCS
JAPAY 4 4 3 5 4 20
BATS 3 4 3 5 4 19
IMB 3 4 1 5 4 17
ALTRIA 2 2 1 4 4 13
PM 2 4 1 4 4 15
KT&G 2 4 5 4 4 19
ITC 2 3 5 3 4 17
Gudang Garam 2 5 4 4 4 19

IMB has huge debt problems

image.png.965a19bd2a701f21cbd640a1a98ba0f2.png

Phillip Morris is on another level.

image.png.df18d94a62dcae4aba8612160fdbbc24.png

             
             
             
             
             
             
             
             
             

 

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1 hour ago, sancho panza said:

I was looking at Vodfanoes debt structure the other day.Fascinating to see theyve floated off about E/£30bn in bonds,some out at 2056 under 3%................................read thsoe last two figures

F***in ell. So are they allowed to buy out their own bonds for peanuts (relative to inflated FCF) later in the cycle if/when yields top out? Very happy to be in on the equity side of this racket if so!!!

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29 minutes ago, jamtomorrow said:

F***in ell. So are they allowed to buy out their own bonds for peanuts (relative to inflated FCF) later in the cycle if/when yields top out? Very happy to be in on the equity side of this racket if so!!!

Its a crucial part of an inflation cycle and what most people miss.Once you have high worth fixed assets built from some equity,but also debt at less than 3% then once inflation gets over that level bonds holders have simply funded equity holders,and of course it also means new entrants to the market have a much higher cost of capital.Its crucial though the bonds are well spread,and the company has good and growing free cash to pay the bonds off as they come due,not roll them over at higher coupons.

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