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

[MrXxxx]

9 hours ago, Cattle Prod said:

I now have my wifes ISA entirely in large cap dividend stocks, and a little PHAG. She sees the price drops and gets worried, and I say 'the dividend hasn't changed, you will still get the same x pounds a year' and she goes away happy. If the divis are cut, I'll hide in the garden!

Hide in the garden?...you'll be sleeping in the shed! :-) :-) :-)

[Noallegiance]

7 hours ago, dgul said:

It would make a change from the beneficiaries of QE to date.

And it is exactly the sort of thing that is required.

What? More socialism from the allegedly anti-socialist POTUS?

100 years of creeping socialism got us in this mess. More of it won't get us out.

[MrXxxx]

17 minutes ago, MvR said:

based on the fact that since most retail traders lose money, by taking the opposite side, they will make money.  They keep separate lists of the consistently winning and losing customers, and take the opposite side of the losers.

Interesting, I watched a Krull video on YouTube recently where he said just this.

19 minutes ago, MvR said:

Depending on their own inventory, and what sort of position they want to be in, they may route the order to the market, or they may not. They may simply widen the spreads they offer, knowing they can offset your order with one of their own at a more advantageous price

So is this why some brokers will recompense when people have a `fill or kill` that should have actioned but wasn't, knowing that they are still making by a) `rigging the system`, and b) not every retail customer will complain?!

 

[MvR]

3 minutes ago, MrXxxx said:

Interesting, I watched a Krull video on YouTube recently where he said just this.

So is this why some brokers will recompense when people have a `fill or kill` that should have actioned but wasn't, knowing that they are still making by a) `rigging the system`, and b) not every retail customer will complain?!

 

Pretty much, yes. 

[Democorruptcy]

Water?

Companies like UU currently have a free marketing campaign, the governbankment is telling everybody to wash their hands all day singing happy birthday twice 

[Harley]

2 hours ago, Castlevania said:

You need to look at the debt profile. Vodafone for all their issues have in my opinion done a brilliant job in taking advantage of low rates over the past decade and have pushed their debt profile out by borrowing long at cheap rates. 

Agreed.  I used to do this with the Morningstar data.  But I've been using FT.com given their superior screener.  I'll look into updating things with Morningstar.

PS: More on debt.  Not all is bad, depends on its nature (e.g. profile as you mention) and what it's used for.  I've also seen some struggling companies reduce debt presumably because they have to rather than because they're smart.  But then I've seen quite a few companies seemingly (in the round) effectively using debt to shore up their dividend payout record.  I looked at metrics like interest cover and debt to capital ratios but would need to work out any history myself.  Plus there is an element of keeping it simple and focusing on the relationships to get a rounded view.  But I agree, looking at the ageing history of long term debt is useful.

[dgul]

32 minutes ago, Noallegiance said:

What? More socialism from the allegedly anti-socialist POTUS?

100 years of creeping socialism got us in this mess. More of it won't get us out.

I don't understand the problem with this.  The problem is 100 years of creeping socialism.  The problem is the creation of all sorts of responses to what is actually an economic cycle problem, storing up vast additional problems for the future

This is not the same as a targeted response to a specific non-economic-cycle problem.  Of course, it does require that the 'targeted response' is removed within a 'reasonable timescale', but that's an implementation issue, not anything fundamental in the need for a targeted response.

[Harley]

1 hour ago, MrXxxx said:

Can't see your table; on a really small phone, but my only critique would be the duration (5yrs) of #3/4...with such a short duration you could get misleading signals as it doesn't cover the average cycle length of 10-11yrs, something that I would have though is especially important with cyclical stocks?

I can understand only 5yrs, as this is all FT offers, amazing really considering it subscription and you can get same tabulated information elsewhere for free...unless I am looking in the wrong place or `missing a trick`?

Yup, that's the problem but 5 years is probably just enough to get a current average/trend.  10 years and I could be looking at old wars.  Depends on the stock I guess.

[Barnsey]

As expected, we got enough out of the White House last night to stabilise the markets, too early to say if we've bottomed but things are looking good so far at the open. Just demonstrates yet again that U.S. and it's monetary and fiscal policy pretty much rules all economies so we must pay very close attention. 1 week to go until we get another .5% cut from the Fed, many expecting straight to 0.

[BadAlchemy]

Managed to sell the second of three small tranches of IBTL this morning on HL. I missed £5.10 yesterday (darn!) but sold it at £4.88 this morning. Not bad at all. HL now reporting "Unable to retrieve live quote" if I try to sell my final lot... ( which I'm not going to do just yet but it seems to be the only way to get an up to date price is to go through the motions of placing a deal).

I've done quite well with IBTL and, along with gold miners, it is softening the blow of all the other paper losses.

[Harley]

So I'm running screens to look for possible stocks to invest in for the long term on a total return basis.  And will keep going, industry by industry and will look at it all in the round at the end.  But my initial impression is not great.  Cash flow is poor for many companies and debt is high with no sign of falling.  But my most noticeable take away is how despite everything, total assets continue to rise year on year.  I question valuations, of fixed assets, intangibles, investments, goodwill, etc for several.  Meanwhile matching liabilities are less open to judgement, as they are someone else's legal asset, except for shareholder funds!  The current focus is on the P&L but will we see balance sheet asset and shareholder fund write downs in the not too distant future (now all the CEOs have left)?  Needs a closer look but just something to watch for now.

[TheCountOfNowhere]

9 hours ago, dgul said:

It would make a change from the beneficiaries of QE to date.

And it is exactly the sort of thing that is required.

Not it wouldnt.

 

Trickle up. 

 

That money goes straight to the rich/corporations. 

Its another bailout. 

 

[DurhamBorn]

If my road map is right,based on where treasury/gilt yields are i would expect the response to be fiscal.They will say monetary and fiscal,but it will really be fiscal as the Fed (and then everyone else) will monetize the treasuries as they are issued.They key to then watch is the long end to start to see a creep up in yield.

This is just the start of course.I expect each dose will see a market rally,but never enough to get us out of the mire.

Its really tricky,but its probably best to build positions in the targets,but keep perhaps 35% cash back.

I priced value stocks/cyclicals etc to come in to PEs of 5 to 7 that seemed mad at the time but many are now there.The question is really was the target valid,or more likely will they go down more when the glamour stocks roll over.

[Harley]

2 minutes ago, DurhamBorn said:

This is just the start of course.I expect each dose will see a market rally,but never enough to get us out of the mire.

Yup, was thinking the same.  The initial attack, followed by trench warfare with the odd flurry.  Soon will be time to dig in for the long haul and keep focused in the face of a lot of noise.

[TheCountOfNowhere]

Is it a dead cat bounce today? 

 

Sounds like the bailouts are coming. 

 

The ecb talking about buying antly old shite off their chums now

[CVG]

7 minutes ago, DurhamBorn said:

then watch is the long end to start to see a creep up in yield.

I already have my strategy in place to rotate a % allocation of the portfolio back into long term Gilts (with 30+ years to maturity) as yields rise.

[DurhamBorn]

8 minutes ago, Harley said:

Yup, was thinking the same.  The initial attack, followed by trench warfare with the odd flurry.  Soon will be time to dig in for the long haul and keep focused in the face of a lot of noise.

I think so Harley.The problem we have is we might see a huge rally then bust,or sugar rush,then down,sugar rush then down etc.That might not be a bad thing though because it might stop the glamour stocks dragging the value plays down too much.If i could pick a way this plays out id take that one.

 

 

[Harley]

23 minutes ago, DurhamBorn said:

I think so Harley.The problem we have is we might see a huge rally then bust,or sugar rush,then down,sugar rush then down etc.That might not be a bad thing though because it might stop the glamour stocks dragging the value plays down too much.If i could pick a way this plays out id take that one.

Indeed, seems the US market is only held up by a few glamour stocks.  A gentle rotation away from them and things might look healthier, lower overall but healthier. 

[Noallegiance]

1 hour ago, dgul said:

The problem is the creation of all sorts of responses 

Exactly.

There have been no economic cycles that haven't been interfered with for 30 years. The economic cycles are vital. When they're blocked with socialist policy, that is what stores up problems for later.

Ever-expanding central bank balance sheets prove that no measures have been reversed. And it's happening again.

The responses designed to prevent the natural course of the ebb and flow of markets mean that there are precisely zero genuine markets anywhere on the planet. 

[onlyme]

3 minutes ago, Noallegiance said:

Exactly.

There have been no economic cycles that haven't been interfered with for 30 years. The economic cycles are vital. When they're blocked with socialist policy, that is what stores up problems for later.

Ever-expanding central bank balance sheets prove that no measures have been reversed. And it's happening again.

The responses designed to prevent the natural course of the ebb and flow of markets mean that there are precisely zero genuine markets anywhere on the planet. 

Worse they hide and disguise the underlying problems, bail out those making the worst mistakes and continue and encourage a situation which without that interference would be fixed by the market, it is supposed to be the market that is the best allocator of resources or have I got that wrong and does that o longer apply?

[CVG]

16 minutes ago, Harley said:

Indeed, seems the US market is only held up by a few glamour stocks.  A gentle rotation away from them and things might look healthier, lower overall but healthier. 

That's what I hear too but a look at the PE's suggest otherwise. The other US stocks look overvalued too.

[BearyBear]

Italy suspends mortgage payments!

https://www.independent.co.uk/news/world/europe/coronavirus-italy-economy-mortgage-payments-symptoms-lockdown-latest-a9389486.html

I begin to think buying a property is the best investment ever as the government (using taxpayer money, printed money or whatever...) will always help you..!

[kibuc]

28 minutes ago, BearyBear said:

Italy suspends mortgage payments!

https://www.independent.co.uk/news/world/europe/coronavirus-italy-economy-mortgage-payments-symptoms-lockdown-latest-a9389486.html

I begin to think buying a property is the best investment ever as the government (using taxpayer money, printed money or whatever...) will always help you..!

To be fair, if there ever is a good justification for debt holiday, for me this would be it - an external, once-in-a-blue-moon event impossible to foresee.

 

[BearyBear]

11 minutes ago, kibuc said:

To be fair, if there ever is a good justification for debt holiday, for me this would be it - an external, once-in-a-blue-moon event impossible to foresee.

 

How about renters..? They should also be getting a rent holiday but they won't...

[Popuplights]

4 hours ago, TheNickos said:

$2 a gallon, could you imagine ever paying that here!

You can already get petrol for less than that here in Texas!! US gallon mind.

Still, that works out as 40p / litre !