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

[Harley]

1 hour ago, JMD said:

re comments... just a thought Harley - but would there perhaps be chance of including a score/metric for future debt obligations? I believe that short-term and long-term debt are important considerations re. corporate viability?

Could you clarify that please?  The debt metric I included is based on looking at the year to year movement in total debt.  1 point for each time it went down.  Primitive and worth refinement (e.g. look at debt ageing or relate debt to other metrics), although pretty soon you'll have to start reading the accounts.

[janch]

It would seem the helicopter money for the common folk is to be in the form of payment holidays/postponements for mortgages/debts plus money for those whose employers can't pay them etc.  So it's bailing out the debtors (again) but this time it's for the common man as well as for businesses etc.

Maybe that's a little harsh as no-one could have seen it coming. Or has it all been rather convenient?  Trump will be able to blame everything on the virus.  It will disguise what would have happened anyway and just speeded it up. 

Once again those of us who have been savers rather than spenders will not benefit. 

It's a more subtle way of giving out cash to the populace than a dollop to everyone.

[Cosmic]

FTSE given up on its bounce!

[TNS]

2 minutes ago, Cosmic Apple said:

FTSE given up on its bounce!

Yep, going to sit back and watch. If Shell hits £10 and BP £2.50 i'm going in hard!

[StrugglingMillennial]

With you on that Nickos 🙏

[Cosmic]

1 minute ago, TheNickos said:

Yep, going to sit back and watch. If Shell hits £10 and BP £2.50 i'm going in hard!

If they get to that I'll kick myself for locking out my NS&I account

[Harley]

49 minutes ago, JMD said:

your a machine Harley!  ...shouldn't sk telecom yield column say 5%? Silly question but why are Vodaphones assets so low, in calculating that figure do you net off its debt?

I would like to say America steel, but probably not! 

Re. SK Telecom, FT.com says zero dividend yield.  I just cross checked with Morningstar who are showing 0.47%.  Where are you getting 5% please?

Re. Vodafone, which assets are you referring to?  Market cap?  That's the share price, not asset valuation.  I'm not showing any other asset figure.  But the asset figure I did look at for the asset score was total balance sheet assets (which equals liabilities) and it is scored zero out of a possible 4 because it has gone down in each of the last five years, much to my surprise.  Much of that fall seems to be due to reduced fixed (tangible and intangible) assets, which some might see as good but in pure theoretical accounting terms it should be neutral (depreciation/amortisation is meant to ensure the matching of the fall in their value (consumption) against the income that consumption generates).  As mentioned, quite unusual to see falling asset values over the five years.  It would be nice to see that as proper accounting/prudence, something which would bode well in any future involving a purge of excess asset valuations across sectors.  I would need to delve deeper to get an idea but am happy holding them for now in my income portfolio (which is largely buy and forget, currently being very forget!).

[BearyBear]

6 minutes ago, Cosmic Apple said:

FTSE given up on its bounce!

No heroin for debt junkies... at least for now

https://www.cnbc.com/2020/03/10/coronavirus-trump-plan-for-economic-response-not-ready-officials-say.html?__source=sharebar|twitter&par=sharebar

 

[nirvana]

Guys listen up -  DERIVATIVES.......Warren buffet said about them 'FINANCIAL WEAPONS OF MASS DESTRUCTION'

THE DERIVATIVES MARKET IS 'WORTH' OVER 1 QUADRILLION DOLLARS - google the current value yourself lol

IT is going POP POP POP all over the place!

Every time you see a large swing in prices, OIL, Stock market whatever, thing ahhhh, that's another derivative imploding!

All the Central Banks CANNOT cover the cost of all these derivatives imploding!!!

Look at the overnight FED repo amounts!!!! THE 'SYSTEM' IS GOING DOWN!!!!

OK your turn to comment???? 

 

[nirvana]

PS the price of crude has hardly moved and yet RDSB has 'lost' about 11% of it's intraday gain! THIS IS NOT FUCKING NORMAL!!!! 

[Harley]

This is getting a bit addictive (wierd I know), but their preparation gives me a useful insight. 

None of this is investment advice and I don't always agree with the scores in terms of what I would do next but it gives a strawman to discuss.

So here is the mining sector for review and comment only.

Same methodology as before.

I would much rather the FT data was split into further industries such as precious metal miners as this seems too broad.  I'm also being a bit lazy assuming I can trade Hong Kong stocks and personally, I probably wouldn't want to anyway so that would change things. Disappointed by Kirkland Lake Gold as it was scoring well but lacked the dividend.  Maybe some flexibility needed.  I already have positions in BHP and RIO in my income portfolios so need to look closer a AAL.  But I really want some precious metal miners in the mix (or just give up and buy GDX, etc).  One sector I would like to widen the net, maybe down to the top 40 market caps, or try and split out by sub-sectors (like they have on Investing.com).  I went with FT.com because I can do one search across all exchanges but am then restricted in the granularity of their industry classifications.  Maybe worth doing the legwork for a few key areas using Investing.com.

PS: I also own Glencore in my income portfolio but maybe those scores show the dangers in chasing yield!

[onlyme]

4 minutes ago, confused said:

PS the price of crude has hardly moved and yet RDSB has 'lost' about 11% of it's intraday gain! THIS IS NOT FUCKING NORMAL!!!! 

The Duran had a good pice on YT on the price of oil - mad/childish MBS picking a fight with everybody at the moment and utterly isolated, Putin will let him stew for a bit and there will be some deal/resolution, in a few weeks on output,  given their Russian links I'd say they at least understand Putin quite well and how he goes about politics, They didn't go into the scale of the possible demand destruction and what that could do but I suppose equivalent production reduction would could match that even if they wanted to.

[BadAlchemy]

24 minutes ago, Cosmic Apple said:

FTSE given up on its bounce!

This is what they need. It can solve the dead cat not bouncing issue and deliver the helicopter money at the same time...

[nirvana]

There's another 1300 point swing in the DOW!!!!! POP POP POP POP POP 

[Green Devil]

S and P back to yest lows. Oh dear. Did the promise of money printing not make up for the threat of global pandemic? 

[JMD]

16 minutes ago, Harley said:

I would like to say America steel, but probably not! 

Re. SK Telecom, FT.com says zero dividend yield.  I just cross checked with Morningstar who are showing 0.47%.  Where are you getting 5% please?

Re. Vodafone, which assets are you referring to?  Market cap?  That's the share price, not asset valuation.  I'm not showing any other asset figure.  But the asset figure I did look at for the asset score was total balance sheet assets (which equals liabilities) and it is scored zero out of a possible 4 because it has gone down in each of the last five years, much to my surprise.  Much of that fall seems to be due to reduced fixed (tangible and intangible) assets, which some might see as good but in pure theoretical accounting terms it should be neutral (depreciation/amortisation is meant to ensure the matching of the fall in their value (consumption) against the income that consumption generates).  As mentioned, quite unusual to see falling asset values over the five years.  It would be nice to see that as proper accounting/prudence, something which would bode well in any future involving a purge of excess asset valuations across sectors.  I would need to delve deeper to get an idea but am happy holding them for now in my income portfolio (which is largely buy and forget, currently being very forget!).

Oh, I see now, it makes sense now, thanks for explaining the Vod. asset column figure. 

For SK am I looking at a different company? https://www.investing.com/equities/sk-telecom-co-ltd-dividends

[leonardratso]

re limit buy/sell orders, ive had quite a few on coinbase pro, sell at this proce, but at that price etc, i have yet to see one fail - even under duress (ie mad volatility), i know its an enclosed market, but still they always filled.

 

[nirvana]

22 minutes ago, onlyme said:

The Duran

What's that? Used to like Duran Duran! 

 

[JMD]

49 minutes ago, Harley said:

Could you clarify that please?  The debt metric I included is based on looking at the year to year movement in total debt.  1 point for each time it went down.  Primitive and worth refinement (e.g. look at debt ageing or relate debt to other metrics), although pretty soon you'll have to start reading the accounts.

Harley, apologies my terminology was wrong - I was trying to ask about future 5/10 year debt profiles, but I think you have already answered this question in response to Castlevania.

Showing the historical track record on lowering debt is useful to know and as you point out your chart does show this. But I was thinking in terms of large unsustainable debt being carried forward into the expected high interest part of the next cycle - Isn't this the existential risk of this blog? But I guess this is getting far too granular and as you say probably involves looking at company accounts (the financial sites do state short/long term debt but are not really clear what this actually means).    

[nirvana]

@onlyme cool checking out 'the duran'.....in their other news 'US delivers nukes to Poland'......blimey, don't they think the world is in enough shite at the moment as it is????? 

[BearyBear]

37 minutes ago, confused said:

PS the price of crude has hardly moved and yet RDSB has 'lost' about 11% of it's intraday gain! THIS IS NOT FUCKING NORMAL!!!! 

It can happen sometimes... i'd say it precedes more pressure on the underlying asset.

[Harley]

21 minutes ago, JMD said:

For SK am I looking at a different company? https://www.investing.com/equities/sk-telecom-co-ltd-dividends

Thanks for that.  Very interesting.  The one you point to is their listing on the South Korean stock exchange.  It comes up on the FT.com screen with the NYSE one but both show no div.  Looking further, Morningstar shows the NYSE one (and the UK) one is an ADR not a full listing and has a mere 0.44% yield.  So presumably you'll need to buy on the South Korean exchange to get the full yield.  That does not however explain why the South Korean one comes up on the FT.com screen but with a blank yield and it can't find any details of the stock when you click on it 9only the US version).  Seems I'm still searching for the perfect data stream!  SK Telecom would be a serious contender on the list if I included the full dividend but then would fail on the basis (valid?) that we could not buy it (i.e. do we generally (i.e. using mainstream brokers and not paying additional exchange fees) have access to the South Korean exchange?).  One of my objectives of doing this was to test the advantage funds are meant to have in being able to access markets we can't.  Here might be an example, although overall this is not yet a noticeable problem (especially if you don't want to invest in China).

[onlyme]

3 minutes ago, confused said:

@onlyme cool checking out 'the duran'.....in their other news 'US delivers nukes to Poland'......blimey, don't they think the world is in enough shite at the moment as it is????? 

If so that's  to get them out of Incirlik apparently before Turkey goes full retard, they mentioned that a few days ago.

[nirvana]

3 minutes ago, BearyBear said:

It can happen sometimes... i'd say it precedes more pressure on the underlying asset.

OK interesting point......but we are in truly mad times when everyone is getting excited about an ANNUAL 9% divi payment, yet the stock goes up 10% and down 10% in one day! That's a 20% move IN ONE DAY!

Also bear in mind, when a stock falls 50% it needs to gain 100% to get back to its original value!!!! This is why you shouldn't trade without a stop! imo 

[Harley]

23 minutes ago, JMD said:

Harley, apologies my terminology was wrong - I was trying to ask about future 5/10 year debt profiles, but I think you have already answered this question in response to Castlevania.

Showing the historical track record on lowering debt is useful to know and as you point out your chart does show this. But I was thinking in terms of large unsustainable debt being carried forward into the expected high interest part of the next cycle - Isn't this the existential risk of this blog? But I guess this is getting far too granular and as you say probably involves looking at company accounts (the financial sites do state short/long term debt but are not really clear what this actually means).    

Absolutely is a key part of this blog.  Probably needs a number of metrics (like debt to capital ratios, debt ageing, etc) to get a handle on.  But even these can be misleading as we'll probably need to look at the precise debt details to see (e.g. how fixed is the rate, what is it, what are the covenants, etc).  For now, I content myself to see they are moving, very roughly, in the right direction (down) and certainly not increasing total debt, which most are, without the financial justification (e.g. growing business).  Some seem to be losing cash flow each year but maintaining high dividend payouts and/or good historical payout track records via increased debt!  Oh dear!