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

[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 

[RJT1979]

They are buying DOGE coins. Keep up. Silver thing never got much traction. I did 300pc on Doge. 

[geordie_lurch]

Monday and the whole of next week is going to be interesting but I'm not making a Black Monday call yet I don't think... I have set some cautionary stop losses and some optimistic limit orders just in case

[Harley]

2 hours ago, wherebee said:

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...

Yep. I noticed that from quite a wide variety of sources.  Government bonds of course and given the sources, US ones.  Also some prior talk about one more up for them.  They (bond ETFs) have not been doing well recently on their monthlies for me though but worth a closer look.  As the video guy said, a move into them by traders could be a signal so needs watching.  As does USD.

[MrXxxx]

For those 'slow to the GMC party' and finding it difficult the understand the post-talk part of this weeks Macrovoices podcast explains it beautifully, and also highlights the fact that it wasn't just the Reddit's that were responsible, but the 'sharks were actually feeding on themselves'!

Here Napier talk 1:08 onwards, and download the picturebook as it really helps (https://www.macrovoices.com/podcasts-collection/macrovoices-podcasts)

[Bricks & Mortar]

 

1 hour ago, Harley said:

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? 

Ah.  I'd checked in the afternoon and saw it was taking off.  I see it fell back.
I'm also calming down as I've checked to see the total assets under management at Robinhood are a mere $20 billion, (the big brokers are in the trillions).
What's got me spooked is RH is preventing its users from buying AG, and 50 other stocks.
I'm still taking something out of my stock portfolio, and buying physical silver on Monday.  Got my eye on some 500g silver bars from thegoldbullion.co.uk unless I find a better price over the weekend.
I'll be watching what is said over the weekend before deciding how much to take out.  May only be 10% or so, if everything dies down.
 

[Lightscribe]

9 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."

Yup. Those darn alt-right (notice how they are labelled even though Reddit is about as left as you can get). Oooh noooo that sucks look what these online Trump trolls have done they’ve gone and crashed the market! Online terrorists. 

Don’t worry, we can make it all better, we can purge the internet, track and censor everything to just government approved sources like China does. It’s for your own good.

[feed]

 

https://www.thetimes.co.uk/article/bosses-make-capital-gains-as-sunaks-tax-rises-loom-0wnb82v3g

Directors in UK-listed companies have sold hundreds of millions of pounds’ worth of shares this year as they cash in on the markets’ winter rally and act before any possible tax changes.

Wonder if they've had the nod 

[No One]

Ive been thinking, if the hedge funds that shorted the gamestonks and anc have to cover their losees, wont they have to liquidate their other stocks en masse? could that be a buying opportunity?

[JMD]

11 hours ago, Rave said:

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  .

Insightful post Rave. Do you know of any co2 capture/sequestration companies that you think might do well? I think your also correct about the hydrogen/battery tech companies, like most of the tech sector, they are far too pricey - at least for me to buy anyway. But I would like to put some money into a few potential co2 capture companies, but I expect most of them are still private?

[Option5]

9 minutes ago, JMD said:

Insightful post Rave. Do you know of any co2 capture/sequestration companies that you think might do well? I think your also correct about the hydrogen/battery tech companies, like most of the tech sector, they are far too pricey - at least for me to buy anyway. But I would like to put some money into a few potential co2 capture companies, but I expect most of them are still private?

Equinor are building a system "Northern Lights Project"

[Democorruptcy]

3 hours ago, MrXxxx said:

For those 'slow to the GMC party' and finding it difficult the understand the post-talk part of this weeks Macrovoices podcast explains it beautifully, and also highlights the fact that it wasn't just the Reddit's that were responsible, but the 'sharks were actually feeding on themselves'!

Here Napier talk 1:08 onwards, and download the picturebook as it really helps (https://www.macrovoices.com/podcasts-collection/macrovoices-podcasts)

Blackrock filed 9.2m/13.2% of Gamestop shares for Dec 2020 on here 26th Jan

https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001326380&owner=exclude&count=40

 

[JMD]

9 hours ago, Rave said:

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).

(Excuse thread derailment, but cars, yellow reduced stickers and pizzas are sometimes given a free pass here!)                                                                                                                                                                           Could be wrong, but wasn't the late 90's Peugeot 405 considered a sweet spot, cheap and cheerful to buy, and in that the engine required no modification, though I think it was recommended to have a separate veg oil fuel tank so could switch to diesel tank on cold mornings?

[Hancock]

3 hours ago, Lightscribe said:

Yup. Those darn alt-right (notice how they are labelled even though Reddit is about as left as you can get). Oooh noooo that sucks look what these online Trump trolls have done they’ve gone and crashed the market! Online terrorists. 

Don’t worry, we can make it all better, we can purge the internet, track and censor everything to just government approved sources like China does. It’s for your own good.

I just showed that to my kid (10), and  she is aware of it stating they use it to teach her at school.. all about the environment, global warming, equality etc..

She had to write a story about Greta last week.

[Don Coglione]

9 minutes ago, JMD said:

(Excuse thread derailment, but cars, yellow reduced stickers and pizzas are sometimes given a free pass here!)                                                                                                                                                                           Could be wrong, but wasn't the late 90's Peugeot 405 considered a sweet spot, cheap and cheerful to buy, and in that the engine required no modification, though I think it was recommended to have a separate veg oil fuel tank so could switch to diesel tank on cold mornings?

I think that was the XUD engine, used in various Peugeots and Citroens.

[DurhamBorn]

Running numbers and i think core inflation will touch multi decade high of 3% at the start of this cycle ,so thats over 25 years high.Liquidity is there for that already.Market is positioned for the opposite to happen.Market is shaking out people of the inflation/cyclical trade before likely moves higher again in those sectors.

Normal move from Fed business cycle printing is around 2% gain in core inflation.Looking at liquidity its likely we will get 3%+ so touching or above 3% is very likely for the first stage.

The market is missing the message this will send.It is buy energy and things you use before others do.Given the lack of investment in oil and gas this last 5 years its likely mid term price targets could over shoot.The vaccine situation is a window into what happens when politicians make big mistakes.There is no bigger one than handing energy policy to 15 year old Swedes.

[Castlevania]

Not relevant at all, but Greta Thunberg’s second name is Tintin.