Credit deflation and the reflation cycle to come.

[Option5]

13 minutes ago, MrXxx said:

 but you are all "Domestic Goddesses" as well! :-) :-) :-) "

Bit sexist

[MrXxx]

18 minutes ago, Option5 said:

Bit sexist

People normally assume God is a man, but like in any household the more enlightened of us know who is really in charge! :-)

[Option5]

1 minute ago, MrXxx said:

People normally assume God is a man, but like in any household the more enlightened of us know who is really in charge! :-)

Wrong, he made heaven and earth in 6 days then took a day off, must be a man or he would have spent the 7th day ironing and cleaning.

[onlyme]

1 hour ago, Majorpain said:

This is why its dangerous shorting Tesla!

Plenty of warnings!

Why would he do this? To cause max pain before word got round if indeed there is a plan to go private. 

[leonardratso]

complaining of lonmin, NGD will probably hit zero before they do, another 8% off today.

[dgul]

1 hour ago, Democorruptcy said:

I thought ths was an interesting read about Sirius, not least for the suggested governbankment guarantee

Sirius Minerals: money for a hole in the ground

FT https://ftalphaville.ft.com/2018/08/07/1533614400000/Sirius-Minerals--money-for-a-hole-in-the-ground/

With Sirius it isn't about reality, it is about whether someone else will believe the story and pay more for it than you did.  

[Barnsey]

2 hours ago, Majorpain said:

This is why its dangerous shorting Tesla!

Didn't take long for trading to be suspended! 

[Majorpain]

1 hour ago, onlyme said:

Plenty of warnings!

Why would he do this? To cause max pain before word got round if indeed there is a plan to go private. 

The only rational thing i can think of is he has lost the plot and is trying to get back at the "shorters" who are trying to destroy his company.  The tiny problem he now has is that these announcements need to be done through the markets for obvious reasons, not the CEO twitter account.

12 minutes ago, Barnsey said:

Didn't take long for trading to be suspended! 

Will it be unsuspended is what i want to know??!!! 

Edit - Back trading again, i have no interest in Tesla besides watching the fun, however if one of my companies CEO's did that i would be logging into my broker account to sell ASAP!

[onlyme]

1 minute ago, Majorpain said:

The only rational thing i can think of is he has lost the plot and is trying to get back at the "shorters" who are trying to destroy his company.  The tiny problem he now has is that these announcements need to be done through the markets for obvious reasons, not the CEO twitter account.

Will it be unsuspended is what i want to know??!!! 

Yes it will be unsuspended.

My guess (and it is a guess and if private buyout likely) or going ahead word was already getting out and giving the opportunity for some of the large shorts to close so he Tweeted it to stop them getting out on the cheap - he absolutely loathes them. SEC rolls up and Musk tells them to go fuck themselves otherwise he will let on how many others were trading on insider knowledge and all he was doing was being fair and letting all investors know the situation. 

 

 

[BearyBear]

2 hours ago, Majorpain said:

This is why its dangerous shorting Tesla!

Sounds like price manipulation to me...!

[Errol]

Tesla’s Phony Quarterly Numbers

http://investmentresearchdynamics.com/teslas-phony-quarterly-numbers/

[Alifelessbinary]

1 hour ago, dgul said:

With Sirius it isn't about reality, it is about whether someone else will believe the story and pay more for it than you did.  

Sirius is one of only a few shares I actively trade. I’ve been dabbling since 2016 and it’s been quite a ride. On pure luck i top sliced at 40p, which means I got a fair chunk in my ISA for minimal cost.

The next big test is in September when Sirius is looking to secure £3bn, entirely through debt with the use of binding commitment letters. If this fails then they’ll need to turn to investors. If it succeeds there’s talk that the shares will rebase above £1, but if it fails it could easily drop like a stone.

It’s still a highly risky play, but has pretty good upside potential (greater fool theory quite possibly). The government guarantee angle is closely aligned with the themes in this thread. I’m not sure a speculative project is the best for the government to support, but it would show they are preparing to combat a deflationary crash.

[sancho panza]

5 hours ago, DurhamBorn said:

A new article from Steve,and interesting he picks up on the same thing we picked up on back in the thread,

http://truecontrarian-sjk.blogspot.com/

"Vanguard is significantly reorganizing its PGPMX fund to drastically reduce its exposure to gold and silver mining companies after having maintained its investment consistency for decades,such rare events tend to occur just before major rallies"

 

 

 

As ever,worth waiting four months for.Some really good advice in green at the bottom.

Must say he's a brave boy shorting Amazon

 

 

 

' As a result of an unusually lengthy bull market for U.S. equities, unsustainable distortions have been created which almost everyone thinks is permanent even though current valuations are highly unstable and unsustainable.

Only when it becomes far too late to sell U.S. equities and high-yield corporate bonds at favorable prices will most investors realize what they should have done. The first step is to observe characteristic signs which have heralded past bear markets for U.S. equities. History almost always repeats itself with minor variations.

Even at the highest points in 2005-2006, there were no U.S. neighborhoods where the average housing price divided by the average household income exceeded 8. Today there are many neighborhoods where these ratios have surpassed 10 and some where they have moved above 11 as compared with historic averages of 3:1 which even Julius Caesar would recognize since this ratio hasn't changed through the millennia.

Especially whenever investors are finally selling their overpriced assets, investors won't have many places to go. U.S. Treasuries are highly liquid and will end up absorbing much of the asset reallocation which is exiting previously-popular assets.

The bottom line: Since nearly everyone wants to be fully invested in the most popular sectors, remain heavily in cash and only purchase the least-popular securities.

 

Whenever the herd is closest to being unanimous it is most dangerous to run with them. While most investors are eager to hold popular Nasdaq shares, stick with gold mining and silver mining shares along with long-term government bonds of both the U.S. and emerging markets. If you have real estate which you can sell then do so since housing prices are likely to be substantially lower by 2022-2023 especially where the ratios of housing prices to average household incomes are currently highest.'

[sancho panza]

21 minutes ago, Errol said:

Tesla’s Phony Quarterly Numbers

http://investmentresearchdynamics.com/teslas-phony-quarterly-numbers/

'The cash balance of $2.23 billion that is presented on TSLA’s balance sheet was higher than expected – with an alleged implication that TSLA burned less cash than expected. But this was accounting sleight of hand. TSLA achieved this feat by stiffing its suppliers as evidenced by the ballooning of the accounts payable entry on the balance sheet. From Q4 2017 to Q1 2018, TSLA’s accounts payable rose $213 million, or 8.2%, to $2.603 billion. But from Q1 to Q2 this year, TSLA’s payables rose $427 million, or 16.4%.

In other words, TSLA slowed down the rate at which is pays suppliers by a considerable amount, which enables TSLA to hold the cash it owes to suppliers on its balance sheet, thereby giving the appearance of a higher cash balance.

[Lightscribe]

7 hours ago, Alifelessbinary said:

Sirius is one of only a few shares I actively trade. I’ve been dabbling since 2016 and it’s been quite a ride. On pure luck i top sliced at 40p, which means I got a fair chunk in my ISA for minimal cost.

The next big test is in September when Sirius is looking to secure £3bn, entirely through debt with the use of binding commitment letters. If this fails then they’ll need to turn to investors. If it succeeds there’s talk that the shares will rebase above £1, but if it fails it could easily drop like a stone.

It’s still a highly risky play, but has pretty good upside potential (greater fool theory quite possibly). The government guarantee angle is closely aligned with the themes in this thread. I’m not sure a speculative project is the best for the government to support, but it would show they are preparing to combat a deflationary crash.

Yup, I’ve been keeping an eye for a while but not dabbled. I for one think the government guarantee is ridiculous, but we do have a ridiculous government, so can see it heading up.

[Talking Monkey]

8 hours ago, sancho panza said:

'The cash balance of $2.23 billion that is presented on TSLA’s balance sheet was higher than expected – with an alleged implication that TSLA burned less cash than expected. But this was accounting sleight of hand. TSLA achieved this feat by stiffing its suppliers as evidenced by the ballooning of the accounts payable entry on the balance sheet. From Q4 2017 to Q1 2018, TSLA’s accounts payable rose $213 million, or 8.2%, to $2.603 billion. But from Q1 to Q2 this year, TSLA’s payables rose $427 million, or 16.4%.

In other words, TSLA slowed down the rate at which is pays suppliers by a considerable amount, which enables TSLA to hold the cash it owes to suppliers on its balance sheet, thereby giving the appearance of a higher cash balance.

Something not quite right with Tesla, the huge number of executive departures, the accounting sleight of hand, then all of a sudden Musk is taking it private, so last month when he would have been balls deep in negotiations with an army of lawyers and bankers he skipped off to Thailand with a sub. And only 6 weeks ago was buying Tesla shares. None of it stacks. I'm sure the truth will come out eventualy

[Lightscribe]

6 minutes ago, Talking Monkey said:

Something not quite right with Tesla, the huge number of executive departures, the accounting sleight of hand, then all of a sudden Musk is taking it private, so last month when he would have been balls deep in negotiations with an army of lawyers and bankers he skipped off to Thailand with a sub. And only 6 weeks ago was buying Tesla shares. None of it stacks. I'm sure the truth will come out eventualy

As I said on the big short thread the other week, Tesla stock is completely irrational and highly speculative, I’ve always stayed well away.

[Democorruptcy]

16 hours ago, Bricks & Mortar said:

$420? 
I'll have some of what he's smoking.

Very good!

4/20 April 20th, is a day celebrated by marijuana smokers. 

[InLikeFlynn]

17 hours ago, dgul said:

With Sirius it isn't about reality, it is about whether someone else will believe the story and pay more for it than you did.  

This is very true.  Through my work I got to know a bit about this company: all I will say is that I have never been tempted to hold any of their shares.

[Alifelessbinary]

7 hours ago, InLikeFlynn said:

This is very true.  Through my work I got to know a bit about this company: all I will say is that I have never been tempted to hold any of their shares.

Can you share a bit more information, as I always like to here from people who have a particular edge in a market?

[sancho panza]

Just catching up on my Hodges reading.As ever,very worthwhile.

 

https://www.icis.com/blogs/chemicals-and-the-economy/2018/07/high-flying-story-stocks-hit-air-pockets-as-credit-finally-tightens/

High-flying “story stocks” hit air pockets as credit finally tightens

By Paul Hodges on 29 July, 2018 in Financial Events

“Nobody could ever have seen this coming” is the normal comment after sudden share price falls.  And its been earning its money over the past week as “suddenly” share prices of some of the major “story stocks” on the US market have hit air pockets, as the chart shows:

• Facebook was the biggest “surprise”, falling 20% on Thursday to lose $120bn in value
• Twitter was another “surprise”, falling 21% on Friday to lose $7bn 
• Netflix has also lost 15% over the past 16 days, losing $27bn
• Tesla has lost 20% over the past 6 weeks, losing $13bn

These are quite major falls for stocks which were supposed to be unstoppable in terms of their market advances.

Of course, their supporters could say it was just a healthy correction and a “buying opportunity”.  And they might add that so far, other “story stocks” such as Alphabet, Apple and Amazon are still doing well.  But others might say a paradigm shift is underway, and these sudden shocks are just the early warning that the central banks’ Quantitative Easing bubble is finally starting to burst.

They might have a point, looking at the second set of charts:

• Twitter stopped being a major growth story as long ago as 2015, since when its user growth has been relatively slow, even going negative in some quarters
• Facebook stopped showing major growth in active users 18 months ago – and in 2018, it has been flat in N America and losing subscribers in Europe, whilst Asia and the Rest of the World are also heading downwards
• Tesla, of course, has been a serial disappointment.  Its founder, Elon Musk, was brutally honest when founding the company in 2003, saying it had a 10% chance of success.  Since then, it has mostly failed to meet its production targets.  It was supposed to be making 5000 Tesla 3 cars a week by the end of last year, but according to Bloomberg’s Model 3 tracker, it is currently producing only 2825/week.  Around 0.5 million buyers have paid their $1k deposits and are still waiting for their car – and Tesla needs their cash if its not to run out of money
• Netflix is another “story stock” now seeing a downturn in subscriber growth.  Yet at its peak it had a market value of $181bn, with net income for this quarter forecast by the company at just $307m.  Like Tesla, it was valued at a higher value than comparable businesses such as Disney, which have had solid earnings streams for decades.

The common factor with all 4 stocks is that they have a great “narrative” or “story”.  Elon Musk has held investors spellbound whilst he told them of unparalleled riches to come from his innovation.  This seemed to be the same with Facebook until the furore arose over the data user scandal with  Cambridge Analytica.  Twitter and Netflix have also had a great “story”, which overcame the need to show real earnings even after years of investment.

THE LIQUIDITY BUBBLES ARE STARTING TO BURST AS CENTRAL BANK STIMULUS SLOWS
In other words, reality seems to be starting to intrude on the “story”, just as it did at the end of the dot-com bubble in 2000, and the US subprime bubble in 2008.  The key, then as now, is the end of the stimulus policies that created the bubbles, as the 3rd set of charts shows:

• Slowly but surely, the US Federal Reserve is finally raising interest rates back to more normal levels
• And more importantly, China’s shadow bank lending is declining – H1 was down by $468bn versus 2017

Even the European Central Bank and the Bank of Japan have signalled they might finally be about to cut back on the combined $5.75tn of lending, often at negative rates, that they pumped into the markets between 2015 – March 2018.

The issue is simple. All bubbles need more and more air to be pumped into them to keep growing. Once the air stops being added, they start to burst. And for the moment, at least, Facebook, Twitter, Netflix and Tesla are all acting as the proverbial canary in the coal mine, warning that the great $33tn Quantitative Easing bubble may be starting to burst.

[Bricks & Mortar]

Facebook and Twitter seem to be down because of falls in user numbers.  They supply their services without charge.  I'm struggling to link that with a bursting QE bubble.  Ironically, it may be a nation in near full employment has less time for their services.
Tesla's problem is its difficulties in living up to previous promises.
Netflix is the only one I suspect is being affected by tighter credit and reducing discretionary spending. 

Or... are we seeing the selling of stock because some investors were leveraged with the QE money?

[dgul]

2 minutes ago, Bricks & Mortar said:

Facebook and Twitter seem to be down because of falls in user numbers.  They supply their services without charge.  I'm struggling to link that with a bursting QE bubble.  Ironically, it may be a nation in near full employment has less time for their services.
Tesla's problem is its difficulties in living up to previous promises.
Netflix is the only one I suspect is being affected by tighter credit and reducing discretionary spending. 

Or... are we seeing the selling of stock because some investors were leveraged with the QE money?

It is just a sign of lots of money being available to pump up asset prices.  These are growth stocks and are held because they'll be worth more in the future (regardless of the actual merits of them being 'better' -- they only have to be worth more).  If QE stopping means not so much money to support asset price growth then there's no point in holding assets just because they grow. 

[Bear Hug]

@DurhamBorn I remember you mentioning BT quite a few times before,  and they have done well over the last couple of months for me.

Today I have noticed the following statement in BBC Business Live:

Quote

Top of the losers is BT, which dropped 4.6% to 229p after announcing that it intends to upgrade the UK to ultrafast fibre broadband by 2020 using G.Fast technology instead of 10m broadband lines.

Aren't they completely missing the point, as BT have gone ex-dividend today (10.55p), and the 11p loss pretty much corresponds to that?

Or have I got this completely wrong? 

[leonardratso]

yep. Looks like the So-Called BBC is full of shit as expected.