AuthorTopic: Big Slide v2.0 Begins  (Read 67358 times)

Offline Golden Oxen

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Re: Big Slide v2.0 Begins
« Reply #345 on: December 05, 2016, 07:53:16 PM »
I wish I had as much faith in Gold as you do, GO.  But we've all seen pieces of paper saying "I represent a 400 oz gold bar, serial number xxxxxxx" being traded as if it was real physical metal.  And we've seen stacks of paper gold being pledged twice or more as collateral for loans.  I think all the gold bars are still in Fort Knox, but rehypothecated, perhaps many times.  So how do you stop paper gold from occurring?

I wish I knew Palloy.

Have been pondering this one most of my life.

Some claim there will be a demand for physical at some future date that will set off a frenzy and bring the Comex down. I don't see it happening, but it's remotely possible.

The best hope we have at present is the new China Gold Exchange IMO. Already you will notice gold sells for about a 25 to 30 dollar premium there. I think it's significant but need much more time to think about what it means and would like to watch the premium for a longer period of time to get a  better handle on it.

There are of course numerous other possibilities for an end to the paper gold scam.

You can be sure if I arrive at a conclusion that i'm confident about it will be posted on the Gold Silver thread.

Thanks for your question, sorry my answer is so inadequate.




Offline Golden Oxen

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Re: Big Slide v2.0 Begins
« Reply #346 on: December 05, 2016, 07:59:27 PM »
Gentlemen, I am enjoying this discussion immensely this evening, but my eyes are closing.

Knocked silly today by the markets. Gold shot up 10 bucks on the Italy news, then got pummeled down 30 from there, then rebounded to back to even, and finally closed off around seven bucks.

Total madness and I'm knocked silly from it as well as brain dead tired.

Goodnight gents until we meet again.

Offline K-Dog

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Re: A Major Banking Collapse Looks Imminent
« Reply #347 on: December 06, 2016, 01:02:03 AM »
You constantly confuse gold as money of the bankster;  it is not RE. Gold is the money of the people that was taken away from them by the bankster with the point of a gun pointed at them by their corrupt government cohorts.

First off, I never said anything about who the gold belongs to or how it was accumulated. Generally speaking it's first acquired through mining on the backs of slave labor, then goes through a series of thefts over the centuries.  Those can be violent theft such as the Conquistadores, or vaious types of fraud.

Second, how they got the gold and stuffed it into basement safes sprinkled around the world is irrelevant at this point.  It's not going to all be coined up and dropped from helicopters on J6P.

RE

And often used in various forms of bait and switch.

Offline Golden Oxen

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Re: A Major Banking Collapse Looks Imminent
« Reply #348 on: December 06, 2016, 04:22:06 AM »
You constantly confuse gold as money of the bankster;  it is not RE. Gold is the money of the people that was taken away from them by the bankster with the point of a gun pointed at them by their corrupt government cohorts.

First off, I never said anything about who the gold belongs to or how it was accumulated. Generally speaking it's first acquired through mining on the backs of slave labor, then goes through a series of thefts over the centuries.  Those can be violent theft such as the Conquistadores, or vaious types of fraud.

Second, how they got the gold and stuffed it into basement safes sprinkled around the world is irrelevant at this point.  It's not going to all be coined up and dropped from helicopters on J6P.

RE

You have become completely incoherent to me. Sorry :icon_scratch:

Perhaps this quotation will clear up for you what I am trying to explain.

Please just think about it and read it a few times before going off on another incoherent ramble totally different from the topic at hand.

Please RE, just think before you speak, Mr Rothbard is a much better  instructor than GO.

"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."

Murray N. Rothbard

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Re: A Major Banking Collapse Looks Imminent
« Reply #349 on: December 06, 2016, 04:29:06 AM »

You have become completely incoherent to me.

The point is that Gold is highly centralized and doesn't circulate, and there is no mechanism defined for decentralizing it and getting into the hands of the people.  People can't use it as money if it is sitting in stacks in the basement of Da Fed.  How do you propose this gold is distributed out?

RE
« Last Edit: December 06, 2016, 04:43:32 AM by RE »
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Offline Golden Oxen

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Re: A Major Banking Collapse Looks Imminent
« Reply #350 on: December 06, 2016, 05:49:17 AM »

You have become completely incoherent to me.

The point is that Gold is highly centralized and doesn't circulate, and there is no mechanism defined for decentralizing it and getting into the hands of the people.  People can't use it as money if it is sitting in stacks in the basement of Da Fed.  How do you propose this gold is distributed out?

RE

First of RE that is not true. Gold is diffused throughout most of the worlds population in small amounts. This is a fact.

This question is one that I can and will try and answer in the future. There are at least four scenarios that I have worked out to bring the world back to Gold easily, but the length of tie required to explain just one is beyond my capacity at this current juncture, I have too much going on for the next few weeks at least, as well as the markets to deal with.

So you won't feel I'm being evasive let me just give you one in short form as a synopsis of one of my methods to tackle the puzzle of going back to Gold.

We can safely assume, It is my belief, that you consider me a religious believer in Gold and dogmatic as a devout bishop in the Temple of Gold. This is obvious.

Yet even GO, a confirmed cynic and distrustful of ALL MEN, would accept the current scrip as being ALMOST as good as Gold if I could walk into any bank and demand gold for my scrip if I became suspicious of foul play by the bankster.

So one can plainly see that the scrip we are currently using may be utilized quite easily, without any problem, under that possible set up.

As a matter of fact it worked quite well for a great length of time.

You get the picture, of course the simplification was excessive, but believe me, the problems you refer to are very solvable.

Hopefully I will have the time to write some extensive articles on this matter after the Holidays, I am up to my ass in everything including year end financial and tax matters.                                                                           

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Re: A Major Banking Collapse Looks Imminent
« Reply #351 on: December 06, 2016, 05:59:17 AM »

You get the picture, of course the simplification was excessive, but believe me, the problems you refer to are very solvable.

As of now, you haven't provided any mechanism here, just a lot of verbiage that it is possible.

Anyhow, put this on hold, because I just finished my article for next Sunday Brunch, Mapping the Road to Monetary System Collapse.  I cover the Gold issues in detail in the article, as well as many others.

You can write your article in response to this.

RE
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Offline Golden Oxen

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Re: A Major Banking Collapse Looks Imminent
« Reply #352 on: December 06, 2016, 06:33:45 AM »

You get the picture, of course the simplification was excessive, but believe me, the problems you refer to are very solvable.

As of now, you haven't provided any mechanism here, just a lot of verbiage that it is possible.

Anyhow, put this on hold, because I just finished my article for next Sunday Brunch, Mapping the Road to Monetary System Collapse.  I cover the Gold issues in detail in the article, as well as many others.

You can write your article in response to this.

RE

Of course I gave you the mechanism, make the current fiat convertible into Gold. That is not verbiage. Nor is the correction given of your incorrect statement.

I have decided against discussing anything further about Gold or finance with you. Your Ego renders you incapable of learning anything from someone smarter than you, even if it is on topics you know a tad next to zero about such as Gold and Finance.

I'll Be here if you wish to discuss how to make chicken soup properly. A topic you excel in by the way.  ;D  :emthup:


                                                 
                                                                           JEWISH PENICILLIN RE'S MASTERED TOPIC

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Re: A Major Banking Collapse Looks Imminent
« Reply #353 on: December 06, 2016, 06:44:51 AM »
=
I have decided against discussing anything further about Gold or finance with you.

:LolLolLolLol: QUITTER!

I do make a great  chicken soup though.  :icon_sunny:  I got a couple of cooking articles that have been languishing in the queue for ages because of all the breaking newz stuff that I gotta cover each week and is time-limited.  Cooking articles last forever, they're timeless.

Then there are about 10 chapters in advance of How I Survived Collapse in the queue too.  Seriously backed up here like NYC Traffic.  ::)

RE
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How Bad Will the “Bond Massacre” Get?
« Reply #354 on: January 07, 2017, 04:56:23 AM »
http://wolfstreet.com/2017/01/04/how-bad-will-the-bond-massacre-get/

How Bad Will the “Bond Massacre” Get?
by Wolf Richter • Jan 4, 2017 • 37 Comments   

Worse “than the 1994 ‘Bond Massacre,'” with “sustained double-digit losses on bonds, subpar growth in developed markets, and balance sheet risks for banking systems….”

The backdrop: after 36 years of bond bull market, the amount of US bonds has ballooned to $47 trillion, up 24% from just ten years ago:

    US Treasurys ($19.8 trillion),
    Municipal bonds ($3.8 trillion)
    Mortgage related bonds ($8.9 trillion)
    Corporate bonds ($8.6 trillion)
    Federal Agency bonds ($2 trillion)
    Money Markets ($2.6 trillion)
    Asset backed Securities ($1.3 trillion)

Bonds dwarfs the US stock market capitalization ($27 trillion). Bonds are a global phenomenon with even bigger bubbles elsewhere, particularly in NIRP countries, such as those in Europe, and in Japan. That’s why bonds matter. They’re enormous. And the damage they can do to investors is huge.

So how bad might the next bond bear market get? Paul Schmelzing, a visiting scholar at the Bank of England and an academic at Harvard where he concentrates on 20th century financial history, published an unpleasant scenario on the Bank of England’s blog. He doesn’t mince words:

    [A]s rates reached their lowest level ever in 2016, investors rather worried about the “biggest bond market bubble in history” coming to a violent end. The sharp sell-off in global bonds following the US election seems to confirm their fears. Looking back over eight centuries of data, I find that the 2016 bull market was indeed one of the largest ever recorded. History suggests this reversal will be driven by inflation fundamentals, and leave investors worse off than the 1994 “bond massacre.”

To arrive at his conclusion, he classifies bond bear markets into three types:

    The inflation reversal of 1967-1971
    The sharp reversal or “Bond Massacre” of 1994
    The steepening yield curve or “value-at-risk shock” in Japan in 2003.

He explains that “historically, inflation acceleration has been a solid predictor of sharp bond selloffs.” But other “prominent episodes appear less correlated with fundamentals, and can inflict similar levels of losses.”

Type 1: The inflation reversal of 1967-1971 occurred as annual inflation shot from 1.6% to 5.9%, along with some pressures on the federal budget from the Vietnam War that pushed the deficit from 0.2% in 1965 to 2.8% in 1968. But even when the budget moved back into balance, Treasurys continued their rout:

    The “inflation reversal” leaves bondholders particularly bruised, and is most clearly associated with fundamentals: namely a sharp turnaround in realized consumer price inflation (CPI).

Type 2: The Sharp Reversal of 1994, or the “Bond Massacre,” turned out to be short-lived. It wasn’t caused by inflation, fiscal policies, or Fed action. The Fed did begin to raise rates in May 1994, but the turmoil had started in Q3 1993 and peaked in early 1994. Instead:

    [T]he dramatic increase in leveraged bond positions by both US hedge funds and mundane money managers set in motion self-reinforcing liquidations once uncertainty over emerging markets including Turkey, Venezuela, Mexico, and Malaysia – all of which experienced sharp capital flow volatility – put pressure on speculative positions.

Type 3: The value-at-risk (VAR) shock in Japan in 2003 occurred when fears spread that the Bank of Japan, which was already doing QE before it was called QE, would taper its purchases of Japanese Government Bonds. The yield curve, which had been extraordinarily flat, steepen sharply, as prices of longer-dated bonds sagged. These sagging prices hit banks, which hold large portfolios of JGBs, particularly hard. Their shares crashed to multi-year lows, and some received taxpayer bailouts:

    [T]he sudden steepening of the JGB curve from the middle of 2003 posed a new set of challenges: calibrated risk management structures, known as “Value-at-Risk” models, required banks to shed JGB assets once their price started plummeting. Since most banks followed similar quantitative signals, and exerted a traditionally strong home bias in their fixed income portfolios, a concerted dumping of government bonds ensued.

Schmelzing concludes:

    A pessimistic reader could certainly identify gloomy ingredients for the “perfect storm”: the potential for a painful steepening of bond curves, after a sustained flattening as in 2003, coupled with monetary tightening; and a multi-year period of sustained losses due to a structural return of inflation as in 1967.

But he considered the Type-2 “meltdown,” as it happened in 1994, less likely. At the time, highly leveraged bond positions and external shocks came together. This time, there has been “progress on bank leverage regulations,” and “the current global capital flow cycle has already almost fully reversed from the cycle peak,” he writes.

Instead, it will more likely turn into a toxic combination of Type-1 and Type-2 bear markets:

    Global inflation dynamics are picking up, at a time when Central bankers voice more tolerance for “inflation overshoots.” Though currently bank equity investors are cheering the steepening of yield curves, meanwhile, the 2003 Japan episode should fix regulators’ attention on the growing home-bias in government bonds.

Banks in some countries are particularly exposed to the VAR shock, including Italy, whose financial institutions hold 18% of their assets in Italian government debt, up from 12% in 2008. And “in most geographies,” banks hold these domestic government bonds mainly in “‘available-for-sale’ portfolio buckets, where they have to be marked-to-market.” That allowed banks to take the gains as central banks pushed down interest rates and inflated bond prices in recent years, but it now exposes them to losses and forced selling.

    On balance, then, more than to a 1994-style meltdown, fixed income assets seem about to be confronted with dynamics similar to the second half of the 1960s, coupled with complications of a 2003-style curve steepening. By historical standards, this implies sustained double-digit losses on bond holdings, subpar growth in developed markets, and balance sheet risks for banking systems with a large home bias.

And that would not conform to the rosy scenario.

President-Elect Trump has been hounding certain companies with his drive-by tweets, to knock them around some, get their shares to sink, and cut some “deals.” And companies react. But there’s more to it than what’s on the surface. Read… Trump Tweets, Ford & GM Counter, their Shares Jump, the Peso Plunges, but the Jobs Won’t “Come Back” to the USA
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Expert Warns: Next Financial Crisis Has Already Begun
« Reply #355 on: February 27, 2017, 11:19:44 PM »
Buy our Financial Newzletter! First Issue FREE!  Give us your Email Addy so we can pepper you with SPAM every day!  This is MUST KNOW information for every Investor!  Protect your assets by accessing our TOP SECRET financial advice!  Our financial professionals are direct descendants of Seers who predicted the Collapse of the Roman Empire!  They will tell you precisely when to short the market and make a KILLING on Collapse!  You will be richer than Warren Buffet in a matter of minutes!

RE

http://www.moneyandmarkets.com/reports/RWR/blackoctober/content5NE/?sc=OUTBR&ec=6737155&dv=MAM


Expert Warns: Next Financial Crisis Has Already Begun


by Mike Burnick, Director of Research

The early stages of what will be the most severe and painful financial crisis in U.S. history  is now underway.

That’s according to a top analyst with a remarkably accurate track record for calling major economic shifts.

He called the gold rally in 1999 (before the metal soared 533%) and the top of the gold market in September of 2011.

He also called the stock market crash in 1987 as well as the real estate crash in 2007.

His secret to spotting major reversals ahead of the crowd is a proven system that was developed by a little-known presidential advisor after the Great Depression. It has since predicted every major market move for the last 50 years with incredible accuracy.

And today it’s foreshadowing one of the worst financial crises we’ve ever seen. The Dow’s recent 2,000 point plunge was just a taste of what lies ahead.

See the proof for yourself.

No fewer than three of the most powerful economic waves in existence are now converging in a way that hasn’t been seen since 1929.

And they are warning of a great unraveling that is about to explode into the headlines.

Cycle #1 shows that businesses will hoard cash ... create fewer jobs ... and stop reinvesting in business growth. And by doing so, will help drag the economy to a near-standstill.

Cycle #2 indicates that consumers, shaken by weak job growth and plunging household income will pull back too, leading to slower business formation and slower inventory turnover.

Cycle #3—which predicted both the Great Depression and the 2008 Great Recession—shows a coming period of massive economic pain including an ever-weaker economy, chronic unemployment, soaring interest rates, massive defaults on public and private debt and more.

Sound familiar? It should, because the evidence is clear that we have already entered the early stages of these unstoppable cycles.

RECOMMENDED: Find out the date this “Supercycle” will hit the U.S.

Our government, our economy and our way of life are living on borrowed time. For most, the changes will be catastrophic.

Only those who prepare now will have a prayer of protecting their loved ones, let alone preserving their wealth or their quality of life.

The very first step is to see these cycles—the most powerful forces in the economic universe—for yourself.  So we’ve just posted a special briefing gives you the full story.

You will get a detailed explanation of how they work, and see for yourself the data that shows the coming collapse. Plus you will discover the simple, practical steps you can take now to get your family and your finances through the crisis ahead.

You can get immediate access to this important research free of charge here.
Read the full report here

The new economic crisis will catch many Americans completely unprepared. Please don’t be one of them! Take action right now to protect yourself and your family and to preserve your wealth. The 4 steps detailed in the report will help you get started. Just enter your email address below to access the full report now.
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This is Worse than Before the Last Three Crashes
« Reply #356 on: March 05, 2017, 05:17:23 AM »

http://wolfstreet.com/2017/03/04/pe-multiple-expansion-at-record-multiple-compression-coming/

This is Worse than Before the Last Three Crashes
by Wolf Richter • Mar 4, 2017 • 10 Comments   

This chart shows “multiple compression” is coming.

How long can this surge in stocks go on? That’s what everyone wants to know. Projections range from “forever” – these projections have become increasingly common – to “it’s already finished.” That’s a fairly wide range.

Everyone has their own reasons for their boundless optimism or their doom-and-gloom outlooks. But there are some factors – boundless optimists should push them aside assiduously – that, from a historical point of view, would trigger tsunami sirens. Because in the end, it’s not different this time. And the cycle of “multiple expansion” and “multiple compression” is one of those factors.

For example, a stock trades at a price that gives it a P/E ratio of 20 (stock price is 20 times earnings per share). When earnings per share remain flat over time, but the stock price rises, then the P/E ratio (the multiple) expands. When this spreads across the market, even when aggregate earnings remain flat, it means “rally.”

And earnings have been flat since 2011! The other day, I posted a chart that showed that earnings of the S&P 500 companies in Q4 2016 were back where they’d been in Q4 2011. So five years of earnings stagnation. Yet, during those five years, the S&P 500 index soared 87% [read… S&P 500 Earnings Stuck at 2011 Levels, Stocks up 87% Since].

The thing that changed during those five years was the P/E ratio. This combination of flat earnings and soaring stock prices, and thus soaring P/E ratios, is, historically speaking, not a good thing when it drags on for too long. This chart shows the S&P 500 P/E ratios on every January 1 of the year. This aggregate P/E ratio has nearly doubled from 14.9 on January 1, 2012, to 26.7 on March 3, 2017:


Flat earnings, no problem. But wait… The problem for stocks is the inevitable multiple compression. Multiple expansion and compression go in cycles. Like boom and bust. Invariably!

Multiple compression with flat earnings means “sell-off.” And when this combines with an earnings decline, the sell-off turns into much worse. It happens with regularity.

This chart by John Alexander at Macro Charting tracks the percentage increase and decrease of the P/E ratios – so multiple expansion and compression – going back to 1979. I marked the four record periods of multiple expansions (in months). The first three – which ended in 1987, 2000, and 2009 – turned into periods of multiple compression associated with blistering crashes (click to enlarge):


The current period of non-stop P/E ratio expansion has lasted for 57 months, by far the longest in the data series. Can this go on forever? The chart says no.

Does the chart tell us when the pendulum will swing in the other direction? Nope. In fact, the chart tells us that the pendulum should have already swung in the other direction after, say, 40 months, and that it started to do so, and then bounced off.

There are a million reasons why multiple compression hasn’t started yet, including the scorched-earth monetary policies by central banks around the world and the hope for miracles during the Trump administration.

Does the chart tell us how far stocks will fall, or how sharply they will fall, or for how long they will fall once the pendulum swings in the other direction? Nope. But it does suggest, from a historical perspective, that it could get very ugly. And if you tilt your head just right, the chart suggests that it should already have gotten very ugly. But it hasn’t….

This market (“Dow 30,000”) practically guarantees that the Fed will hike rates. Read…  What’s Different This Time? Stocks
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The Chances of Toshiba Being Delisted Are Rising
« Reply #357 on: April 11, 2017, 05:52:47 AM »
Toshiba delisting is like Westinghouse going tits up.  That's a big domino.

RE

http://fortune.com/2017/04/11/toshiba-financials-delisting/

toshiba
The Chances of Toshiba Being Delisted Are Rising


Toshiba Corp. holds temporary shareholders' meeting
Shareholders of Toshiba Corp. enter building to attend the temporary shareholders' meeting held in Mihama Ward, Chiba Prefecture, Japan on March 30, 2017.  Masanori Inagaki — AP

Reuters,Fortune Editors
8:21 AM ET

Japan's Toshiba filed twice-delayed business results on Tuesday without an endorsement from its auditor, increasing the likelihood that the nuclear-to-TVs conglomerate will be delisted.

The filing carried a disclaimer from auditor PricewaterhouseCoopers (PwC) Aarata LLC that it was unable to form an opinion of the results.

The move is unprecedented for a major Tokyo-based firm and puts the Tokyo Stock Exchange center stage as it weighs the pros and cons of forcing Toshiba to delist. In a press briefing Tuesday after the results were released, CEO Satoshi Tsunakawa said: ""The decision on any delisting is for the stock exchange to make. We will do our utmost to avoid it."

Failing to act tough with Toshiba would bring into question authorities' credibility in maintaining standards for investors but a delisting would complicate the crisis engulfing the firm, increasing financing costs and exposing it to further lawsuits from angry shareholders.

Accountants have been questioning the numbers at U.S. nuclear subsidiary Westinghouse Electric, where massive cost overruns at four nuclear reactors under construction in the Southeastern United States have forced its Japanese parent to estimate a $9 billion annual net loss and take drastic measures.

PwC is questioning not only recent results but also probing the books at Westinghouse for the business year through March 2016, sources have said, declining to be identified as they were not authorized to speak on the matter publicly.

Toshiba has put up its prized memory chip unit and other assets for sale, Westinghouse has filed for Chapter 11 protection from creditors and may also be sold.

The company also said on Tuesday it was considering an initial public offering for smart meter group Landis+Gyr. Reuters last month reported that it was preparing a potential $2 billion divestment of the Swiss-based business.

The decision on whether to delist Toshiba or not now rests with the bourse. Toshiba has been on its supervision list since mid-March after failing to clear up concerns about its internal controls a year and a half after a 2015 accounting scandal.

There are no set rules governing how long the bourse should take to come to a conclusion.

What married people need to know about filing taxes.

Separately, Taiwan's Foxconn has offered up to 3 trillion yen ($27 billion) for the chip business, nearly $10 billion higher than Toshiba's own estimate, the Wall Street Journal reported, citing people familiar with the matter.

Such a proposal by Foxconn would also put Japanese regulators in a tough position as they have vowed to vet bidders to block a sale to investors it deems a risk to national security. Foxconn is considered such a risk because of its close ties to China.

Japan's trade minister Hiroshige Seko repeated on Tuesday that Toshiba's chip technology was important, not only for Japan's growth strategy, but also in terms of jobs and information security.

"For those reasons, we continue to carefully monitor Toshiba's business conditions and sale of its chip business," Seko said.

Toshiba declined to comment on its chips business and Foxconn, formally known as Hon Hai Precision Industry, also declined to comment.
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General Electric: The End Must Be Near
« Reply #358 on: October 11, 2017, 08:11:31 AM »
GE is not allowed to burn cash but Elon Musk can shovel it into his furnace at will.  ::)

RE

https://seekingalpha.com/article/4112784-general-electric-end-must-near

General Electric: The End Must Be Near
Oct.11.17 | About: General Electric (GE)


David Alton Clark
David Alton Clark
Long/short equity, tech, banks, oil & gas
CNBC PRO Column
(17,188 followers)
Summary

With the stock down over 25% year-to-date the bears are coming out of the wood work.

A recent article was so unabashedly negative that I have to respond. Some of the points made I disagree with completely.

Even so, I look upon these types of events as a signal that the end of a selloff may be near.

In the following piece I make my case for concerned prospective and current shareholders.

What Happened?

No one has anything good to say about General Electric (NYSE: GE) these days. In fact the negative banter has gotten so bad I actually increased my position today. One author in particular came out Tuesday with a scathing review of General Electric. The following is my rebuttal of the major points made in the piece.
New CEO promises same failed strategy

In the piece the author states:

    “After over a decade of flailing its wheels, Immelt is out, but the new CEO promises the same failed strategy going forward.”

This is simply not true. How do I know? The new CEO hasn’t even provided to us what his new strategy will be. The new CEO John Flannery is current reviewing the entire company. On November 13 he will divulge his new strategy and reset expectations. So to say that the new CEO has promised the same failed strategy is simply not true at this time. The bottom line is we don’t even know yet.
C-suite continues to churn

The author states:

    “GE's c-Suite continues to churn while the dividend growth prospects are non-existent.”

Immelt just recently stepped down as Chairman. Now the company just announced Trian Fund founding partner Ed Garden will be appointed to the board. Garden will replace Robert Lane, who is retiring for health reasons. What’s more, it was announced on Friday that the CFO and three vice chairs will be stepping down. Jamie Miller, currently CEO of GE Transportation, will become the new CFO effective November 1st. Current CFO and vice chair Jeffrey Bornstein will exit the company on December 31st after serving 28 years. Along with Bornstein, vice chairs Beth Comstock and John Rice will retire effective December 31st as well. These departures closely follow news of the retirement of Chairman Jeffrey Immelt. Trian owns about 1% of GE.

Here is the deal. The “c-suite” is not “continuing to churn.” New CEO Flannery is cleaning house. Whenever a CEO takes over, they always want to shake things up. It gets management's blood pumping. There is never anything negative with getting fresh blood and a new set of eyes to come up with an improved plan of action.
General Electric’s cash burn

The author states:

    “the cash burning abomination that is GE.”

The fact of the matter is General Eectric is not a “cash burning” abomination. In fact General Electric’s cash balance increased nearly 50% during the first half of the year.

Source: ge.com

This cash balance rose from $10.5 billion on 1/1/2017 to $14.2 billion in June of 2017. Furthermore, the company expects cash flow from operating activities to improve in the second half of the year. Immelt stated on the last conference call:

    “Contract assets will grow at about the same level and we will benefit from timing of other our items. We ended the quarter with $14 billion of cash on the balance sheet, in line with expectations. And we should be within the $12 billion to $14 billion goal for industrial CFOA.”

So, the truth of the matter is there is no cash burn. The company has increased the cash balance in the first half of the year and expects the cash balance to be in-line with expectations for the remainder of the year.


Flannery says he is doubling down on failed strategy

The author states:

    “Now Flannery says he's going to double down on Immelt's failed strategy by selling off even more businesses, such as selling off its water division for $3.4 billion.”

First, as I stated earlier, we haven’t even heard what Flannery’s strategy is yet. I did a google search to find the quote where Flannery states he is “doubling down” on Immelt's plan. I couldn’t find anything. Nevertheless, the fact that Flannery has just cleaned house with a major reorganization, I would say this is indicative of someone who is looking to break with the past, not double down on it. We shall see. I feel the statement made by the author is misleading at best.
Short-term moves are desperate window dressing

The author states:

    “In the meantime, the company's short-term moves appear nothing more than desperate window dressing to appease Wall Street.”

This could not be further from the truth in my opinion. Flannery is not making these small changes as window dressing to appease Wall Street. The obvious reason why is small moves like this cannot and have not “appeased Wall Street.” The reason these small moves like canceling the corporate jets, etc., are being announced ahead of the official reset presentation is because they are “no-brainers.” As Flannery reviews the cost side of the balance sheet perks like corporate jets and company cars are easy line items to eliminate. Flannery is simply nipping the cost in the bud. No reason to wait until November to put a stop to the corporate jet fleet expenses.
These moves don’t add up to $2 billion

The author states:

    “However, let's be realistic. In 2016, GE's total compensation to its top five executives was $78.2 million, $8 million of which was through perks such as company cars and private jet travel. Which means that the savings that Flannery is talking about can't be obtained by such PR stunts.”

These moves do not add up to the savings target of $2 billion. The issue is no one ever said they were supposed to. This is the anatomy of a false strawman argument. You prove a point by making up some arbitrary thesis.
The Bottom Line

The fact of the matter is people familiar with the matter state Flannery is moving aggressively to break with the past and planning to announce cost savings of greater than $2 billion at the November 13 meeting. According to a recent article in the WSJ.com:

    “Since taking over as CEO, John Flannery, who is now chairman too, has been moving aggressively to break with the past, replacing GE’s finance chief and two other senior leaders on Friday. The GE veteran is also expected to unveil his restructuring efforts and reset financial targets in November, according to people familiar with the matter. They include a plan to generate more savings than the $2 billion previously targeted by the end of 2018, the people said.”

Here is the bottom line - don’t buy in to the hype. General Electric is down, but nowhere near out. The dividend is safe and the company’s cash balance is adequate. With the stock already down 25%, I’d say most, if not all, the bad news is priced in. Now is the time to buy, not sell. Nevertheless, always later into any new position over time to reduce risk. Those are my thoughts on the matter. I look forward to reading yours. Please use this information as a starting point for your due diligence.
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In celebration, here's Ben Lichtenstein with the call on the 2010 Flash Crash.  :icon_mrgreen:
 :multiplespotting:

<a href="http://www.youtube.com/v/WrxlVjZJawQ" target="_blank" class="new_win">http://www.youtube.com/v/WrxlVjZJawQ</a>

https://qz.com/1106440/black-monday-1987-the-stock-market-crash-that-was-so-bad-hospital-admissions-spiked/

The “Black Monday” market crash 30 years ago today was so bad hospital admissions spiked


 
 HAPPY BIRTHDAY 

The “Black Monday” market crash 30 years ago today was so bad hospital admissions spiked


NYSE trading floor on Black Monday. (AP/Peter Morgan)
2 hours ago

Precisely 30 years ago today, on Oct. 19, 1987, stock markets around the world suffered one of their worst days ever, in what became known as Black Monday. After a long-running rally, the crash began in Asia, picked up steam in London and ultimately ended with the Dow Jones Industrial Average down a whopping 22.6% for the day in New York. This was—and still remains—the worst day in the Dow’s history, in percentage terms.

In fact, the crash was so severe that it resulted in a spike in hospital admissions. Joseph Engelberg and Christopher A. Parsons from the University of California at San Diego published a paper last year in The Journal of Finance that looked to see if there was a link between daily stock returns and hospital admissions in California, particularly relating to psychological conditions such as anxiety, panic disorder, or depression. On Black Monday, there was a 5% increase in hospital admissions above what the researchers would normally expect. The chart below shows the percentage difference between actual admissions and the prediction of their regression model during the week of Black Monday.

black-monday-hospital (Engelberg, Pasons (2016))

There are several theories about what caused the 1987 crash. Potential reasons for the initial market downturn include a slowdown in the US economy, falling oil prices, and escalating tensions between Iran and the US. However, Black Monday is considered the first crash of the modern financial system because it was exacerbated by newfangled computerized trading.

So-called program trading meant computers were set up to quickly trade stocks when certain conditions were met, and on this day it led to automatic selling as the market fell. The Federal Reserve said in a 2006 paper that Black Monday was a shock not just because of the price crash but because the market itself was “significantly impaired,” as the volume of sell orders overwhelmed systems.

In the UK, the FTSE 100 fell 11% on Black Monday and then another 12% the next day. The crash also coincided with another infamous event in Britain, what became known as the Great Storm of 1987. BBC weather presenter Michael Fish went down in history for telling the public there would be no hurricane. Instead on Oct. 15 and 16, 1987, a storm hammered the UK. This meant most traders couldn’t get to work on the Friday before the crash, leaving portfolio positions exposed when a financial storm hit the next trading day.

Stock Market Crash of 1987
US newspapers after Black Monday. (AP)

“There was hardly anyone in the Schroders’ London office on the Friday or anywhere in the City,” remembers Andrew Rose, an equities fund manager at the asset manager in London. Additionally, lots of traders had bought portfolio insurance, one of the types of program trading. “Investors thought it was a free lunch and losses would be limited,” Rose wrote in a note. “But everyone was a seller and no one was a buyer when markets went into freefall on Monday morning.”

Given the lofty heights of today’s markets, with the S&P 500, Nasdaq, Dow and FTSE all reaching all-time records in the past week, the anniversary of Black Monday is a poignant reminder that nothing lasts forever in the markets. But is there an imminent risk of another crash?

Outside of stocks, the market today is very different. Bond yields are extraordinarily low, meaning investors have fewer other places to look for returns. For example, 10-year UK government bonds had a yield of more than 10% in 1987, but today are closer to 1%. “Monetary policy settings and the level of bond yields are at levels that suggest the market soufflé can rise a fair bit more before the inevitable happens,” Kit Juckes, a strategist at Societe Generale, wrote in a note to clients.

A measure of equity market valuations—the cyclically-adjusted price-to-earnings ratio—in the UK is currently around 17, according to Hargreaves Lansdown. By comparison, the long-term average is about 19 and in October 1987 the P/E ratio was more than 30. However, in the US, the P/E ratio is currently 31.3, higher than during the stock market crashes in 1987 and 1929, but lower than the dot-com bubble.

shiller-pe-ratio-oct-2017 (Shiller P/E Ratio)

Unlike the market crash in 1929, Black Monday in 1987 didn’t lead to an economic recession—or, indeed, depression—in the US or UK. In fact, the crash quickly came to look like a blip. Since Black Monday, the Dow index has risen nearly 1,000%.

“In the short term the stock market is a capricious beast and can move sharply in either direction,” Laith Khalaf, an analyst at Hargreaves Lansdown, wrote in a note. “But in the long run, it’s surprisingly consistent.”

Dow_Jones_Average_stock_index_since_1900__djia_chartbuilder
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