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08-16-2019, 09:08 AM

#61

Name User

Gets Weekends Off

Joined APC: Mar 2014

Posts: 3,093

Quote:

Originally Posted by TransWorld

, the markets go up. People who get out at the bottom of corrections miss out.

The true recession shows in other economic indicators and are slow rolling tops that pick up speed going downhill after a few months. That is not something that screams over a day or two.
.

This is an article I saved. It's a quick read. Notice the date. Anytime I read about talking heads proclaiming this or that, I remember it and what came afterward.

Quote:

Dow tops 14,000, hits record

Wall Street starts off fourth quarter with a bang, sending the blue-chip leader to all-time closing and intraday highs.

By Alexandra Twin, CNNMoney.com senior writer
October 1 2007: 5:56 PM EDT

NEW YORK (CNNMoney.com) -- Stocks rallied Monday, with the Dow closing at an all-time high on bets that the big banks are starting to put the worst behind them - and on hopes that the Federal Reserve will continue cutting interest rates.

The Dow Jones industrial average (Charts) added nearly 192 points to end at an all-time high of 14,087.55. Earlier in the session, the Dow had hit 14,115.51, a new record intraday high. The previous intraday high was 14,021.95 from July 19.

The tech-fueled Nasdaq composite (Charts) gained 1.5 percent and carved out a new 2007 record, closing at its highest point since Feb. 2001.

The broader S&P 500 (Charts) index climbed 1.3 percent. The Russell 2000 (Charts) small-cap index jumped 2.4 percent.

"You're seeing a continuation of the recent momentum," said Chris Johnson, CEO of Johnson Research Group.

"It becomes a psychological phenomenon," he said. "Investors know that there are inherent risks in the market, but at the same time, they're rationalizing any bad news."

Wall Street was also perhaps betting that any so-called "bad news," whether it be weak bank earnings or a dip in the ISM index, means the Fed is more likely to cut interest rates again at its next policy meeting at the end of the month.

Tuesday brings the August pending home sales report in the morning.

The simple reality is very few know what is transpiring. Mostly because there can be a turn of events that completely change the trajectory of our economy. We saw that in 2012, with the Chinese slow down, again in 2016 with both oil and Brexit leading to intense sell offs, and then in 2017 with the Trump election and tax cuts moving it the opposite way. All were events that absolutely no one could have predicted.

08-16-2019, 09:15 AM

#62

Aeirum

Banned

Joined APC: Mar 2019

Posts: 229

Quote:

Originally Posted by Name User

This is an article I saved. It's a quick read. Notice the date. Anytime I read about talking heads proclaiming this or that, I remember it and what came afterward.

The simple reality is very few know what is transpiring. Mostly because there can be a turn of events that completely change the trajectory of our economy. We saw that in 2012, with the Chinese slow down, again in 2016 with both oil and Brexit leading to intense sell offs, and then in 2017 with the Trump election and tax cuts moving it the opposite way. All were events that absolutely no one could have predicted.

Except for Matt Groening. I watch his show exclusively for future predictions.

08-16-2019, 09:23 AM

#63

Name User

Gets Weekends Off

Joined APC: Mar 2014

Posts: 3,093

Quote:

Originally Posted by Buzzlightyear

I’m down for the year. I’m mostly in cash with a little bearish bets. At this point I’m more concerned about the completion of this full cycle.

Earlier this year we saw a rip your face off rally as people bought the dip. Yesterday we saw the 4th biggest sell off points wise in history and today nobody came in to buy. Sentiment appears to be turning.

FWIW I believe you are making a mistake being mostly cash (just in general). It's very difficult for people to consistently time markets. But more importantly, it's even more difficult for those who are that concerned now enough to be in cash - losing money due to inflation - to buy in when it seems like the world is ending.

The bond market has traditionally been correct as far as gauging fear. Fear is what brings on recessions. Companies start hoarding cash, or put another way, stop their capex spending. They implement a hiring freeze. The greased wheels stop spinning.

Economies grow because people (and companies) feel safe to spend and invest. When they no longer feel safe, they pull back and invest in "safe" assets. That drives bond prices higher which lowers yield.

I remember a crew news back in 2016. It was right after Brexit and someone asked Kirby about our stock price (it was about where it is now, albeit with a higher share count). Kirby said bookings look solid. People were still spending. It was a good gauge. What do bookings look like now? On our latest earnings call our CFO said "bookings look a little soft". So is this a temporary blip in a fear driven pull back (due to China trade issues) or something more sinister? If I were to bet, I'd bet this is temporary, with little structural issues growing. But, I've never been good at betting

08-16-2019, 09:40 AM

#64

Name User

Gets Weekends Off

Joined APC: Mar 2014

Posts: 3,093

Quote:

Originally Posted by Name User

It's actually lower than it opened the day after the merger. In 2013. With $5b in cash that leaves it at $6b left to make the gap.

Assuming only $1b in annual profits...

So in theory someone could buy us for $11b and get their cash back in total in six years. The market is essentially a non-believer in the company making money.

So I was asked about the $5b in cash that I referenced above in a PM. I can't attach an image there so will respond to that person here.

Every quarter AA issues what's called a 10Q (the annual report is a 10K). It's a summary of our financial health.

Here is the section dealing with assets:

So we have straight up cash, and short term investments which are pretty much the same thing. We also have restricted cash. Think of restricted cash as the money you keep in your checking account to make monthly bills.

So roughly $5.3b in "cash". They also have a $2.8b credit card they can access, for a total of around $8b in "liquidity".

Notice our total cash position has increased since last quarter. The company is planning on making a $750m contribution to the pension fund this year. This is already after over contributing this year.

Now hear me out. Either they are bad at math or they are trying to goose their earnings at some point in the future. By prepaying their pension obligations now, they make the company look weaker than it is now (contract talks? I dunno). But they are essentially prepaying some massive obligations now. My thinking is in a year or two when our capex drops off a cliff they will also not have the pension contributions to make, and presto EPS shoots thru the roof (if we aren't bought by a corporate raider prior to that).

That's my tinfoil hat thinking for today.

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