Comments
Transcript
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JMCan you please send a link to the Corp Solvency crisis report?
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TSHope phase giving way to the Solvency phase. That spells global Crisis.
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ASEs didnt you famously say that the RECESSION was over a few months ago?
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TMCan we get the transcript, please?
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LFSoon to be rid of the CoronaV and even sooner to be rid of the disgraceful Trump. What is not to like and celebrate?
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TEWhatever happened to letting these companies file Chapter 11 and just restructure? Yes, debt holders may face a loss for have to accept new terms but so goes life for investors. Governments shouldn't have taxpayers pay the bill. I get the short term help due to government mandated shut downs but most of the insolvent companies were heading towards insolvency BEFORE the pandemic. Corporate debt is at all time highs and still going up. Let them restructure. Tired of this Socialism being passed off a Capitalism - crony capitalism at that.
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JHThe report from the Group of Thirty is still just talk at this point. Too often I've seen such groups say one thing and do another. I'll wait to see what they do.
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BRGovernment can help a liquidity problem but they can't stop insolvency issues. We don't need more zombie companies.
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JNAnyone here want to share some stocks that fit Ed's profile of not counting on the re-opening?
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DBDoes anyone have a link to the paper they discuss in this video? TIA
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SRGentlemen, Very interesting episode. I have a question / counterpoint: Is corporate insolvency bad? I admit, I am a CPA and not an investment manager, but when I put this discussion together with Grant Williams' discussion of a "debt jubilee," I see upside. Past episodes of RV have discussed the debt overhang, the use of corporate debt for stock buybacks, and excess compensation based on stock options. At one time (prior to 2009), corporations that declared bankruptcy had their equity holders take a significant (up to 100%) loss and their creditors assume equity positions. How much would General Motors, the company, be better off if it could have eliminated its historical debt and focused on making cars for its new owners? The problem with a debt jubilee is that one person's debt is another person's asset. The rules for stock market ownership was "you pays your money and takes your chances." If we have massive corporate insolvency, it doesn't mean that the companies go away, it means that the stockholders took their chances.
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JMWheres Raoul, need update on the unfolding...
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DOor.... Russel Napier is correct... The Magic Money Tree of commecial banks credit is going to be used to exaustion... That is, not by conventional Government Debt
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BSThanks for this discussion. Great work. Also enjoyed Peter Cooper’s delivery of the news. Solvency - agree that we need to get Raoul Paul needs to come back and and update the unfolding. Cant wait to hear from him. Some highlights : “There is a new business reality.” How do we let companies fail - and which ones make the cut to save. Goal is to make the dislocations as non-systemic as possible. Great points about inflation. Seeing inflation while we are still short 10M jobs seems very unlikely. Is the political will present to have enough fiscal support to bridge the gaps? Great discussion, could have stayed with it for another hour.
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SLGood discussion - liked the fact you used it to breakdown the G30 report. More of this type of analysis would be great. I do think Ed's being a bit pessimistic about the opening & the affect the vaccine should have on economies. This virus is pretty specific in who it harms & as long as old people with pre-existing conditions and aged care home occupants are targeted this thing should be done & dusted. All we should be worried about is hospitalizations and deaths & this should be dramatically reduced with targeted vaccinations. The data says that if you under 70 years of age with no co-morbitities this virus is less dangerous than the flu
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ADEd likes companies with strong balance sheets, free cash flow, and low leverage - translated - he likes the only companies that can afford to buy Bitcoin. Why? Because with the reliable cash flow, they can weather any ups-downs in price action. Now, buying Bitcoin might not be what they will do, however, interesting that it is the same idea for what makes a "good company". Excited for the potential of a new "value investing" paradigm at the other side of this solvency crisis.
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DSConcerning the new normal, IMO it will take longer than currently thinking to get there. When people have two injections of the vaccine and they feel safe, even cruise ships will fill up and face the normal cruise ship viruses. Everyone I know wants to go to restaurants, bars, movies, fly, cruise, whatever. I think we will be surprised how quickly the middle class and wealthy will be having a great time after being in lockdown with COVID – Roaring Twenties. The less fortunate will be in a lot more trouble but will also be happy to be free. The federal, state, and local governments will be in poorer than the poor. Many states showed their preference for business over health care. Tesla moving to Texas is only one of many examples to come. There will be a hollowing out and a filling up. The movement to warm weather states with low taxes will intensify. Katie bar the door; everyone will be celebrating before the next crisis. DLS
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TCFlows (passive) and leverage are amplifying literally everything (kudos to Mike Green for his research on this). The move in the Russel is an example of this. When insolvency hits sectors in the rotation, it's likely to amplify winners and losers (assuming flows don't change). Arbor research has some great data on flows that Liz Ann Sonders tweeted today.
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RBEd, implicit in your comments is that something has to be done to reduce the savings rate. Couple that with your other good points and see where that leads.
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NEThe insolvency here we goooo
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JJThat was awful. It could have been reduced to 5-6 minutes.