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‘What Gives Us A Pause Here’ Are The ‘Facts’: Why The Cycle May Be Turning

Who needs "facts"?

Who needs "facts"?
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4 comments on “‘What Gives Us A Pause Here’ Are The ‘Facts’: Why The Cycle May Be Turning

  1. Franceska

    Too many indicators based on sentiment, opinion, outlook, are released. Some analysts argue that they lead real hard data, to me it seems a kind of self fulfilling prophecy: you are negative on the economy, you start ordering less, spending less, investing less, and then the economy really starts going worse.
    But hard real data are not so negative yet. People don’t even understand those “diffusion” indexes, and what means to be above or below 50, what means to go from 60 to 57. They don’t understand that those data are still positive, they read them as if they were negative changes, and not for what they are, decelerating positive increases.

    I don’t want to underrate the slowdown, but folks behave as if we are on the verge of a new 2008.

  2. Einar Moosegard

    I have yet to see one piece of persuasive evidence to justify the price action in 4q2018. This is exactly the kind of debt bubble freakout people were having in 2015 when oil also halved in price and nothing material came out of it. Yes the fed funds rate is 2% higher, but loads of economic data is way higher as well. Only around 150 of the S&P 500’s companies have increased total debt outstanding every year for the last three years.

  3. I recently looked at the oil companies in S&P 500, specifically on interest coverage (EBITDA/interest) and debt maturities/cash+available revolver. I was surprised to see how not alarming these numbers look. Typical interest coverage is 12X and typical maturity/liquidity is 0.1X. Even isolating the shale E&P names, these numbers don’t look scary.

    Who knows what is hiding in private company debt.

    • On a very small sample size of (2) private energy companies, i found that 100% were not putting adequate maintenance toward their environmental liabilities even in close adjacency to residents. This made me think about the debt they must be carrying at a time when the market is not supportive of growth. I contacted the one company as a private citizen, and contacted the landowner being affected in the other case. Big Trump country out here so it may not have anything to do with finance, may just be knowing that they can get away with. My instinct says it is probably a combination. Very sad.

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