Balance Sheet adjustments

September 30, 2022 Leave a comment

Cut your inventories and receivables numbers by 30%.

If you are analysing publicly listed balance sheets of companies selling ‘non-critical’ products, it may be advisable to lower the ‘current assets’ as seen in the past quarterly reports.

Many companies won’t receive their full quota of monies owed (receivables) nor the full price of their inventory on offer.

This also puts pressure on the cycle of honouring your payables.

Nike reports high inventories and coming discounting in their latest quarterly financial report.

Nike held 19% of its revenues as inventory.

Its total inventory last quarter was touching $9 billion.

This shouldn’t be a surprise but the market is acting as if it is.

Nike’s share price is trading 10% lower in today’s pre-opening market.

In May 2022, I painted a scenario of how falling demand results in higher inventories.

Recessions help with the making adjustments

Through July 2022, I wrote, cited and warned of rising inventories and coming ‘discounting wars’. 

More confirmation of rising inventories
Coming Soon – Price Discounting Wars

The markets were critical of Target and Wal-Mart’s inventory levels with the latter’s inventory ‘only’ touching 8% of its revenue.

September 30, 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , ,

Newsletter – Preparing for the last decile

September 29, 2022 Leave a comment

My latest newsletter has been published.

You can subscribe to this periodical by visiting for the current edition.

https://mailchi.mp/karriasset/preparing-for-the-last-decile-1

preparing-for-the-last-decileDownload

Filed under Finance & Investment

Stubbornness Kills

September 29, 2022 Leave a comment

Whenever market observers write about their views, they often publish prices (targets, support lines, entry points) which reflect their predictions.

I do that too. 

I figure that the readers and myself need some reference or measuring point and there is also the sport of trying to ‘pick it’.

However, I anticipate moments in the coming months where my timing to deploy capital will revert to “NOW”

Swinging at a ball in a nice part of my strike zone is often better than ‘hoping’ for that perfect pitch.

Digging in my heels and waiting for that perfect price means my stubbornness will result in missing many investments opportunities or costing money.

Participating in the ‘fat part of the trade’ is an aim of mine 

I remind myself that getting the first and last 10% of any trade is quite difficult.

September 29, 2022
by Rob Zdravevski
rob@karriasset.com.au

Filed under Finance & Investment Tagged with

Calling for a V or W may be upsetting

September 28, 2022 Leave a comment

I think it’ll be difficult for many investors, managers and financial advisors to buy in the current downdraft and any approaching lows.

Buying discipline and all the ‘Buffett-esque’ euphemisms aside (be greedy when others are fearful etc)

I say this because markets and prices may trade sideways or continue to ‘digest’ recent declines.

In turn, this will bore people in terms of expected quick rewards and impatience.

I don’t think it is advisable to paint pictures about shapes.

Expecting bounces that resemble the letter ‘V’ or ‘U’ or ‘W’ may disappoint.

September 28, 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment

September 28, 2022 Leave a comment

The cratering in stock indices is afoot.

HSI and HSCEI today are doing so.

Opening gains in stocks are being given up as the past 2 days of trading is occurring.

Pessimism is growing amongst a host sentiment and survey indicators.

Really long term mean reversions are occurring or nearing.

Smaller investors seem jittery.

The AUD/USD is plunging. A visit to 0.6320 would be a 3 standard deviation event.

On September 9th, 2022, I wrote;

“I think prices will jump a little, drag in a few more people and then spit them out again in the coming week or three followed up with another swoon.”

Not trusting some of the signals

And here we are…..

For a bit of sport, I think S&P 500 has a terrible day during Wednesday’s session and the Aussie market will give up its early gains then sink further on Thursday before traders swoop in and start buying 2 hours before Thursday close not before they dump the same stock into Friday’s close before their long weekend on the Australian east coast.

That’s the sort of market we have currently.

September 28, 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , , , ,

Bonds are a Buy !

September 27, 2022 Leave a comment

It’s important to keep things simple.

With all this palaver about interest rates, people want to hear what the action is.

How is one expressing their investing view about the topic?

Bond yields are so stretched, that on a monthly basis, they are ‘this’ Overbought for only the 4th time in 35 years (as expressed in the U.S. 5 year bond yield chart with those circles on it)

If you like fixed interest, then you may consider buying a Bond ETF which owns a spread of such bonds…..

because, inversely those bond prices are at extremely Oversold levels, as the Monthly chart below shows.

I have posted a chart of one of those U.S. traded bond ETF’s

This is the case across the 5, 10, 20 and 30 year maturities.

Disclaimer: not personal advice, do you own research or speak to a licensed professional.

September 27, 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , , , , , , ,

Update: Monthly U.S. Dollar Overbought

September 27, 2022 Leave a comment

This chart updates the percentage which the DXY Index is trading above its 200 Month moving average.

Rare air indeed !

This may be the 7th inning, 8th or 9th….but it’s not the top of the 1st.

Incidentally, We are days away from closing the quarter and U.S. corporate earnings will be reported soon after. A reminder to look for management commentary in their earnings call about the effect the strong U.S. Dollar is having on their results.

The strong dollar is something the United States needs to be wary of because prolonged strength is adding to the probability of sustained inflation.

Commercial and military aircraft are costing the rest of the world let alone other U.S. goods and services.

More importantly, the majority of the major commodities are priced and traded in U.S. Dollars.

Rather than the Bank of Japan intervene and spend $21 billion (which is slightly more than the $15bn in U.S. aid sent to Ukraine) to buy and support their Yen…..

and rather than wait for the U.K. government or the Bank of England to crank up rescue packages to support the British Pound…

perhaps the U.S. Treasury (Janet Yellen) should start making announcements designed to weaken their currency?

Such action may possibly help your ‘friends’ in the G-10; help your own bond market (your cost of capital) and make the world a better place.

Keep in mind that a U.S. 10 year bond yielding 3.85% in isolation isn’t a concern until you ponder that the bonds of other nations are seemingly trading a ‘better creditworthiness’ of 3%.

But then again, the market may end up fixing it all for you.

September 27, 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , , ,

Inflation reports are a lagging indicator

September 27, 2022 Leave a comment

Lumber prices have fallen 70%.

They are back to pre-pandemic pricing and the same as 2019 and 2018.

This is deflationary. These falling prices are seen amongst many other commodities.

I have written about Aluminium, Iron Ore, Copper, Hot Rolled Coil Steel, Natural Gas and Oil….all doing the same.

WTI Crude Oil was $120 only 3 months ago. It is now $78 per barrel.

Don’t be tricked into believing whatever pricing you are seeing or experiencing today is forever.

September 27, 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment

AUD/USD, Gold, Oil and SPX hit targets

September 27, 2022 Leave a comment

As mentioned in this note below…

the S&P 500 Index traded to 3,645 in Monday’s trading session…..

A trough in Bitcoin volatility portends a S&P 500 bottom

although I think there is a little more to go.

The AUD/USD hit its 0.6464 target as per this note,

The AUD/USD is nearing a low

but there is also a little more to go.

WTI Crude Oil hit my $77.50 target but it also has a bit more lower travel ahead.

Crude Oil and AUD/USD watch

Finally, Gold hit my target of US$1,642 and it is close to finding a floor.

I think somewhere the current price and US$1,590 would do.

Gold today

However, the context is that we are nearing the end of these moves, rather than the start of a new trend.

If it turns out to be an extension of the existing trend, I remind myself that the last 10% of a ‘trade’ is often the most difficult part to be involved with.

September 27, 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment

Another way to look at USD strength

September 27, 2022 Leave a comment

The Bearish USD ETF is exhibiting extremes including being at the higher quintile of historical percentages which it’s trading below its 200 week moving average.

Anecdotally, all I am hearing is about U.S. Dollar strength. Now (the financial media) are calling referring to it as “King Dollar”.

Remember when 2 years ago, they were calling the demise of the U.S. Dollar?

September 27. 2022

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , ,

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