"BMT Investors" Bulletin Board

[kscarbel2]

The stock market is at a very dynamic moment, due to the global pandemic. The March/April low was a once in a decade event. I invite all members with an interest in the market to join in discussion.

[kscarbel2]

Garrett Motion Exploring Options to Restructure Balance Sheet

Dow Jones Newswires  /  August 26, 2020
Garrett Motion  Inc. (Symbol GTX) on Wednesday said it is working with its financial and legal advisers to explore options for a restructuring of its balance sheet, a move it warned could wipe out current shareholders.

The Switzerland-based transportation-systems company warned that any actions it might take could materially reduce the value of its common shares, dilute existing holders or result in the cancellation of its existing common stock.

(Note that Garrett domiciled itself outside of the U.S. in Switzerland)

The former Honeywell unit said it is moving to address its balance-sheet concerns while its core business remains strong.

Garrett said its high leverage poses significant challenges to its overall strategic and financial flexibility, a situation made worse by a burdensome agreement with its former parent related to asbestos liabilities.

Garrett late last year sued Honeywell, alleging the conglomerate unilaterally imposed the "oppressive and unconscionable" 30-year indemnification agreement before its October 2018 spinoff.

Garrett said it has ample liquidity to support its current and future commitments [so why then explore options for a restructuring?], noting that it had $482 million in available cash and undrawn revolver capacity as of June 30.

[kscarbel2]

MarketWatch  /  September 21, 2020

Dallas Fed President Rob Kaplan on Monday said the new Federal Reserve forward guidance could create “fragilities” and “excesses” in financial markets.

Last week, the Fed promised to hold its policy rate close to 0% until inflation is on track to “moderately exceed” the central bank’s 2% target “for some time.”

Kaplan and Minnesota Fed President Neel Kashkari both disagreed with the framing of this so-called forward guidance, which offers provides market participants some guidance about the futures path of interest rates. The Federal Open Market Committee earlier this month debuted its new forward guidance. Kashkari said the problem with the Fed’s new guidance is that it still holds on to the importance of the unknowable variable of a maximum sustainable job level.

One reason for his opposition, Kaplan said, was it gives institutional investors a signal “you’re going to need to take more risks,” says Kaplan.

“Excessive risk taking...can create fragilities and other excesses in the system which are hard to see in real time and easier to see in hindsight and can create issues for us,” said Kaplan.

“I felt the costs were not worth the benefits,” he added.

The Dallas Fed president said there wasn’t much benefit from announcing forward guidance last week because financial markets already believe the Fed will hold its policy rate steady for years.

[kscarbel2]

Turbocharger maker Garrett files for Chapter 11 bankruptcy

Reuters  /  September 21, 2020

Auto supplier Garrett Motion Inc. said Sunday it filed for Chapter 11 bankruptcy protection as it struggled with heavy debt amid the COVID-19 pandemic and a dispute with former parent Honeywell International Inc. over asbestos liabilities.

Garrett Motion said it entered into a "stalking horse" purchase agreement with private equity firm KPS Capital Partners for $2.1 billion.

The stalking horse agreement would imply that any other bids that come in must be higher than the offer made by KPS. The agreement is subject to court approval.

Garrett Motion, which makes automotive turbochargers, said it's seeking court's approval for a $250 million debtor-in-possession financing facility. Throughout the reorganization process, Garrett Motion expects to operate without interruption.

The company listed both assets and liabilities in the range of $1 billion and $10 billion, according to a filing with the U.S Bankruptcy Court for the Southern District of New York.

Garrett Motion's largest customer is Ford Motor Co., which accounted for 12 percent of 2019 sales, according to its annual report.

Automakers and suppliers have been hit by the coronavirus outbreak, which led to shuttered vehicle factories and disrupted supply chains.

"...the financial strains of the heavy debt load and liabilities we inherited in the spin-off from Honeywell -- all exacerbated by COVID-19 -- have created a significant long-term burden on our business," CEO Olivier Rabiller said in a statement.

The company has accused Honeywell of devising the spinoff of Garrett Motion, its transportation systems business, in late 2018 to offload Honeywell's liabilities related to asbestos-exposure claims.

Honeywell said Garrett was pursuing a bankruptcy "to avoid the legitimate and reasonable financial commitments" the company assumed as part of its spinoff in 2018.

"Garrett always has been capable of fulfilling those obligations with the assets it received in the spinoff," Honeywell said in a statement, adding that it was committed to engaging in a dialogue with the firm.

Garrett Motion said expects to emerge from the Chapter 11 and complete the sale process in early 2021.

Morgan Stanley and Perella Weinberg Partners served as financial advisers to Garrett Motion.

Sullivan & Cromwell LLP and Quinn Emanuel Urquhart & Sullivan LLP were legal advisers. AlixPartners served as Garret Motion's restructuring adviser.

Garrett Motion, tax domiciled in Rolle, Switzerland, saw 2019 sales of $3.25 billion.

[sabrinahathaway]

If a large company scares people and shareholders so much, it means that it is profitable for people to start selling shares and the company will then buy them up. A very thoughtful move, given that stocks and bonds are quickly converted into money, and this is not for nothing. I know that https://thecentsofmoney.com/why-liquid-net-worth-matters/ has information on this news, but it resembles the gesture of Musk, who declared to the whole world that bitcoin fell, and then sharply bought it and raised the price. Of course, bonds are much faster to monetize because it is like a currency, the exchange rate is growing and it is also, or rather its value. Only a fool can't win on the difference in this area

Edited March 21, 2021 by sabrinahathaway

[kscarbel2]

Core inflation in January rose 3 percent from a year earlier.

Thus, Jay Powell will not lower interest rates further, in the near-term.

The fed shouldn't have lowered rates the last time, given we all knew that inflation had not yet been tamed.

[67RModel]

End the Fed.

[kscarbel2]

Allison Transmission (ALSN) is down $16.00 today (-14%).

https://finance.yahoo.com/quote/ALSN/

-----------------------------------------------------

Wabash fell past their 1-year low to $12.96

https://finance.yahoo.com/quote/WNC/

[mowerman]

i did notice they have been fluxuating,,,pretty good right after tarriffs,,,,,i just moved my retirement recently watching it pretty close,,,,lol ,,bob

[kscarbel2]

 

[mowerman]

Disgusting figures thanks for that. Just goes to show you both sides of Ben sitting on their hands while they just keep raising the national debt. Let the next guy worry about it. Incredible.

[Truckcrazy]

7 hours ago, kscarbel2 said:

Core inflation in January rose 3 percent from a year earlier.

Thus, Jay Powell will not lower interest rates further, in the near-term.

The fed shouldn't have lowered rates the last time, given we all knew that inflation had not yet been tamed.

Might as well blame the Fed for Trump’s mistakes.

[Joey Mack]

Greed is at the core when it comes to managing money.  Blaming Any president is probably a waste of time.. i often wish i was deep inside to see the actual costs and the returns within banking , and grocers, for example.  I really dont trust the ones behind closed doors.  Yes i am a Trump supporter, but i dont care how much of a King you think he is ... There is a professionally corrupt person stock piling profits, in the background, who only supports themself.. R or D doesnt matter...

[kscarbel2]

The Republican-controlled House of Representatives late on Tuesday passed President Trump's $4.5 trillion tax-cut plan, sending the budget resolution to the Senate, where Republicans are expected to take it up.

 

It's mainly good for corporate US. There's expected to be less regulation, and tax cuts. I would expect it to happen and then it will be positive for the stock market if they do so.

[kscarbel2]

US stocks will struggle early March amid weaker economic data before they rally once again later in spring.

Short-term, things are too messy for stocks to break out.......the market is stuck.

Layoffs and ripple effects due to DOGE add pressure on the macro picture.

Consumer surveys are expected to go lower, and then there's inflation.

Stocks will need to get to a point were technicals appear washed and oversold. Retail will be exhausted, commodity trading advisors more tapped out.

The S&P 500 will then be able to rally again in late March and early April. Liquidity improves, macro overhang clears out, earnings keep showing resilient corporate America, the hemorrhage stops, and retail is back at the buying table.

Risks and confusion surrounding tariffs remain, weighing on overall risk sentiment. Seasonality is weak into March, making the outlook for stocks in the coming weeks challenging.

Medium-term, the path is S&P 500 index higher, yields lower.

JP Morgan

[kscarbel2]

Speaking on the worsening economy, from 1:55

.

 

[kscarbel2]

"Tariffs are actually, we've had a lot of experience with them. They’re an act of war, to some degree. Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay them."

Warren Buffett

[kscarbel2]

There are so many automotive and commercial truck plants in Mexico, plus an ocean of supporting supplier plants, it would take me an hour to list them all. And of course, a significant amount of that production arrives in the US.

What Bill Clinton and corporate American did, creating NAFTA under entirely false pretenses, was criminal.

[mowerman]

Ha ha I’ve been crying about that for years. Thanks for that last statement. Everybody’s long forgot about that. Oh by the way, I hardly come to this thread now that I’ve got an investment I will be here quite a bit.

[kscarbel2]

1 hour ago, mowerman said:

Ha ha I’ve been crying about that for years. Thanks for that last statement. Everybody’s long forgot about that. Oh by the way, I hardly come to this thread now that I’ve got an investment I will be here quite a bit.

I haven't forgotten. It remains front burner with me. Intelligent Americans knew it was a scam, orchestrated by big business and politicians on kickbacks, but were powerless to do anything about it.

This 25 percent import tariff basically short circuits NAFTA. If one wants to sell in the USA, one should produce in the USA. This is the tone in China, India, Brazil, Russia and other large countries. Protectionism is proper. Look out for your own. For example, don't allow your DoJ to authorize the sell-off of 75 percent of your commercial truck makers to foreign aggressors. That's called sabotage by traitors. Put the national interest before the self-serving wants of big business, and the country will profit from it. Observe the countries that do, and note the has been countries that didn't.

[Joseph Cummings]

13 minutes ago, kscarbel2 said:

I haven't forgotten. It remains front burner with me. Intelligent Americans knew it was a scam, orchestrated by big business and politicians on kickbacks, but were powerless to do anything about it.

This 25 percent import tariff basically short circuits NAFTA. If one wants to sell in the USA, one should produce in the USA. This is the tone in China, India, Brazil, Russia and other large countries. Protectionism is proper. Look out for your own. For example, don't allow the sell-off of 75 percent of your commercial truck makers to foreign aggressors. Put the national interest before the self-serving wants of big business, and the country will profit from it. Observe the countries that do, and note the has been countries that didn't.

Clinton put the screws to American manufacturing, and pretty much any American who got their hands dirty working. 

But it goes back even farther than that. The collapse became very apparent with the closing of the Campbell Works of YS&T on Sept. 19, 1977 "Black Monday" instantly putting 5,000 men out of work.

But the planning for this ass ramming of Americans had to go even farther back, How far? I don't know, I was in high school in 1977 and had no idea that there were globalists with plans to destroy America. Just the idea of it was inconceivable to me.

[kscarbel2]

President Trump has told the leaders of Japan and China they can not continue to reduce the value of their currencies, as doing so would be unfair to the United States.

 

"I've called President Xi, I've called the leaders of Japan to say you can't continue to reduce and break down your currency. You can't do it because it's unfair to us. It's very hard for us to make tractors, Caterpillar here, when Japan, China and other places are killing their currency, meaning driving it down. Instead of complaining repeatedly over the phone over such attempts, the US can make up for the disadvantage its manufacturers suffer by imposing tariffs."

[kscarbel2]

OPEC+ has finally decided to go through with its long-delayed oil production increase, adding 138,000 barrels per day to its production plans beginning in April. It’s the first output hike for OPEC since 2022, marking a cautious step toward unwinding the 2.2 million bpd in cuts the cartel has been clinging to like a security blanket.

The decision comes as President Trump renews his calls for lower oil prices, pressuring Saudi Arabia and its allies to pump more. With crude hovering around $71 per barrel and a volatile mix of geopolitical and economic uncertainty in play, including U.S. sanctions on Russia, Iran, and Venezuela, plus a looming global tariff war, OPEC+ didn’t have an easy time deciding this move.

The OPEC announcement tanked US oil stocks yesterday and today.

[67RModel]

5 minutes ago, Joseph Cummings said:

But the planning for this ass ramming of Americans had to go even farther back, How far? I don't know, I was in high school in 1977 and had no idea that there were globalists with plans to destroy America. Just the idea of it was inconceivable to me.

I am of the opinion that it was set into place on July 22, 1944 when the Bretton Woods Agreement was executed and put into place. This was the catalyzing event that essentially created globalization as we know it. The US Dollar was set up as the world reserve currency and in return for that the US agreed to patrol and police the World's oceans with its Navy to ensure the safety and free flow of goods. This is one of the main reasons why we still have carrier groups and submarines still constantly deployed and patrolling many of the hostile waterways around the globe. The US Secretary of state at the time, Cordel Hull believed the main cause of both World Wars was economic discrimination and trade warfare. He is quote at that time was:

"Unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war … if we could get a freer flow of trade…freer in the sense of fewer discriminations and obstructions…so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance of lasting peace."

Once globalization took hold and each country could specialize in whatever it was they excelled in and the writing was on the wall for the American worker and factories. No longer were American companies competing with domestic entities. They were competing with anyone in the world willing to work for less. International trade was streamlined by foreign countries currencies having defined convertibility to the US Dollar via the IMF and the terms of the Bretton Woods Agreement.

Since the US was the only industrialized country still left standing and completely unscathed by the war the "golden years" of the 50s and early 60s happened as they did. This was probably the most abnormal economic situation in human history. To this day many people still lament these times and use it as a basis for "normal" or how things should have remained. Its hard to loose when your the only game in town. By the late 1960s and 1970s Europe was back on line and developing nations had pools of essentially free labor. By the 1990s American manufacturing was a shell of it former self and the US economy had all but transitioned to a service-based economy. all NAFTA did was put the final nail in that coffin. Although I don't disagree it wasn't a criminal piece of legislation, the seeds for American industrial capacity decline were planted 50 years before. 

[Joseph Cummings]

47 minutes ago, 67RModel said:

Bretton Woods Agreement

Bretton Woods has a putrid Keynesian stink about it