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Peak Corporate Earnings (?)
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vtsnowedin



Joined: 07 Jan 2011
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Location: New England ,Chelsea Vermont

PostPosted: Tue Dec 13, 2016 1:32 am    Post subject: Reply with quote

raspberry-blower wrote:
vtsnowedin wrote:
johnhemming2 wrote:
I would tend to agree in that resource companies will tend to benefit to a greater extent when resources are scarcer. The big question on energy is how well Solar PV does.

That may well be where a lot of the cash taken out of Exxon's stock is being redirected to.


Evidence that backs up this idiotic assertion please?

As you have jumped on my plausible suggestion as being idiotic I'm sure that any evidence I might find and present would also be ridiculed without regard to it's quality.
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fuzzy



Joined: 29 Nov 2013
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Location: The Marches, UK

PostPosted: Tue Dec 13, 2016 11:52 am    Post subject: Reply with quote

Let's focus our anger in the chinning bar people. I wish we could get away from piling on VT. Personally I value what he has to say. He sees things with a different view from me sometimes, but we are all bright people here.

If I become world president, I have a gravy train job for everyone on this board.
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raspberry-blower



Joined: 14 Mar 2009
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PostPosted: Tue Dec 13, 2016 11:56 am    Post subject: Reply with quote

Not had you produced any credible evidence - which you failed to do.

To put this matter to bed, the ExxonMobil 2015 Annual Report can be found here

On what page is there conclusive proof that ExxonMobil is switching its allegiance from fossil fuels to Solar PV?
In truth all there is is what amounts to little more than a footnote (on page 39 of 52, I believe) on research into algae biofuels. Nothing about Solar that is of any significance

What is interesting to note is the increase in debt on the balance sheet - up from $22,699 million in 2013 to $38,687 million in 2015 - an increase of 70%.

A rise of .25% in interest rates would see an increase in operating costs of nearly $100 million without anyone doing anything. Which is why we won't see any major movements because it won't just be ExxonMobil that will get crushed - there's a whole raft of them
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vtsnowedin



Joined: 07 Jan 2011
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Location: New England ,Chelsea Vermont

PostPosted: Tue Dec 13, 2016 12:55 pm    Post subject: Reply with quote

raspberry-blower wrote:
Not had you produced any credible evidence - which you failed to do.

To put this matter to bed, the ExxonMobil 2015 Annual Report can be found here

On what page is there conclusive proof that ExxonMobil is switching its allegiance from fossil fuels to Solar PV?
In truth all there is is what amounts to little more than a footnote (on page 39 of 52, I believe) on research into algae biofuels. Nothing about Solar that is of any significance

What is interesting to note is the increase in debt on the balance sheet - up from $22,699 million in 2013 to $38,687 million in 2015 - an increase of 70%.

A rise of .25% in interest rates would see an increase in operating costs of nearly $100 million without anyone doing anything. Which is why we won't see any major movements because it won't just be ExxonMobil that will get crushed - there's a whole raft of them

I did not suggest that Exxon was getting into solar. I suggested that the stock holders that cashed in their shares maybe reinvesting their money in renewables. There is no database for what those investors decided to do with their cash.
As to the soundness of Exxon's' fiances I wouldn't worry too much about them. True a quarter point interest rate rise would cost them 100 million but at the same time a $3.00 rise in the price of crude has increased the value of their reserves by 270 billion dollars.
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raspberry-blower



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PostPosted: Thu Dec 15, 2016 8:33 pm    Post subject: Reply with quote

Talking at cross purposes then, VT. Your view is on the Divestment movement - that would be worth a thread of its own - possibly in the Government and Society category. Is there any relevant thread anywhere?
There is definitely a move away from the fossil fuel sector although there is still a long way to go.

This thread is about the Corporate behemoths who have been spending fortunes on share buybacks rather than R & D and are showing stagnation in their annual reports. Your point about ExxonMobil being able to offset the interest rates rise if the oil prices also rise is certainly valid although if it falls it then becomes a real liability. Not that I care about them one jot
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vtsnowedin



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PostPosted: Thu Dec 15, 2016 9:25 pm    Post subject: Reply with quote

raspberry-blower wrote:

There is definitely a move away from the fossil fuel sector although there is still a long way to go.


That has been true in the coal sector over the last eight years. The next four to eight years maybe a totally different story.
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johnhemming2



Joined: 30 Jun 2015
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PostPosted: Thu Dec 15, 2016 10:17 pm    Post subject: Reply with quote

vtsnowedin wrote:
True a quarter point interest rate rise would cost them 100 million but at the same time a $3.00 rise in the price of crude has increased the value of their reserves by 270 billion dollars.

One is revenue and the other capital, however. Also one involves a cash payment the other has no immediate cash element.
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vtsnowedin



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PostPosted: Fri Dec 16, 2016 2:00 am    Post subject: Reply with quote

johnhemming2 wrote:
vtsnowedin wrote:
True a quarter point interest rate rise would cost them 100 million but at the same time a $3.00 rise in the price of crude has increased the value of their reserves by 270 billion dollars.

One is revenue and the other capital, however. Also one involves a cash payment the other has no immediate cash element.

In that line I doubt if much of Exxon's debt is at variable rates.
Having had cash in hand they had the choice of paying off debts, increasing capex seeking to increase reserves,or buying back stock to reduce future dividend payments. Rex made the decision that the stock buyback was the best choice.
I wouldn't bet against him. Would you?
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johnhemming2



Joined: 30 Jun 2015
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PostPosted: Fri Dec 16, 2016 9:52 am    Post subject: Reply with quote

vtsnowedin wrote:
In that line I doubt if much of Exxon's debt is at variable rates.
Having had cash in hand they had the choice of paying off debts, increasing capex seeking to increase reserves,or buying back stock to reduce future dividend payments. Rex made the decision that the stock buyback was the best choice.
I wouldn't bet against him. Would you?

They may not be variable in the short term although I would expect some commercial finance to be linked to interbank rates.

However, stock buybacks are not motivated by the desire to reduce dividend payments as a rule. Shareholders tend to like them because they can keep up the share price.
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vtsnowedin



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PostPosted: Fri Dec 16, 2016 1:48 pm    Post subject: Reply with quote

johnhemming2 wrote:
vtsnowedin wrote:
In that line I doubt if much of Exxon's debt is at variable rates.
Having had cash in hand they had the choice of paying off debts, increasing capex seeking to increase reserves,or buying back stock to reduce future dividend payments. Rex made the decision that the stock buyback was the best choice.
I wouldn't bet against him. Would you?

They may not be variable in the short term although I would expect some commercial finance to be linked to interbank rates.

However, stock buybacks are not motivated by the desire to reduce dividend payments as a rule. Shareholders tend to like them because they can keep up the share price.

I think that is a distinction without a difference. The share price stays up because future dividend obligations are reduced.
Of course management tries to make the buybacks on the lows which reduces the depth of those lows.
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fuzzy



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PostPosted: Fri Dec 16, 2016 3:08 pm    Post subject: Reply with quote

There is also the fact that it is the financial industry that is most critical of share buybacks just because their money is trading. If buybacks are done with debt, maybe it's a problem, but with profits it's good housekeeping. Why should any company be weeping dividend costs, which are just a never ending debt? The underlying problem is that tax/business structure benefits companies who are shared owners/multinational and this sucks by penalising the small/simple ltd business. Now we have even more dodgy constructs with LLPs and LLCs which should never be legal and came from the US via UK crown depedencies.
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vtsnowedin



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PostPosted: Fri Dec 16, 2016 4:16 pm    Post subject: Reply with quote

fuzzy wrote:
Why should any company be weeping dividend costs, which are just a never ending debt? .

There are only two ways for a investor (not day traders) to profit from stocks. The stock must have the potential for growth in share price or pay dividends or both. The problem with growth in share price is that the share holder must sell part of their stock to realize a profit and then compute capital gains taxes.
The dividend receiver just adds the payments to income and still holds all their shares. For decades dividends was always the main goal with betting on startups having exponential growth being a relatively recent development.
Watch for changes in investment strategies caused by whatever tax overhaul the next Congress passes.
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raspberry-blower



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PostPosted: Fri Dec 16, 2016 5:20 pm    Post subject: Reply with quote

fuzzy wrote:
There is also the fact that it is the financial industry that is most critical of share buybacks just because their money is trading. If buybacks are done with debt, maybe it's a problem.


The share buyback frenzy of particularly Corporate America has been fuelled by very cheap debt, not from cash reserves. Whilst the interest rate is virtually zero this is not perceived as a problem. It is only when interest rates rise that this rears its ugly head.

The problem that the financial world has with share buybacks is that this makes the said stock more illiquid and susceptible to more violent share price movements. Normally, this has the impact of raising the share price higher however in the event of a market crash, the opposite is true.

Bottom line is if the big Corporations are investing far more in share buybacks as opposed to R & D then they have passed the stage of rapid growth and are now into the more stagnant stage of the business bell curve
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fuzzy



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PostPosted: Fri Dec 16, 2016 5:33 pm    Post subject: Reply with quote

raspberry-blower wrote:
fuzzy wrote:
There is also the fact that it is the financial industry that is most critical of share buybacks just because their money is trading. If buybacks are done with debt, maybe it's a problem.


The share buyback frenzy of particularly Corporate America has been fuelled by very cheap debt, not from cash reserves. Whilst the interest rate is virtually zero this is not perceived as a problem. It is only when interest rates rise that this rears its ugly head.

The problem that the financial world has with share buybacks is that this makes the said stock more illiquid and susceptible to more violent share price movements. Normally, this has the impact of raising the share price higher however in the event of a market crash, the opposite is true.

Bottom line is if the big Corporations are investing far more in share buybacks as opposed to R & D then they have passed the stage of rapid growth and are now into the more stagnant stage of the business bell curve


If they are big corporations, they are already past their usefulness for society. The wider your customer base, the poorer a service you can offer and still rake in the dough. Anything large is an exercise in hiding cash from taxmen. If it was illegal for any organization to have more than 100 employees, how would the world be worse?
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emordnilap



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PostPosted: Fri Dec 16, 2016 6:00 pm    Post subject: Reply with quote

fuzzy wrote:
If it was illegal for any organization to have more than 100 employees, how would the world be worse?


My home town has lots of locally-owned shops and has a bit of a reputation for them. There are concessions to smaller new businesses, rates-wise and a good deal of negotiation goes on behind the scenes regarding start-up rents.

I suggested the rates concessions for new 1 or 2 people businesses some time ago when the local development planners invited suggestions; no doubt others did too.

If more people took an interest in civic life this sort of thing could happen more. Your suggestion, fuzzy, is doable if only.
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