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spunko

Credit deflation and the reflation cycle to come (part 2)

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An apt time to continue part 2.

Might be worth @sancho panza adding on his scores on the doors from different sectors on the first few pages of the thread.They are an excellent way to look at the sectors most of interest going forward.Reference of course not investment advice.

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Posted (edited)

@JMD  Seems we can't quote from a closed thread.

You asked "Has anyone thoughts on how to get investment exposure to good automation/robotics companies, and also to the semiconductor manufacturer sector in general (perhaps etf's)? I'm thinking in terms of those companies that will help increase productivity for the industrial/manufacturing/building sectors".

Here are some ETFs open to UK investors: https://www.justetf.com/uk/find-etf.html?query=robotics.  Namely ROBG, RBTX, RBOD (not sure of the difference between the last two).  You could look at these and/or look at their and the US (no KID) ETF holdings to cherry pick companies.

Not seeing any specific semiconductor ETFs (though do exist in the US market), but there are general technology ones.  Again maybe look at the US, etc ETF holdings.

Good idea!

Edited by Harley

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16 minutes ago, DurhamBorn said:

An apt time to continue part 2.

Might be worth @sancho panza adding on his scores on the doors from different sectors on the first few pages of the thread.They are an excellent way to look at the sectors most of interest going forward.Reference of course not investment advice.

With methodology link?

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@JMD. I've been drip feeding into pictet robotics for the last year, it was one of the few funds I found at the time that seemed to target automation etc.  Honestly haven't dug deep and looking just now has considerable holdings in things like the big chip makers and alphabet.  

Have considered selling for a while thinking with holdings like the above may see a bit of a down turn but I don't hold a lot so have stayed in. 

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Posted (edited)

@DurhamBorn replied on the closed thread:

 
19 hours ago, Harley said:

We talk about reflation stocks, even mention the odd one, but don't define the term.  What are the attributes, such as sector/industry?  Illustrative examples?

"Iv put above in the thread a lot iv started buying and are a very good indication of the sort of company.

I view them as this.

A company that can run with or outpace inflation and/or a company that has expensive assets depreciating at a fixed rate where the product coming from those assets will increase in price,even just with inflation as that feeds fast free cash increases.(telcos prime examples and potash miners etc)

Another side im seeing as reflation are sectors that gain from inflation in other ways,an example are public transport companies.High motoring costs will force more people to use their services (they also have the advantage of the depreciation).High energy costs will force investment in green/cheaper energy.Iv bought SSAB for instance as they are turning their blast furnaces to hydrogen and that could see much bigger margins at the end of the next cycle.I road map them at 130 SEK a share in around 2027 as long as they survive a deflation event of course.

Other companies that gain from all Fiat being de-valued.That is resource,food etc.

Companies that gain from defence spending".

 

That's interesting because, dissecting that shows several key themes beyond just pure (benign) "reflation":

. Companies which can positionally gain/maintain from an inflationary environment (e.g. due to pricing power, depreciating valuable asset base, etc).

. Companies which can gain from the structural changes brought on by inflation (e.g. move to public transport, higher energy costs, etc).

. Companies providing a store of value faced with devaluing fiat money (which leads to a key discussion about producers as proxy commodity plays).

. Companies which can benefit from the more traditional capital expenditure reflation approach (e.g. defence companies). 

So we're talking about a reflationary environment and inflation (in things other than assets as has largely been the case to date).  The talk here and elsewhere seems to be about fiscal reflationary policies as opposed to just the past monetary reflation policies (like QE, etc), although we may see more extreme monetary policy ("theory"!) as well.  Indeed the "austerity" we have had in the UK, if it was anything, was fiscal retrenchment rather than a neutral fiscal policy.  The aim of this coming fiscal reflation would be to correct a deflationary bust which may (consensus appears "will") overshoot into high inflation, especially given the legacy effects (yet to play out via things such as the velocity of money) of the monetary policy to date (both since 2008/9 and structurally before).  Reflation has been defined as "controlled inflation" but this looks unlikely without at least a deflationary bust first!  Then there's Japan........

Edited by Harley

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just heard about this on a video

August 13th

Just two years ago, India's huge car market was booming and global players were rushing to invest. Now it's been slammed into reverse.

Sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday. It's the ninth straight month of declines and the sharpest one-month drop in more than 18 years

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27 minutes ago, Harley said:

  Reflation has been defined as "controlled inflation" but this looks unlikely without at least a deflationary bust first!  Then there's Japan........

I am always on the lookout for a sizeable bust, Japanese or otherwise.

Both here, the "other board" and GEI have turned me into a permabear. Luckily it is starting to pay off.

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With the UK about to leave the EU, what are the chances of  EU regulations being lifted regarding KID. If this restriction was lifted with immediate effect then rather than looking at individual stocks wouldnt US ETFs be a better place to start looking at. If so which ones

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10 minutes ago, DoINeedOne said:

just heard about this on a video

August 13th

Just two years ago, India's huge car market was booming and global players were rushing to invest. Now it's been slammed into reverse.

Sales of passenger vehicles plunged 31% in July, according to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday. It's the ninth straight month of declines and the sharpest one-month drop in more than 18 years

Funnily enough I listened to a recent YouTube video today with Gerald Celente discussing India, credit crunch there, their claim now to Kashmir and then found this

https://m.economictimes.com/industry/services/property-/-cstruction/indian-real-estate-developers-at-risk-as-credit-dries-up/articleshow/70227128.cms

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Posted (edited)

JMD said:

......personally not sure how important 'brands' will be in a reflation economy, brands may be 'pushed back' into becoming luxury items like they once were......

Harley said:

Ha, exactly what I was thinking. I've been an Aldi type well before it was fashionable or "necessary" so have had my doubts for a long time.  And, spookily, I also thought about the luxury nuance at the time of writing.  What does that mean for the branded companies though?  What would be interesting is to know who actually makes what - do the brand companies (in which case do they offer contract manufacturing and are they set up to do this successfully?),  do they retreat and/or buy up such companies, or what?  I once worked at a contract manufacturer supplying some products to all the supermarkets but these were the main supermarkets and I don't know how widespread this is.  Then again, I hold Unilever and that just keeps rising in defiance of these thoughts!    

 

 

 

 

Harley, that's a good question, but I suspect a complex one. Especially as it relates back to your earlier 'reflation stock synopsis' and who actually owns the (dare I say 'depreciating asset'?!) factory production site. Anyway, bet it’s a very mixed bag, with some dedicated legacy factories, but also for logistical/cost reasons more and more brand-name food production being 'contracted out' - after all its cheaper for the basic food materials, potato crisps, baked beans, etc. - to be bought in bulk, then sorted centrally into their different quality, size, shape, etc. before processing on different production lines for the branded/non-branded items. Unilever is a vast beast, but if you consider how it has expanded over the years by buying up smaller companies, I would suspect it has a similarly mixed(up) production setup.  

I then thought that perhaps the key trend is that supermarket own-brand market share is increasing. For example, I was aware that Walmart's biggest seller is its own-brand 'great value' range. However, i've just attempted to do some research and found that 'great value' is itself manufactured by corporations including - wait for it - Sarah Lee! ...So even more complex than first thought, and down yet another rabbit hole! 

With the expansion of value chains like Lidle/Aldi here, and similar happening in US, and where these type of shops mostly don't even stock brands, I think that food brand market share will continue to fall here in the West. The question is will companies like Unilever make up for these falling sales by continuing their expansion into Asia?  

1 hour ago, Harley said:

@JMD  Seems we can't quote from a closed thread.

You asked "Has anyone thoughts on how to get investment exposure to good automation/robotics companies, and also to the semiconductor manufacturer sector in general (perhaps etf's)? I'm thinking in terms of those companies that will help increase productivity for the industrial/manufacturing/building sectors".

Here are some ETFs open to UK investors: https://www.justetf.com/uk/find-etf.html?query=robotics.  Namely ROBG, RBTX, RBOD (not sure of the difference between the last two).  You could look at these and/or look at their and the US (no KID) ETF holdings to cherry pick companies.

Not seeing any specific semiconductor ETFs (though do exist in the US market), but there are general technology ones.  Again maybe look at the US, etc ETF holdings.

Good idea!

thanks Harley, i'll take look.

Edited by JMD

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16 minutes ago, Thorn said:

Funnily enough I listened to a recent YouTube video today with Gerald Celente discussing India, credit crunch there, their claim now to Kashmir and then found this

Thanks to @Yellow_Reduced_Sticker for posting that Celente video in the old thread.  It got me looking at other Kitco News videos.  I liked this one with Jim Rogers, especially the bit where he says how busts start off with just a few incidents until there are enough for people to join the dots, by which time it's too late.  I'm seeing them now, three this week.  The accountants (at least those with a liquidator mindset) are smelling blood and the auditors are backing off.

 

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8 minutes ago, JMD said:

...after all its cheaper for the basic food materials, potato crisps, baked beans, etc. - to be bought in bulk, then sorted centrally into their different quality, size, shape, etc. before processing on different production lines for the branded/non-branded items.....

Precisely my experience.  We had n production lines, one per supermarket.  Each started with the same base ingredient and then things were added back depending on the quality the supermarket wanted.  More for say M&S, less for some others.  I'll leave out some other details given it's dinner time!  Also very common for say scuba gear or power tools to be made in one factory and then adjusted for the brand, or not.  Mexico was popular for the US.

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1 hour ago, Dogtania said:

@JMD. I've been drip feeding into pictet robotics for the last year, it was one of the few funds I found at the time that seemed to target automation etc.  Honestly haven't dug deep and looking just now has considerable holdings in things like the big chip makers and alphabet.  

Have considered selling for a while thinking with holdings like the above may see a bit of a down turn but I don't hold a lot so have stayed in. 

thanks Dogtania.

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21 minutes ago, billfunk said:

This one seems to have turned upwards too... small market cap but interesting tie-ups for future 

07D28941-37C5-44AC-8ABC-B7C9E9C6D314.png

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1 hour ago, Castlevania said:

@spunko is there a good reason to chop a thread in half? 

Sad times :(

Most forums limit each thread to a certain number of pages to stop it lagging the database. Anecdotally I think a 450 page thread does slow the site down a bit, so trying to limit each thread to 100 pages per part. 

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