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

[Shamone]

11 minutes ago, DurhamBorn said:

https://finance.yahoo.com/news/bp-invests-1b-fuels-joint-182223271.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvLnVrLw&guce_referrer_sig=AQAAACfg272qL5scD6q7hrdjgI6rp9jwfpd76YwoA2B3aTLI3tojbqIOIBxWtCDm2Gm_knLGIAHNrThXTovfO92RxtlGKO5WcoJoi9tYe6bixvwruOz2GHaIM5u8Oxlr5FRqVjBTPrNe7TiPMA9S-R0j5VILctQGGJ0R3SfzuWW4iwEw

Good move from BP.Obvious the focus on Green energy is is mainly for headlines and they still intend to sell their oil.India will be a very fast growing market over the cycle.I was getting a bit worried about the leadership,but this deal says to me they are playing to the gallery and still intend to keep big cash flow from oil.

I agree with this, I have a small amount in a crappy India fund that I will probably hold on to.

[Bear Hug]

3 minutes ago, Loki said:

Thanks for that, I noticed they dropped below 300 today. 

Markets have decided to give me second chance to buy!

[Bear Hug]

Checked what my LISA stocks did.  Bloodbath in transport, telecoms and retail almost offset by doubling gold miners...

[Loki]

2 hours ago, Shamone said:

I agree with this, I have a small amount in a crappy India fund that I will probably hold on to.

http://www.businessworld.in/article/India-Drops-Out-Of-2020-Kearney-FDI-Confidence-Index-/17-06-2020-288150/

Just a link i came across, not endorsing it or vouching for it

[Shamone]

5 minutes ago, Loki said:

http://www.businessworld.in/article/India-Drops-Out-Of-2020-Kearney-FDI-Confidence-Index-/17-06-2020-288150/

Just a link i came across, not endorsing it or vouching for it

It’s only a small amount. My confidence index is 0 for all those countries.

[DurhamBorn]

6 hours ago, Bear Hug said:

Checked what my LISA stocks did.  Bloodbath in transport, telecoms and retail almost offset by doubling gold miners...

I sold my transports mostly on the doubling after the falls in March,the structure of the economic fall from the virus made life very difficult for them.Im up or level including divis on all telcos apart from BT,they are down 14%.Im hoping the sector can stay down longer as im still adding to two smaller holdings,Telenor and Shaw Communications.Im also slowly taking some profits in the silver miners and buying more agriculture especially Nutrien at the moment.Iv got a few scattered stocks down 50% and the one not to be named more.Portfolio 7% below highest its ever been (last week),very happy with that considering.Given a lot of the stocks are still paying divis i hope they stay down or fall,the more i can add at these prices or less the better.Broad money is exploding higher,inflation inbound,with a lag.

[CVG]

On 08/07/2020 at 15:22, DurhamBorn said:

The real big worry is if they move back the age you can access your pension.Im looking at 55 still just

I love HMRC. I got the dreaded brown envelope today. No problem! Have a £2600 rebate. I couldn't understand how I was due that given that my personal pension is so small. So I checked the HMRC calculations. Of course, I cashed in 2 small DC's last year when I turned 55 and must have ended up overpaying higher rate tax.

On a separate point, just in case anyone isn't aware and can benefit from it, if you can afford it - put away £3600 a year into a SIPP for your child. You stick in £2880 and the lovely HMRC add £720.

[kibuc]

I'm seeing some very encouraging production numbers from some of the miners on my radar. Fiore obviously, as already reported. Eldorado with big, big Q2 production and solid increase Q/Q and YoY. Even managed to stay flat YoY in the one mine that was shut down for 3 weeks due to lockdown. Great Panther (ugh! yuck!) with strong increase in gold and AuEq production, even though silver production from locked-down Mexico tanked as expected by 2/3rds. Even Endeavour Silver, massively affected by Mexico closures, "only" took a 44% hit YoY thanks to big stockpiles getting processed.

 

On a separate note, what does the group think about Adriatic Metals? I used to think of them as a base metals explorer and didn't pay much attention, but when I look at them through a precious metals lens, silver in particular, then they look... quite cheap?

[Boon]

RDSB falling again - could be back to £10 hopefully.

What are people's opinions on gold and silver? Take profits or keep adding? I am probably getting close to 10% of portfolio in there now.

[Harley]

.

[DoINeedOne]

33 minutes ago, Boon said:

RDSB falling again - could be back to £10 hopefully.

What are people's opinions on gold and silver? Take profits or keep adding? I am probably getting close to 10% of portfolio in there now.

For physical and storage like BullionVault i'm holding but will be positioning myself to buy more if we see the market drop and metals get sold off too

Im currently 33% Metals in my portfolio and that's not including the few miners i have too

Bought some more Gazprom 

Will probably reinvest BP & Shell Dividends back into them today not a lot but still

EDIT: just reinvested those dividends

 

[Harley]

4 hours ago, DurhamBorn said:

Shaw Communications

Maybe I need to ease up on my criteria, but I missed this one given the Quick Ratio (below 1) and the high Debt to Equity Ratio (although below average for the industry).  However, interesting how cash from operations is far higher than reported income, although the cash flow statement for 2019 shows a CAD1bn increase in debt.  The sort of company I would need to delve into the financial statements to get a proper handle on.  Do you screen fundamentals for companies?

[sancho panza]

On 09/07/2020 at 11:43, kibuc said:

28 shares  Respect, I find it difficult to keep up with my 8.

My problem with silver miners atm is that they ones running up the most are already hugely overvalued. I cannot see myself buying Frist Majestic, for instance, when its peers are trading and much lower multiples. But those low-valuation peers are lagging behind, while FR keeps going higher and higher... Massively frustrating.

In goldies at least I can see some of the producers who were laughably cheap putting up some good gains. HMY is still hugely undervalued and so is Fiore. I might even hold my nose and take a punt at Great Panther. Marginal miners are poised for a big move at rising prices.

I don't know much about copper. It's that thing that you put on the roof and it turns green, ain't it?

Ours is a spray n pray operation on the PM miners.I learned early on that Mark twain wasn't far worng ('A gold mine is a hole with a liar at the top') and realised how out of my depth I was.Hence the spread of shares.Conversely in the oil sector,where we have significantly more invested,we only hold 10 stocks currently,as I got out of a lot of smaller ones in early Feb iirc.

To be fair,I don't monitor them much,particualrly as over time,the portfolio has got skewed towards the larger caps/tier 2's and therefore throws up less shocks.

Like you,I find the silver miners expensive in general over the past few years(no idea why they are) and have thus steered us into gold much more.Having said that we have a decent holding in Fres/Hoc which didn't seem to follow their Can/US counterparts higher.

Over the last few months I've started looking at silver more as I've noticed the discrepancy in running timesCurrently lined up as follows-based on intial invesment size

line 1-KGC,ABX,FRES,AU,NCM,BVN,NGD(the latter two are the big win plays)

line 2 SAND,OGC,OR,GFI

Line 3 AGI,SIB,RIO2,EGO

Line 4 IAM,AXU,GORO,ITR,HMY,AUY

Line 5 RSGR,B2G,MAI

Line 6 POG,IPT,

 

On 09/07/2020 at 13:33, Cattle Prod said:

I think Canada (along with Iran and Venezuela) will be one of the few large countries with oil production growth remaining. There is one catch though: most of it is in Alberta, Alberta is landlocked, and prices are utterly shite. If you go there and talk to them, they (a) can't stand the Ottawa goverment, for milking them, and blocking pipelines to the east (so much so there is a nascent secession movement!), and (b) think that the yanks have been blocking exports south to support the US shale industry. I expect these blockages to be released pretty quickly, once the reality that the US shale patch has blown its wad sink in. Pipelines are already getting approved. There will be a lag though. How to pick winners in all that though? No idea. There is time yet to profile Canadian producers, I'd want to see more export routes first. To answer your question, I don't think any Canadian supply will be lost, they've been operating with very low prices (not WTI up there, look at WCS) for years. Here is some of 2018:

You asked my question in bold and answered it as well

Thanks for the informed reply.I was unaware of the WCS and the pricing they've been living with for some time.

Whenever I see these posts about struggling oilfields,I wonder what Exxon will be running their slide rule over.

Shurely all this chaos must see some consolidfation as companies are bought out of amdinistration?

 

edit to add CP,some big oilies are as cheap as when oil was sub $25????

[sancho panza]

17 hours ago, DurhamBorn said:

https://finance.yahoo.com/news/bp-invests-1b-fuels-joint-182223271.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvLnVrLw&guce_referrer_sig=AQAAACfg272qL5scD6q7hrdjgI6rp9jwfpd76YwoA2B3aTLI3tojbqIOIBxWtCDm2Gm_knLGIAHNrThXTovfO92RxtlGKO5WcoJoi9tYe6bixvwruOz2GHaIM5u8Oxlr5FRqVjBTPrNe7TiPMA9S-R0j5VILctQGGJ0R3SfzuWW4iwEw

Good move from BP.Obvious the focus on Green energy is is mainly for headlines and they still intend to sell their oil.India will be a very fast growing market over the cycle.I was getting a bit worried about the leadership,but this deal says to me they are playing to the gallery and still intend to keep big cash flow from oil.

Cheers for psoting DB.Like you say,looks a shrewd move.Like you say,reassures that the leadership are in touch with the real world.

'India is expected to be the fastest-growing fuels market in the world over the next 20 years, with the number of passenger cars in the country estimated to grow almost six-fold over the period.

Meanwhile, five-star analyst Sam Margolin at Wolfe Research last month raised BP’s rating to Buy from Hold with a price target of $31, up from $29, saying that the company has "a credible pathway" to deleveraging and dividend coverage in 2021.

Overall, Wall Street analysts share Margolin's bullish outlook on the stock. The Strong Buy consensus shows 3 Buy ratings versus 1 Hold rating. The $29.67 average price target implies a 34% gain in the shares over the coming 12 months.'

[sancho panza]

5 hours ago, kibuc said:

I'm seeing some very encouraging production numbers from some of the miners on my radar. Fiore obviously, as already reported. Eldorado with big, big Q2 production and solid increase Q/Q and YoY. Even managed to stay flat YoY in the one mine that was shut down for 3 weeks due to lockdown. Great Panther (ugh! yuck!) with strong increase in gold and AuEq production, even though silver production from locked-down Mexico tanked as expected by 2/3rds. Even Endeavour Silver, massively affected by Mexico closures, "only" took a 44% hit YoY thanks to big stockpiles getting processed.

 

On a separate note, what does the group think about Adriatic Metals? I used to think of them as a base metals explorer and didn't pay much attention, but when I look at them through a precious metals lens, silver in particular, then they look... quite cheap?

Adriatic metals has been pushed by pamplona trader iirc.He's always struck me as one of the more honesdt players in the space but beyond that I knwo little.Having siad that I've jsut had a butchers and their main ops are in Serbia.These days I've steered us to more stable geo political places for PM mienrs if possible.

Pamplona Trader had some encouraging posts on EGO a week or two back.

 

[sancho panza]

5 hours ago, Boon said:

RDSB falling again - could be back to £10 hopefully.

What are people's opinions on gold and silver? Take profits or keep adding? I am probably getting close to 10% of portfolio in there now.

is Hold an option.That's where we are.

[sancho panza]

 

Potential good news for the yellow stuff.Mankind less so.

https://notayesmanseconomics.wordpress.com/2020/07/10/the-us-is-near-to-joining-the-ever-growing-world-of-negative-interest-rates/

The US is near to joining the ever growing world of negative interest-rates 

Posted on July 10, 2020

3

Sometimes a piece of news comes with a splash of deja vu or if you prefer groundhog day. I had that sort of feeling last night when I noted via a tweet from John Authers who used to write The Long View at the Financial Times that the US five-year bond yield had fallen to a new low of 0.28 %. My immediate thought was is it going negative too? We have seen this happen in the Euro area with Germany the leader of the pack. More recently we have seen it in my home country the UK where both the two-year and five-year bond or Gilt yields have been negative for several weeks now. That is really rather extraordinary in the UK’s case but we know that these events are accompanied by a litany of official and media denials.

Comment

I have left out the economic outlook until now so let me bring it into play.

ew York Fed Staff Nowcast
The New York Fed Staff Nowcast stands at -15.1% for 2020:Q2 and 10.4% for 2020:Q3.
News from this week’s data releases increased the nowcast for 2020:Q2 by 1.2 percentage points and increased the nowcast for 2020:Q3 by 8.9 percentage points.

This week’s pandemic news means they seem set to subtract some of the expected growth for Q3. Thus not only has the outlook turned down it remains extremely volatile. Ordinarily I would say that would make bonds more attractive but of course that relied on them having a yield which these days is fast disappearing.

Another source of demand comes from the US Dollar because the safest place to hold Dollars is in Treasury Bonds. The more uncertain things look the more Aloe Black will be singing ” I need a $ a $ is what I need”

On these roads we see that US Treasury Bond yields are slip-sliding away and the two-year at 0.15% is in the van. In my country  the UK when the final push came it happened quite quickly.

[DurhamBorn]

5 hours ago, Harley said:

Maybe I need to ease up on my criteria, but I missed this one given the Quick Ratio (below 1) and the high Debt to Equity Ratio (although below average for the industry).  However, interesting how cash from operations is far higher than reported income, although the cash flow statement for 2019 shows a CAD1bn increase in debt.  The sort of company I would need to delve into the financial statements to get a proper handle on.  Do you screen fundamentals for companies?

I dont screen Harley,but i do take a look and need to be as sure as i can be that the company can pay its coupons and also get debt away if needed.Telcos are coming towards the end of a long capex cycle.I expect the whole sector to de-leverage over the cycle and free cash to increase.Shaw is only a tiny holding and will by around 10% of what i have in Vod/Telefonica etc.Telia and Telenor will be around 30% of what i have in the bigger ones.

[Harley]

2 hours ago, DurhamBorn said:

I dont screen Harley,but i do take a look and need to be as sure as i can be that the company can pay its coupons and also get debt away if needed.Telcos are coming towards the end of a long capex cycle.I expect the whole sector to de-leverage over the cycle and free cash to increase.Shaw is only a tiny holding and will by around 10% of what i have in Vod/Telefonica etc.Telia and Telenor will be around 30% of what i have in the bigger ones.

Ta, but how, if I may ask, do you pick on something like Shaw if not via a screener?  And Investing.com does not even have it in Telecoms but Broadcasting and Cable TV (FT.com has it in Fixed Line Telecommunications, arrrg)!

PS:  Interesting, DYOR but a reduced confidence buy signal on the daily today, though not on the weekly or monthly yet.  I will watch with interest!

[DurhamBorn]

1 hour ago, Harley said:

Ta, but how, if I may ask, do you pick on something like Shaw if not via a screener?  And Investing.com does not even have it in Telecoms but Broadcasting and Cable TV (FT.com has it in Fixed Line Telecommunications, arrrg)!

PS:  Interesting, DYOR but a reduced confidence buy signal on the daily today, though not on the weekly or monthly yet.  I will watch with interest!

I do it the old fashioned way.I search every main country for their main telcos.Then go through them all.I think the big US telcos are all fair value so havent bought any.I think most of the rest of the world ranges from good value to superb value.I think the European/UK telcos are the best value for lots of reasons.

Shaw is in cable because its got a big fibre network.It also got a mobile network though that is growing.Canada isnt a huge telco market due to size and geography,but happy to add a few.

[Harley]

51 minutes ago, DurhamBorn said:

I do it the old fashioned way.I search every main country for their main telcos.Then go through them all.I think the big US telcos are all fair value so havent bought any.I think most of the rest of the world ranges from good value to superb value.I think the European/UK telcos are the best value for lots of reasons.

Shaw is in cable because its got a big fibre network.It also got a mobile network though that is growing.Canada isnt a huge telco market due to size and geography,but happy to add a few.

Thanks for the insights.  The mis (or different) classification of companies does my head in!  I would have missed Shaw using Investing.com and got it using FT.com but then FT.com does not have the granular industry segmentation Investing.com has.  What do you use?  Maybe I just need to use both!

PS:  Shaw may have a network but does not seem to do much content so I question the industry assignment.  I scanned their accounts but little in the way of normal segment teporting.  Actually, quite an odd set of accounts to my English eyes.  Maybe a Canadian thing!

[M S E Refugee]

 

[DurhamBorn]

59 minutes ago, Harley said:

Thanks for the insights.  The mis (or different) classification of companies does my head in!  I would have missed Shaw using Investing.com and got it using FT.com but then FT.com does not have the granular industry segmentation Investing.com has.  What do you use?  Maybe I just need to use both!

PS:  Shaw may have a network but does not seem to do much content so I question the industry assignment.  I scanned their accounts but little in the way of normal segment teporting.  Actually, quite an odd set of accounts to my English eyes.  Maybe a Canadian thing!

I tend to use Morningstar,though i also simply use "list of Canadian telecom companies".I had been researching most of my targets for three or more years so im only really adding smaller holdings now.I dont really need to screen at first because im investing in larger companies now mostly.Much easier to find them than smaller ones.

[Harley]

6 minutes ago, DurhamBorn said:

I tend to use Morningstar,though i also simply use "list of Canadian telecom companies".I had been researching most of my targets for three or more years so im only really adding smaller holdings now.I dont really need to screen at first because im investing in larger companies now mostly.Much easier to find them than smaller ones.

Three or more years!  Like so many things, hard work makes things look easy to others!

[DurhamBorn]

Just now, Harley said:

Three or more years!  Like so many things, hard work makes things look easy to others!

Indeed.On the telcos i think we have a structurally undervalued situation.The market is pricing them on capex staying the same or growing and connections (service revenue) growing slowly below inflation.I thing that is all wrong.I think Capex will probably fall mostly (some like BT might grow in some areas).Connections will explode.6 billion now,30 billion+ at the end of the 5G cycle.Those extra connections wont provide the same income as the first 6 billion,but can mostly be ran on the edge of networks for little extra capex/opex.The last cycle saw tech monetise most of the internet over the top and telcos missed out.This time i think they will get more of the pie.Google taking 5% in Vodafones India business and companies like Microsoft and Google fighting to partner with Telefonica as can be seen here last month,

https://www.fiercetelecom.com/telecom/move-over-microsoft-google-cloud-ties-into-spain-s-telefonica-for-cloud-and-5g-edge-use

Given these companies would be a struggle to buy out for tech companies due to national governments (Telefonica cant be taken over by act of parliament) they have no choice but to try to partner and force out each other.Telcos have the upper hand for the cycle i think.