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


spunko

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3 hours ago, DurhamBorn said:

One of the big new trends in carbon capture will be natural carbon offsets,mostly planting trees and today buried in some text from BP and Rosneft is just that ,translated it means Rosneft is going to keep pumping but plant lots of trees across Siberia so BP can be carbon neutral by 2050.Trading new forest carbon credits should become a huge business during the cycle.

https://www.bp.com/en/global/corporate/news-and-insights/press-releases/rosneft-and-bp-agree-to-cooperate-on-carbon-management-and-sustainability.html

The companies intend to work together on opportunities for low carbon solutions in downstream ‎businesses, including the development of advanced fuel as well as evaluate the potential for the ‎development of natural forest sinks and trading of forest carbon-offsets credits. The companies will ‎cooperate in sustainable development and social investment, including biodiversity.

Ironically it is global warming that is causing the extensive Siberian thawing, thus allowing it to be used for agri and forestry... and of course 'carbon offsetting'... can't help thinking there must be a cosmic joke(r) at play here - only wish Douglas Adams (Hitch Hikers Guide to the Galaxy) was still alive to help put all this stuff into proper context!!!

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1 minute ago, JMD said:

Ironically it is global warming that is causing the extensive Siberian thawing, thus allowing it to be used for agri and forestry... and of course 'carbon offsetting'... can't help thinking there must be a cosmic joke(r) at play here - only wish Douglas Adams (Hitch Hikers Guide to the Galaxy) was still alive to help put all this stuff into proper context!!!

Joker?  The thaw is apparently releasing methane!

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Just think.  People probably burning the midnight oil right now at the Treasury to come up with ways to eff us over come Budget day to pay for all the eviliness/stupidity/ineptness of our current politicians.

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53 minutes ago, Harley said:

Joker?  The thaw is apparently releasing methane!

(Not strictly the place but you did ask) Yes, methane being released, but which is the biggest contributor to global warming, co2, methane, or water vapour or volcanoes? Ok I admit I'm a sceptic - the thing is I think climate science is a lot like covid science, the massive policy responses to the supposed dangers of both seem to rely mostly on stats and graphs, and in fact the important cause and effect mechanism is worryingly AWOL. I don't deny climate change might be happening, similarly I don't deny the existence of covid19, but it is the futile attempts to hold back the tide that I object to... The Covid 'economic' lockdown, or the Carbon 'wind back human progress' lockdown, would have Canute spinning in his grave. Btw, I am still a believer in proper science coming to save the day, vaccines and carbon capture.

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4 hours ago, Harley said:

Just think.  People probably burning the midnight oil right now at the Treasury to come up with ways to eff us over come Budget day to pay for all the eviliness/stupidity/ineptness of our current politicians.

Surely pension tax relief.Thats the big one.I expect 25% relief for everyone soon.That also means higher pensions for the lower paid and so less welfare,especially housing benefit.Thats going to be huge in a few years as people retire while renting.That pretty much means retire on benefits because getting enough to pay rent and a decent income for most people wont be possible.

Might see maximum ISA levels soon as well,but likely £1 mill to match pensions.

They will be tempted to go for fuel etc but the red wall seats around me know it will be a huge issue.He is boxed in,as you cant really see anywhere that taxes arent already crazy high.Apart from the like of Amazon etc not paying a thing.

Keeping myself under tax allowance while doing the minimum has been the way iv lived for a long time,its the only logical way in the UK.

The only one that im really bothered about is if they move the pension age back more for private/SIPP and also if they cut the tax free bit as im planning on £12500 + 25% tax free from 55 until 68 .

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19 minutes ago, DurhamBorn said:

Surely pension tax relief.Thats the big one.I expect 25% relief for everyone soon.That also means higher pensions for the lower paid and so less welfare,especially housing benefit.Thats going to be huge in a few years as people retire while renting.That pretty much means retire on benefits because getting enough to pay rent and a decent income for most people wont be possible.

Might see maximum ISA levels soon as well,but likely £1 mill to match pensions.

They will be tempted to go for fuel etc but the red wall seats around me know it will be a huge issue.He is boxed in,as you cant really see anywhere that taxes arent already crazy high.Apart from the like of Amazon etc not paying a thing.

Keeping myself under tax allowance while doing the minimum has been the way iv lived for a long time,its the only logical way in the UK.

The only one that im really bothered about is if they move the pension age back more for private/SIPP and also if they cut the tax free bit as im planning on £12500 + 25% tax free from 55 until 68 .

Will that be enough or is it mainly for show to the capital markets and it's really printy as the main course of action?  Changes to CGT or is that a minor source but maybe more for show to "share the pain" blah, blah? Negative rates, etc to boost velocity?  Overall, I'm expecting worse.

PS:  TBH if you are relying on taxing relatively few people to pay relatively a lot via bennies and services, you only have one real choice other than printy/inflation - cut bennies and services.  But then you're a self serving polo.

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7 hours ago, Harley said:

I gave up on pure FTSE high div stocks per dividendata.com, etc both because the FTSE was too small a pool so I was picking up marginal plays whose price performance later cost me (e.g. Card Factory) and because I started to look more closely at the financials and many were not good.  Part of the downside of using an FTSE focussed ISA and SIPP.  I still have a number of such legacy stocks to dump.

I now just look for total return (min 3% div plus good capital gains potential) in more financially and macro sound companies.  That's taken me international, more towards Asia, etc.  If I can put them in an ISA or SIPP (the later especially for US stocks given the better US tax treatment on divs) so well and good but I don't let the tax status or account type primarily drive my investment decisions anymore.  I may open a Saxo ISA given its better global coverage. 

I could also increase the maximum I can invest in any one share to reduce my FTSE holdings (currently set at 25) to the better ones but that'll increase/concentrate risk. 

I'll add I prefer a more trading attitude overall as I've become addicted to taking profits and moving on, something I'm forced into anyway as the value plays I look for, bar a BK, are currently scarce.

So a total return approach in sound companies, wherever that leads me, plus more shorter term trades based purely on price action.  All this only with my upside funds.

A bit of a journey/evolution but it works for me atm.  Far more focussed and efficient than before.

PS: I used to buy initial stakes in good total return prospects and then add on dips but now I just wait for technical buy signals on stocks passing a fundamental screen, regardless of sector or country, and then buy if they pass further due diligence.  That is, despite all the possible clever pre-thinking, I just wait until the price action gives me a green light to look.  I don't want to lose money by buying a good story but at a too high a price!  It's also interesting to see how certain industries take the lead, like we had insurers/assurers a few weeks back and then regional banks (not that I bought!)

This all hinges on the efficacy of my screens and technical buy signals which I keep under review.

PPS: A lot simpler in practice, especially when the screens have been set up.

PPPS:. I use monthly price data for the total return stuff and weekly data for the trades.  I'm too old and busy for daily and inter-day stuff.  RMG, if it had better financials, would be my exemplar.  Bought most on a technical buy, held long term, and just top sliced some good profits (like a good gardener).

PPPPS: I've also learnt when things are quiet on the equity front I should just leave well alone and not try and make work.  Indeed, it usually means I should be looking elsewhere (e.g. other asset classes, preparing for a BK, etc).

Thanks Harley, I can see in some ways we are very similar investors yet in another very different...its posts like this that help me reflect on and hone my own approach I.e been just FTSE focused so far and am finding it `cramps` my investing as there's not enough companies I want to invest in without going in `balls deep`, and so as a result not diversifying/spreading the risk.

As for your last comment, agree 100%, read several book that have shown that this is where retail investors lose returns.

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1 hour ago, DurhamBorn said:

The only one that im really bothered about is if they move the pension age back more for private/SIPP and also if they cut the tax free bit as im planning on £12500 + 25% tax free from 55 until 68 .

See my recent comment in the pension thread; increased early retirement age, so think its only a matter of time...problem is they are between `a rock and a hard place`...make retirement later=more tax, less state pension against the fact retirees are a big spending group....well those who have lived/worked through the golden age of pensions I.e DefBs.

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Q. regarding maximizing tax allowances mentioned above..is it best to hold PM investments in a trading or isa account?...my logic says trading as they don't produce any divi like a stock, and so return is only on capital gain when selling.

This then `allows` you to use your CGT allowance for this (and manage just under limit by selling just enough), and `save` your isas tax fre status for all the divi payers.

Agree/logical?

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1 hour ago, MrXxxx said:

Q. regarding maximizing tax allowances mentioned above..is it best to hold PM investments in a trading or isa account?...my logic says trading as they don't produce any divi like a stock, and so return is only on capital gain when selling.

This then `allows` you to use your CGT allowance for this (and manage just under limit by selling just enough), and `save` your isas tax fre status for all the divi payers.

Agree/logical?

Think I agree, although I hold some in a SIPP in order to mop up funds awaiting investing and/or to balance my asset allocations.  That gives you up to your income tax personal allowance and CGT allowance to live off which would be a lot for me.  Plus you can time things a bit - may be able to offset any major capital losses against gains, and maybe reinvest into silver, etc or vv?  Let's see what the Budget brings on the CGT (and others) front though!

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Brent spitting distance of the $60.nat gas running .

Just got to hope that nest pension crowd knew what they were doing ditching the public's exposure at the inflection point cos it sure doens't look like a long term bear from what I'm seeing.

image.png.703d69e59967e3682ec479af14db12e6.png

image.png.0bd43d1e9e4731fd80856d227d17a344.png

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2 hours ago, MrXxxx said:

Thanks Harley, I can see in some ways we are very similar investors yet in another very different...its posts like this that help me reflect on and hone my own approach I.e been just FTSE focused so far and am finding it `cramps` my investing as there's not enough companies I want to invest in without going in `balls deep`, and so as a result not diversifying/spreading the risk.

As for your last comment, agree 100%, read several book that have shown that this is where retail investors lose returns.

Yup, I had a limit of 25 stocks per two managed accounts (i.e. 4% allocation per stock) so 50 stocks to pick from the FTSE that could pay decent dividends in more of a buy and hold manner.  That took me into peripheral stocks I should not have gone into.  Stocks that TBH failed the macro test (which I was meant to be following) even without Covid, like Card Factory and Carnival.  Retail, etc FFS!  Sure, I could make a case at the time but TBH, poo!  Crazy to buy Card Factory, etc when there's a lovely Japanese chemical company out there paying a good div.  But these were in an ISA so I had little scope.

  That taught me:

. Treat tax savings as a benefit and not as a driver in any way

. Look further afield geographically

. Combine fundamental, technical and macro analysis in my buy and sell decisions and stick to them

. Treat everything more like a trade and don't be so concerned about selling down "holds"

. Leave well alone if there's nothing out there - scratch the itch some other way!

So costly lessons or an investment to charge to my educational budget!

PS: Best I shut up about Japan - a good week for several stocks even though the broad ETF I own is overbought atm.  Quite relatively large moves so hotish money?

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geordie_lurch
33 minutes ago, sancho panza said:

Brent spitting distance of the $60.nat gas running .

Just got to hope that nest pension crowd knew what they were doing ditching the public's exposure at the inflection point cos it sure doens't look like a long term bear from what I'm seeing.

image.png.703d69e59967e3682ec479af14db12e6.png

image.png.0bd43d1e9e4731fd80856d227d17a344.png

Yep but BP is still the only main oilie I track that's still down today? :S

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12 minutes ago, Barnsey said:

:ph34r:

FWIW Martin Lewis/MSE tweets mentioned this yesterday, so I assume it was covered in his programme last night.

Top one year fixed dual fuel deal was with EON, but he preferred the switch to British Gas :ph34r: as you got a years free boiler cover for the same price.  IIRC it was him on breakfast TV highlighting how expensive BG was that caused the customer exodus in c.2017?

More broadly - that's a big leap. Plus council tax increases. And telecoms...

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Another one from a thread upstairs.  What are you people doing?!

16 hours ago, mosstrooper said:

"The Bank of England has taken another step towards adding negative interest rates to its crisis-fighting toolbox.

It's given High Street banks six months to be operationally ready for them."

translation - if people dont start spending we'll take it by negative interest rates. you have been warned. you have six months to get out of cash.

I'm not really big on the conspiracy that covid was just a another printing/stimulus excuse (like the 2008 banking crisis) but am becoming more suspicious by the minute...

 

 

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Transistor Man
11 hours ago, Yadda yadda yadda said:

Any thoughts on Qualcomm? Been smacked down following earnings report. It isn't cheap, it isn't a dividend play and it isn't decomplex either. However, it will benefit from telecoms infrastructure expenditure. 5G, IoT.

I'm tempted but can't help thinking it will take a swan dive in a BK scenario.

No idea. They used to get very good royalties per phone, especially in the 3G era. However, Apple want to design their own modems now. I guess eventually integrating them on their A-series SoCs. 

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Bobthebuilder
59 minutes ago, Harley said:

Another one from a thread upstairs.  What are you people doing?!

 

Making petrol bombs while oil is cheap?

 

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19 hours ago, sancho panza said:

Looking at ANglo Pacific.Intersting play on caol-royalty streamer.Also has some interest in Uranium.Nice spread of assets but coal heavy.Looks like they bought into Uranium at the right time 2017

https://www.anglopacificgroup.com/producing/

https://www.anglopacificgroup.com/wp-content/uploads/2020/05/200527-2020-AGM-Presentation_v8.pdf

image.thumb.png.da26bfe9faa3affe54418e8849233e76.png

image.thumb.png.35d1c622de944cd0029f009d8b8d8252.png

 

https://www.voanews.com/science-health/study-chinas-new-coal-power-plant-capacity-2020-more-3-times-rest-worlds

SHANGHAI - China put 38.4 gigawatts (GW) of new coal-fired power capacity into operation in 2020, according to new international research, more than three times the amount built elsewhere around the world and potentially undermining its short-term climate goals.   

The country won praise last year after President Xi Jinping pledged to make the country "carbon neutral" by 2060. But regulators have since come under fire for failing to properly control the coal power sector, a major source of climate-warming greenhouse gas. 

Including decommissions, China's coal-fired fleet capacity rose by a net 29.8 GW in 2020, even as the rest of the world made cuts of 17.2 GW, according to research released on Wednesday by Global Energy Monitor (GEM), a U.S. think tank, and the Helsinki-based Centre for Research on Energy and Clean Air (CREA).   

 

Decl:jsut bought some Anglo Pacific

SP, thanks for posting Anglo Pacific, i'm a sucker for these royalty companies in general and this one does look good (i own some gold/silver ones, and am looking into us/canada oil/gas ones).

Anglo's divi history is also good (7% currently!). I am always on look out for 'bond substitutes' - i know they are not the same - but do think institutions will go looking for income producing bond replacements and i think royalty companies may well become their favorite.

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Yadda yadda yadda
1 hour ago, Transistor Man said:

No idea. They used to get very good royalties per phone, especially in the 3G era. However, Apple want to design their own modems now. I guess eventually integrating them on their A-series SoCs. 

Do you see 5G offering a noticeable upgrade in user experience to the average phone user? Most people browse the internet, send messages, take photos and decline spam calls. That is the current use of a phone and as far as I can see even budget models do a decent job of this. I'm sure there are some people that use more of a phone's capabilities. There is, of course, the fashion aspect at the top end. I see this as a declining percentage of the market.

What I struggle to see is the need for faster connection speeds. I might be unimaginative and myopic here. Would I truly benefit from my phone connecting to my fridge? Could it be that my online order is preprogrammed with items that are running out? Would it highlight items that I'm wasting? Could it even do a cost benefit analysis that this time I should get a smaller bottle of milk because I've got 40% of the last one left? Or suggest recipes to use up items coming to the end of their use by date? People shopping in supermarkets might get real-time alerts for personalised yellow sticker items. Scanning barcodes to pay and that gets added to your stock records. Proper and easy expenditure records. Perhaps my vacuum cleaner will alert my phone when it needs emptying. Washing machines starting when electricity is cheapest.

This does seem like a vast amount of information to be giving away. As an investor it might be profitable. Qualcomm would be a good play if this is the future.

I see that there is renewed talk that ARM could end up an independent company listed on the LSE.

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Democorruptcy

RDSB'S strategy day is next Thursday:

Quote

 

Ben van Beurden, Chief Executive Officer and Jessica Uhl, Chief Financial Officer of Royal Dutch Shell plc will host a live Q&A investors webcast of the 2021 Strategy Day on Thursday February 11, 2021 14:00 GMT (15:00 CET / 09:00 EST).

The presentation slides and video, pre-recorded by Ben van Beurden (CEO, Royal Dutch Shell plc) and Jessica Uhl (CFO, Royal Dutch Shell plc), will be published at around 09:00 GMT (10:00 CET / 4:00 EST) on our website

https://www.shell.com/media/news-and-media-releases/2021/advance-notice-strategy-day-2021.html

 

 

 

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49 minutes ago, Yadda yadda yadda said:

Do you see 5G offering a noticeable upgrade in user experience to the average phone user? Most people browse the internet, send messages, take photos and decline spam calls. That is the current use of a phone and as far as I can see even budget models do a decent job of this. I'm sure there are some people that use more of a phone's capabilities. There is, of course, the fashion aspect at the top end. I see this as a declining percentage of the market.

What I struggle to see is the need for faster connection speeds. I might be unimaginative and myopic here. Would I truly benefit from my phone connecting to my fridge? Could it be that my online order is preprogrammed with items that are running out? Would it highlight items that I'm wasting? Could it even do a cost benefit analysis that this time I should get a smaller bottle of milk because I've got 40% of the last one left? Or suggest recipes to use up items coming to the end of their use by date? People shopping in supermarkets might get real-time alerts for personalised yellow sticker items. Scanning barcodes to pay and that gets added to your stock records. Proper and easy expenditure records. Perhaps my vacuum cleaner will alert my phone when it needs emptying. Washing machines starting when electricity is cheapest.

This does seem like a vast amount of information to be giving away. As an investor it might be profitable. Qualcomm would be a good play if this is the future.

I see that there is renewed talk that ARM could end up an independent company listed on the LSE.

data harvesting and surviellence. Thats the ghastly future.

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Talking Monkey
5 hours ago, MrXxxx said:

Q. regarding maximizing tax allowances mentioned above..is it best to hold PM investments in a trading or isa account?...my logic says trading as they don't produce any divi like a stock, and so return is only on capital gain when selling.

This then `allows` you to use your CGT allowance for this (and manage just under limit by selling just enough), and `save` your isas tax fre status for all the divi payers.

Agree/logical?

Interesting debate on where to hold what. I thought on holding the big divi payers predominantly in the sipp and the ones that might multi bag mainly in the isa. The logic being if they really run then I would sell and rotate into large divi payers thus having a tax efficient income if I need it coming through the isa, as sipp access will be far away for me

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1 hour ago, Yadda yadda yadda said:

Do you see 5G offering a noticeable upgrade in user experience to the average phone user? Most people browse the internet, send messages, take photos and decline spam calls. That is the current use of a phone and as far as I can see even budget models do a decent job of this. I'm sure there are some people that use more of a phone's capabilities. There is, of course, the fashion aspect at the top end. I see this as a declining percentage of the market.

What I struggle to see is the need for faster connection speeds. I might be unimaginative and myopic here. Would I truly benefit from my phone connecting to my fridge? Could it be that my online order is preprogrammed with items that are running out? Would it highlight items that I'm wasting? Could it even do a cost benefit analysis that this time I should get a smaller bottle of milk because I've got 40% of the last one left? Or suggest recipes to use up items coming to the end of their use by date? People shopping in supermarkets might get real-time alerts for personalised yellow sticker items. Scanning barcodes to pay and that gets added to your stock records. Proper and easy expenditure records. Perhaps my vacuum cleaner will alert my phone when it needs emptying. Washing machines starting when electricity is cheapest.

This does seem like a vast amount of information to be giving away. As an investor it might be profitable. Qualcomm would be a good play if this is the future.

I see that there is renewed talk that ARM could end up an independent company listed on the LSE.

It isn't necessarily just about speed, although that is what is being touted by the phone companies.

Essentially 5G is just an increase in the amount of the electromagnetic spectrum that is being licensed for use by mobile phone companies. What this literally means is that phones will now be able to transmit on more frequencies. This could allow them to transmit data faster, but it also allows an increase in the total number of connected devices. This means that more devices can potentially be equipped with SIM cards whilst maintaining current upload / download speeds or even improving them.

The part of the spectrum being used was previously reserved for wireless audio devices, think handheld microphones etc. The mobile phone companies bought the license for this part of the spectrum when it came up for review a few years ago. Most wireless audio now transmits over bluetooth or WiFi now anyway, which use different parts of the spectrum, and the manufacturers knew this change was coming so phased out equipment which transmitted in that range.

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5G also allows for physical broadband speeds but without the expense of digging up roads to lay fibre.

I've had a 4G router at home for six months or so now, having got sick of crap service and long contracts from the likes of BT and Virgin Media. Now pay £12 a month for unlimited data and get between 20 and 50 Mbps, depending on time of day and weather. I can switch providers without notice simply by changing the SIM.

Those speeds required cable a few years ago. Now the telcos are up to several hundred Mbps on physical links. 5G will allow mobile telcos to do that without wires.

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