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


spunko

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Re freeports: "The SNP Scottish government - which has previously been critical of freeports - now plans to introduce its own scheme, dubbed "green ports"."

How are they not embarrassed when they spout this shite? They've rebadged it you fool!

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Anyone got insights into how China is likely to perform going forward? Is their economic recovery stable or just build more empty cities and roads to nowhere?

I was just reading a local op-Ed on property (bullish, always bullish 🙄) and they raised a good point that a slowing Chinese economy could bust commodity prices in 2022. including oil, iron ore, coal and base metal. 

This would demolish today’s inflation panic, most particularly here in Australia, which will see a whole new round of income destruction in the local Budget and wages as tumbling terms of trade crush nominal growth.

It’s a risk that I haven’t seen discussed much post pandemic 

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Interesting to hear the North East mentioned in the budget, tying in with this thread.  Does anyone have any more thoughts on what other areas will benefit from the reflation?

I'd like to move to East Anglia one day, mostly for family reasons, but prices there seem a bit bubbly.  Would help soften the blow if some decent job opportunities appeared there!

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Yadda yadda yadda
11 minutes ago, DurhamBorn said:

From the budget document,

"The UK’s relatively large stock of inflation-linked debt increases the UK’s sensitivity to inflation; a 1 percentage point increase in RPI inflation would increase spending on debt interest by £6.9 billion. However, the sensitivity of debt interest to RPI is largely unchanged from March 2020, which in part reflects the government’s strategy to reduce the share of inflation-linked debt in total issuance."

Now i wonder why they would want to get rid of inflation linkers ;)

There will probably only be the ones in the BoE pension scheme left!

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Castlevania
3 hours ago, sancho panza said:

It's not an exact formula.I take a look through the last full years income statement and give it a score.It's not a deep dive hence why I only use it with 'spray n pray'

'spray n pray' works for me because deep dives and single company investing in sectors are fraught with the risk associated with the data that gets puts in and aslo with the operations for that company.

The reason Harmony may look skewed to you is that it's full year is to June and thus the data that the coma score is based on is 6/9 months out of date.The bulk of companies full years run into Dec but there's a few miners that don't.BT/Vodafone are two Telecoms that run into Mar/June iirc.

So yes,the HMY score would improve if I used the last half year but the premise of 'spray n pray' for me,is using full year data which means some companies don't look as attractive as they maybe shoudl do...Hence there's DYOR across most of the thread.

Was there any reason you excluded Polymetal? Their full year results were released today and from a cursory glance were good.

Less good was that out of all of 20 employees who contracted Covid-19; 5 died. 

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Yadda yadda yadda
29 minutes ago, geordie_lurch said:

Yep at least the BBC are publicly stating this, like you say following the brains on here doing so earlier...

 

£8bn is the equivalent of around 1p on the basic rate. A little more than that. But focussed on those around the thresholds as a larger proportion of their income moves into a higher tax bracket.

That £8bn has to be based on predicted wages and employment levels. So there must be inflation guestimates in the report. Probably from the 'independent' office of budgetary responsibility. If inflation is higher than the prediction the money raised will be too.

I expect I'll work out what the impact on me is and increase pension payments by the equivalent. Slightly messes up my strategy of shifting more towards an ISA but needs must when the devil drives.

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8 hours ago, RJT1979 said:

Looks like furlough till next April then. I called that month's ago. Paying airline pilots 2.5k a month to watch TV. Could carry on for years and nothing to do with virus anymore.

Paying furloughed pilots to watch TV eh? Actually, isn't that what they mostly do during their day job in any case!!

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Castlevania
2 hours ago, sancho panza said:

The problem is with the coma scores that they don't really assess individual company potential beyond the chart score which gives an approxiamtion of it's current value(obviously imho natch:D:ph34r:).

We have largish psotions in a lot of goldies already-although we sold around 30% (by invesment price)of our holdings in Sept(Although I kept the $1-60 HMY).But looking at these scores EGO(we're alreayd in at $8),B2G($2-75 or so),Yamana($3),KGC $3.75 or so) and barrick($15 or so) could all warrnat further invesment as we move to a more difficult phase in terms of the broader investment outlook.

As i've said previously,I'm looking to offload the royalty companies  we own Osisko and Sand and then redeploy that here into the above.

Gradually,our protfolio in PM's is evolving into some solid mid tiers and above,with the leverage being run in some chunkier than they should be psotions in Rio2/Minera Alamos/New Gold.

You know anthing that's not on the list that's worth a look K?

You excluded everyone’s favourite Mighty Panther ;)

D85D0F98-7223-47AC-BAFD-E35219B1F375.jpeg

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The Idiocrat
1 hour ago, Bricormortis said:

If anyone has good intel on Roscan Gold I would be obliged. :) West African based, near the necessary infrastructure, top management team allegedly. Other miners in the area so permitting should not be insurmountable. Minnow price 0.47cad. 128 million cad market cap. 274 million shares.

From their website ....

Roscan Gold Corporation (TSXV.ROS) is a Canadian public company listed on the TSX Venture Exchange, which is focused on the acquisition and evaluation of gold properties in West Africa. Roscan’s initial prospective gold exploration project is the Kandiole Project located in West Mali. The Company has assembled a significant land position in the prolific gold prospective Birimian rocks of west Mali and continues its efforts to acquire further permits in this region with the goal to expand its existing land package in West Africa.

Roscan has assembled a strong, highly successful management and exploration team led by Nana Sangmuah, Roscan’s President and CEO, Gregory Isenor, P.Geo, Executive Vice-Chairman, John Learn, Roscan’s Exploration Manager and, Touba Mining SARL. This exploration team is highly experienced and has been very successful in working in this area and in this geological environment.

 

They’re on my watchlist. This is a video interview of one of their main shareholders who now sits on their board. Pretty impressive guy, although of course he’s wanting the price to go up.

ETA: Fuck it, just bought a small holding as a punt.

 

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23 minutes ago, Froggy2000 said:

Interesting to hear the North East mentioned in the budget, tying in with this thread.  Does anyone have any more thoughts on what other areas will benefit from the reflation?

I'd like to move to East Anglia one day, mostly for family reasons, but prices there seem a bit bubbly.  Would help soften the blow if some decent job opportunities appeared there!

The Humber area so you could go for North Lincolneshire.Mind you i was seeing a girl from Sheffield  and we went to Cleethorpes for the day and drove through Grimsby.Iv never seen anything as run down.Im actually thinking of buying something in Bridlington,my partner has family there we get on really well with and hes a builder so we could rent out for holiday lets and he would sort any problems.

 

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1 hour ago, sancho panza said:

allegedly looks to be the key word there.it's not a minnow price if the 2019 balance sheet is still valid.

full year was was Oct 20 so surprising no results by now.or not surpsising as the case may be.

image.png.bb97fb4a5a8fcf1b89b3c363c4c61947.png

At first glance, it's an explorer with yeeears to go before any production (assuming they're even planning to ever produce instead of exploring & selling) so don't expect fireworks in financials. Explorers are money pits and compulsive dilluters until they strike gold, literally. Highest risk, highest reward.

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16 minutes ago, DurhamBorn said:

The Humber area so you could go for North Lincolneshire.Mind you i was seeing a girl from Sheffield  and we went to Cleethorpes for the day and drove through Grimsby.Iv never seen anything as run down.Im actually thinking of buying something in Bridlington,my partner has family there we get on really well with and hes a builder so we could rent out for holiday lets and he would sort any problems.

 

I take my kid to Brid to criticise all the fat people, she gets embarrassed but my word there are an abundance of porkers displaying their tattoos in that town.

Cheap as chips for property though, probably the cheapest and relatively safe place there is oop north.

Roads are shite to get out of there though.

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31 minutes ago, DurhamBorn said:

my partner has family there we get on really well with and hes a builder

I thought your partner worked for the council and was female? o.O

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geordie_lurch

A good summary of what today's budget means in terms of the BIG numbers for lay people like myself via ZH here...

Quote

...Goldman summarizes that "the announced package was larger than widely expected (by around £40bn), with public sector net borrowing(PSNB) in the coming fiscal year of £235bn and the debt-to-GDP ratio reaching around 110% in 2023-24."

...

Today’s updated projections by the Office for Budget Responsibility (OBR) show public sector net borrowing (PSNB) at £234bn (10.3% of GDP) in 2021-22, notably larger than the £185bn average expectation across ‘City’ forecasters. While somewhat smaller than Goldman's expectation of a £250bn PSNB in the coming year, some of this is accounted for by less borrowing this year (£355bn vs. £394bn projected in November). In outer years, the OBR projects a sizeable decline in the PSNB to around £85bn in 2023-24 (vs.£100bn projected in November)

Although Goldman continues to expect a slower pace of fiscal consolation than the OBR, the bank sees the debt-to-GDP ratio as likely to reach around 110% in 2023-24.

What is more troubling is that to fund this deficit, the UK now plans £295.9BN in bond sales in 2021-2022, up from £249.5BN expected, which prompted us to ask if more QE is coming:

 

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38 minutes ago, Hancock said:

I take my kid to Brid to criticise all the fat people, she gets embarrassed but my word there are an abundance of porkers displaying their tattoos in that town.

Cheap as chips for property though, probably the cheapest and relatively safe place there is oop north.

Roads are shite to get out of there though.

£5.99 for a big Yorkshire at Nobles amusements and £2.15 a pint in the New Inn does me fine.The roads out are rubbish though like you say I hate going around Scabby on the way home,so i tend to go the York way.They are slowly improving the road to Scabby.

 

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10 hours ago, Noallegiance said:

Anyone else feel mild disappointment at the prospect of not being contrarian any more?!

Speak for yourself!! ...For example, some bloke on here - 'Harley' I think hs called (don't think he posts here much(!)) - has recently asked on here for votes just to get him to 10k reps. I point blank refused to play along - how's that for contrarionism?!?                                                                                                                                       Btw, you'll find Harley's post request on the previous page to this one (whilst there, and in case you dought me, you'll note that I haven't voted). ...However, am I just double-bluffing and is this just a blatant ploy attempt to ramp Harley's rep count? You bet it is!! ...Harley is currently stuck on 10,018, but i expect him to surpass this, with you lot sending him on his own personal melt-up before midnight. So get voting, you have been warned!!!                 (my contrarion principles, prevent me of course from participating)

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Lightscribe
3 hours ago, Hardhat said:

I'm overweight in PM miners and getting a bit fucked at the moment portfolio wise, but this discussion is making me want to add more xD

I am slightly worried that BTC will take over from PMs as a store of value for the younger generation though. I know loads of people my age who hold BTC or other crypto, and barely any that hold PMs or miners.

I wouldn’t worry. BTC will drop with the S&P500 in the BK, but once the real slap in the face (with a wet fish ;)) of inflation is felt in everyday life, both gold/silver and crypto will run together (IMO obviously) as the sentiment of what worked for the last 40 years has changed and no longer applies.

The younger generation is investing in physical silver as well as crypto regardless, they understand it’s value, it’s industrial use and its role with green energy and how the price has been manipulated over the years.

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59 minutes ago, DurhamBorn said:

£5.99 for a big Yorkshire at Nobles amusements and £2.15 a pint in the New Inn does me fine.The roads out are rubbish though like you say I hate going around Scabby on the way home,so i tend to go the York way.They are slowly improving the road to Scabby.

 

Thanks DurhamBorn.  I'll be sure to check out some of these spots during my UK holiday break once lockdown is over!

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OK so the Tories have now spent 400bln, but there doesnt seem to be much set aside for road building, house building etc etc... which is the far quicker route to job creation.

Is this likely to begin, as 15 Billion or so for greeny issues doesnt seem to cut it.

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Don Coglione
2 hours ago, DurhamBorn said:

The Humber area so you could go for North Lincolneshire.Mind you i was seeing a girl from Sheffield  and we went to Cleethorpes for the day and drove through Grimsby.Iv never seen anything as run down.Im actually thinking of buying something in Bridlington,my partner has family there we get on really well with and hes a builder so we could rent out for holiday lets and he would sort any problems.

 

The clue is in the name.

Bettered only by Scunthorpe.

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6 minutes ago, Barnsey said:

GOD. HELP. US.

 

More than half live off the state,benefits and wages.Most dont understand tax allowances and fiscal drag.Lambs to the slaughter.Luckily they left pensions and ISAs alone and we can leverage their inflation.

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Yadda yadda yadda
55 minutes ago, Barnsey said:

GOD. HELP. US.

 

People understand that their furlough money will still be paid. They understand duty freeze on booze and fuel (did they freeze fags too?). They understand £20 per week for universal credit recipients. They don't care about corporation tax as it doesn't affect them directly. They don't understand the impact of freezing tax thresholds, especially as they don't expect inflation.

The only surprise is that Tory voters are more in favour than Labour. This is a tax and spend budget. Shows how many just blindly support their team.

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leonardratso

RE BT et al;

(Sharecast News) - BT Group shares surged on Wednesday after chancellor Rishi Sunak announced a new investment tax super deduction policy in the budget.
Under the scheme, companies investing in new plant and machinery assets in the next two years will be able to cut their tax bills by 130% of the cost.

The super deduction will allow businesses to cut their tax bill by up to 25p for every £1 they invest.

BT, which is currently investing millions of pounds to upgrade its UK broadband network to fibre optic, rallied on the news and by 1510 GMT, the shares were trading up 6.2% at 133.65p.

Neil Wilson, chief market analyst at Markets.com, said: "BT has emerged as one of the big winners from the budget as the super deduction tax relief will allow it to offset its fibre infrastructure spending."

He added: "Any capital intensive projects should be winners."

 

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11 hours ago, Bricks & Mortar said:

Ha! Same here. 
Need a new truck because the old one has the tin worm.  Considering a Toyota Dyna.  Wondering if I can import one from Japan, or if shipping costs will kill me.  All the Dynas made in Portugal were 3.0D4D.  But if I import from Japan, I could get a 2.0 petrol instead and save several grand.    Does about 6000 miles a year. 

So, I'm thinking the diesel might do 25mpg, and the petrol 15mpg.  Present day, the petrol costs £750 a year more.  I guess that would increase with inflation, but so too would the cost of injectors, DPF's, fuel pumps and the like.

In practice, I'll probably just buy a truck, petrol or diesel, if it looks good condition, and especially if its setup the way I want it (with a tipper or tail-lift).

Funny you should mention that.  I've been looking at plant as an inflation hedge or as a way of moving cash to assets.  Bob Cat or telehandler.  Maybe a compact tractor.  Short of storage space though. 

PS:  Log splitter too.  Blooming big one!

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