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

[Harley]

49 minutes ago, DoINeedOne said:

I did wonder if Sprotts Uranium Fund would be available on HL as his others are

 

When it will be available who knows

Just an fyis, not recommendations, but I bought an opening position (U.TSX) ahead of the acquisition.  Not sure which broker.  Also been moving to the Sprott gold and silver funds as hopefully a derisk given various comments.

[DoINeedOne]

11 minutes ago, Harley said:

Just an fyis, not recommendations, but I bought an opening position (U.TSX) ahead of the acquisition.  Not sure which broker.  Also been moving to the Sprott gold and silver funds as hopefully a derisk given various comments.

Does not seem to be available on HL

[Majorpain]

1 hour ago, planit said:

FT article today saying that Boris wants to agree "at least one nuclear plant" before the next election. I feel there will be a rush to nuclear once peoples negative perceptions are overcome.

It is an interesting article, one of the comments about billpayers taking the risk and EDF (French state...) taking the profits does ring true.  Rather than Sizewell C it would be better used to build up a piggy bank for some SMR's, i imagine the consortium would be after about £8bn for a run on 4 on one site close to the main offsite manufacturing location to work out the kinks on the first ones.

In other (good) news, where is the steel coming from for all that!

 

[planit]

48 minutes ago, DoINeedOne said:

Does not seem to be available on HL

I found "URANIUM PARTICIPATION CORP COM NPV" only when choosing Canada as the country on ii, the symbol was just 'U'

 

[DurhamBorn]

6 minutes ago, Majorpain said:

It is an interesting article, one of the comments about billpayers taking the risk and EDF (French state...) taking the profits does ring true.  Rather than Sizewell C it would be better used to build up a piggy bank for some SMR's, i imagine the consortium would be after about £8bn for a run on 4 on one site close to the main offsite manufacturing location to work out the kinks on the first ones.

In other (good) news, where is the steel coming from for all that!

 

The only problem i have is that is on the South Bank of the Humber,to me those Mercians,and Wessex are foreign lands.It should of been on the north bank in Northumbria.

Amazing how this reflation is kicking in and amazing how the MSM and most investors havent worked out the massive energy demands needed for a cycle.

[ThoughtCriminal]

[23rdian]

19 hours ago, Hancock said:

Its got horrendous reviews, fraud is rife and 18% of its customers dont seem happy.
https://uk.trustpilot.com/review/freetrade.io

Reviews seem okay to me. I use it as as backup when I have no trading credit with ii. Although it's not really much cheaper sometimes. I like the app though. I am still waiting for FreeTrade to approve me but that seems like they got their business model wrong.

[HousePriceMania]

1 hour ago, 23rdian said:

Reviews seem okay to me. I use it as as backup when I have no trading credit with ii. Although it's not really much cheaper sometimes. I like the app though. I am still waiting for FreeTrade to approve me but that seems like they got their business model wrong.

https://uk.trustpilot.com/review/fundingcircle.com
 

Funding CircleReviews 

10,605  •  Excellent

 

 

Careful who you believe:

 

1 star....

 

 Jun 2021

 

 

DONT INVEST IN FUNDING CIRCLE...

DONT INVEST IN FUNDING CIRCLE...
Funding Circle have removed the secondary market for their loans so investors now have NO METHOD of liquidating their loans. I am raising a formal complaint with the Ombudsman. They have left their investors high and dry. BUYER BEWARE!

 

 

5 stars.

6 hours ago

 

 

From start( online application) to…

From start( online application) to finish (receiving money)was less than a week! A big thanks to Greg 
who helped us. We wouldn’t go anywhere else for any funding.

 

 

 

I know who from personal experience who's review is more accurate when it comes to trusting a business and if you want me to narrow it down, it's not the 5 start one.

[23rdian]

1 hour ago, 23rdian said:

Reviews seem okay to me. I use it as as backup when I have no trading credit with ii. Although it's not really much cheaper sometimes. I like the app though. I am still waiting for FreeTrade to approve me but that seems like they got their business model wrong.

Meant waiting for Trading212 to approve me. I already use FreeTrade as stated.

[23rdian]

10 minutes ago, HousePriceMania said:

https://uk.trustpilot.com/review/fundingcircle.com
 

Funding CircleReviews 

10,605  •  Excellent

 

 

Careful who you believe:

 

1 star....

 

 Jun 2021

 

 

DONT INVEST IN FUNDING CIRCLE...

DONT INVEST IN FUNDING CIRCLE...
Funding Circle have removed the secondary market for their loans so investors now have NO METHOD of liquidating their loans. I am raising a formal complaint with the Ombudsman. They have left their investors high and dry. BUYER BEWARE!

 

 

5 stars.

6 hours ago

 

 

From start( online application) to…

From start( online application) to finish (receiving money)was less than a week! A big thanks to Greg 
who helped us. We wouldn’t go anywhere else for any funding.

 

 

I wouldn't believe anything on TrustPilot. They seem like a shill.

[JimmyTheBruce]

2 hours ago, 23rdian said:

Reviews seem okay to me. I use it as as backup when I have no trading credit with ii. Although it's not really much cheaper sometimes. I like the app though. I am still waiting for FreeTrade to approve me but that seems like they got their business model wrong.

Same.  I'd not put the same amounts with them as I have in ii, but when it comes to smaller ladders and stocks that simply can't be found elsewhere (such as TIM, which was being discussed earlier) I find them very useful.

I await their imminent denouement as a front for drugs and whores.....

[Hancock]

2 hours ago, JimmyTheBruce said:

 

I await their imminent denouement as a front for drugs and whores.....

Nowt wrong with that!

8 hours ago, DurhamBorn said:

The only problem i have is that is on the South Bank of the Humber,to me those Mercians,and Wessex are foreign lands.It should of been on the north bank in Northumbria.

Amazing how this reflation is kicking in and amazing how the MSM and most investors havent worked out the massive energy demands needed for a cycle.

Only problem is the monopiles are such basic structures and things to make, that a British company ought to be doing it.

What is wrong with us as a nation to not have the intellect to create such simple companies that need a few welders and a factory to put them in. Its a big steel pipe with cement poured into the bottom!

Cheaper housing on that side of the river, if the bridge ever becomes free, then it'll see HPI.

[sancho panza]

On 05/07/2021 at 14:30, Noallegiance said:

 

fascianting watch.Thanks for psoting.Jezza clearly enjoys the thread.

[sancho panza]

11 hours ago, Noallegiance said:

It will be interesting to see if the contrarian mindset plays out over the coming months i.e. when there's open worry the market will climb, but a sentiment of "...this is great and will continue!" is a sign of the end.

I've been saying for sometime,that where we currently are diesn't feel like a top because as you say,tops typically represent peaks in good sentiment.

Soemtiems the simplest tells are the best.

11 hours ago, planit said:

FT article today saying that Boris wants to agree "at least one nuclear plant" before the next election. I feel there will be a rush to nuclear once peoples negative perceptions are overcome.

 

 

The  decisions are made worldwide so when a country commissions a nuclear plant  and starts promoting positive propaganda other governments will gain confidence and jump on the bandwagon.

I would like to invest but this will take some patience as the ups and downs will be months/years in the making.  

We've been long Cameco since about 2017,very littel else to gain direct exposure to nuclear.It did nothing for 3/4 years and then has doubled in 6/7 months.

Exactly the sort of trade thsi thread has pushed from day one .Position early then do nothing.

[sancho panza]

On 06/07/2021 at 20:52, Cattle Prod said:

On oil, most of what you're hearing is noise. Oil is very short term overbought atm, and as I said a week or so ago, badly needs a 10, maybe 15% correction. Opec is just the narrative to fit that fact, their actions are actually bullish. I hope today is is the start of it, loads of Johnny come latelys hopping on board for the train to $100 oil need to be thrown off. They didn't put in the 3 year grind we did to get here, so Mr. Market will cut off their weak hands.

I'll be interested to see the market reaction to Thursdays inventory report.

I've been waiting for a decent pullback for a while.

Looking at the situtaiton currently,we can say there's been a 7% pullback.I keep waiting ofr a deeper sell off but we jsut don't get it.

Must admit that my specualtive buying has moved from RDSB where we've been heavily active last two motnhs to BP.

 

14 hours ago, Loki said:

Shell second quarter 2021 update note

7 July, 2021

The following is an update to the second quarter 2021 outlook. The impacts presented here may vary from the actual results and are subject to finalisation of the second quarter 2021 results, which will be announced on July 29, 2021. Unless otherwise indicated, all outlook statements exclude identified items.

Strong cash generation supports additional shareholder distributions in the second half of 2021 
----------------------------------------

As a result of strong operational and financial delivery, combined with an improved macro-economic outlook, Shell will move to the next phase of its capital allocation framework and, subject to final Board approval, increase total shareholder distributions to within the range of 20-30% of CFFO, starting at the Q2 results announcement. The level of additional distributions will be determined with full visibility of the Q2 financial results.

In the second quarter, Shell expects to have further reduced its net debt, although the extent of the reduction will be moderated by working capital movements. In conjunction with the increased distributions, Shell will retire its net debt milestone of $65 billion and will continue to target further strengthening of its balance sheet and AA credit metrics. 2021 cash capex will remain below $22 billion
 

I havent traded a company's results in a long time as it's jsut not the sort of trade we do.But I was discussing with my dear old mum whether we have a punt options wise on BP/RDSB results-late Jul iirc.Genuinely tempted.

Both shares are depressed,RDSB less so of late witbh a run past 1400 but last day or two while Ive been workign BP has caught my eye.

on another thread,I'd be interested to know what names the hive mind has been buying in PM miners.

I'm looking at Barrick,Anglo,Kinross,FRes.

[sancho panza]

A full repsot of a Wolf St article.my ato pologies to the LPP but it's clearly relevant

https://wolfstreet.com/2021/07/06/bank-of-japan-stops-qe-reserve-bank-of-australia-starts-tapering-bank-of-canada-bank-of-england-already-tapering-amid-shock-and-awe-rate-hikes-in-emerging-markets/

Bank of Japan Stops QE, Reserve Bank of Australia Starts Tapering, Bank of Canada & Bank of England Already Tapering, Amid Shock-and-Awe Rate Hikes in Emerging Markets

by Wolf Richter • Jul 6, 2021 • 147 Comments

The Fed is a laggard, now discussing when and how to taper QE. The ECB is an even bigger laggard, as inflation begins to rage.

By Wolf Richter for WOLF STREET.

The Fed is a laggard, not the leader, in ending the ridiculously easy money policies. At the ECB, internal resistance is building against its asset purchases but for now is getting squashed, leaving the ECB even further behind than the Fed.

The Swiss National Bank continues full tilt, but it doesn’t buy Swiss assets; it prints francs and dumps those printed francs for assets denominated in euros, dollars, and other currencies, including US stocks, which is a different ball game and works as long as enough foreign investors are silly enough to buy these Swiss francs.

But other central banks have already started the process of tapering asset purchases or hiking rates. The Bank of Japan, which started tapering months ago, has now completed its tapering and its total assets actually fell. And some central banks have announced rate hikes, and others have already imposed hiked rates, including shock-and-awe rate hikes in Brazil, Russia, and Turkey to tamp down on raging inflation.

So these are the major central banks that are ever so gingerly stepping away from the ridiculous easy money policies.

Reserve Bank of Australia announced today that it would taper its QE, by reducing weekly purchases of government bonds by A$1 billion a week, to A$4 billion a week.

The Bank of Japan, one of the most voracious money printers over the years in terms of the size of its economy, behind only the tiny Swiss National Bank, has already been tapering its asset purchases for months. With the BoJ, one has to look at the numbers, not at the mumbo-jumbo in the press releases. The BoJ publishes its balance sheet numbers every 10 days.

The balance sheet data release on July 2 revealed that its total assets, after months of slowing purchases, actually fell by ¥7.7 trillion ($70 billion) at the end of June compared to the end of May, to a still gargantuan ¥717 trillion ($6.5 trillion):

The three-month moving average of its monthly QE purchases shows the ongoing trend: In April, May, and June, its total assets increased by an average of only ¥0.78 trillion per month, the smallest increase since the beginning of Abenomics in 2012:

The Bank of Canada announced the first reduction in its purchases of Government of Canada bonds in October last year, from C$5 billion to C$4 billion, when it also ended buying mortgage-backed securities. In March 2021, it started unwinding its liquidity facilities, citing “moral hazard” as reason. In April, it announced a further reduction in its purchases of Government of Canada bonds, to C$3 billion, citing “signs of extrapolative expectations and speculative behavior” in the housing market.

The assets on its balance sheet have now dropped from C$575 billion at the peak in March, to C$481 billion as of June 30:

The Bank of England announced in May that it would reduce its asset purchases, tapering the bond purchases from £4.4 billion a week to £3.4 billion a week.

Like the Bank of Canada had denied in October that its tapering was actual “tapering,” the BoE also denied that its tapering was tapering, calling it instead an “operational decision” that “should not be interpreted as a change in the stance of monetary policy.”

The reason this tapering isn’t tapering, according to BoE governor Andrew Bailey at the post-meeting press conference, is that the BoE didn’t change its “fixed amounts” of its overall QE target of £895 billion, it’s just buying less per week to get to this target.

The Central Bank of Turkey shocked the financial world in March with a shock-and-awe rate hike of 2 percentage points, from 17% to 19%, to tamp down on raging inflation and prop up the lira, when economists had expected a rate hike of half that magnitude. Shortly after the shock-and-awe rate hike, Turkey’s President Recep Tayyip Erdoğan came up with his own shock-and-awe move: he fired the governor of the Central Bank. Under the new governor, the policy rate has remained at 19%.

The Central Bank of Brazil has hiked its policy rate three times by a total of 2.25 percentage points, since mid-March, 75 basis points each time. The first of the rate hikes was shock-and-awe, with economists expecting much less of a hike. Since March, the Central Bank has raised its policy rate from 2.0% to 4.25%, and has put more rate hikes on the table, to tamp down on raging inflation.

The Bank of Russia has been “surprising” economists with multiple rate hikes, and steeper rate hikes than expected, starting March 19 with a 25-basis-point rate hike, when none was expected, followed on April 23 with a 50-basis-point hike, and on June 11, with another 50-basis-point hike. Over the period, it had raised its policy rate from 4.25% to to 5.50%.

The next policy meeting is scheduled for July 23. And Bank of Russia Governor Elvira Nabiullina has already prepared the markets for the possibility of a shock-and-awe rate hike of up to 100 basis points. The reason: raging inflation, which the Bank of Russia, as she said, sees as “not transitory.”

The Bank of Mexico hiked its policy rate by 25 basis points on June 24, to 4.25%, also surprising economists that had not expected a rate hike. No one ever appears to be expecting rate hikes.

Norges Bank, the central bank of Norway, which never got into QE, confirmed repeatedly that it would start raising interest rates in the second half of this year, now likely in September, and put two more rate hikes on the table for next year.

The Riksbank, Sweden’s central bank, announced in late April that it is following through on its plan and end its QE program by late 2021.

The Fed itself is now discussing when and how to reduce its asset purchases. The Fed still claims that it sees the raging inflation as “transitory” or “temporary.” In its announced sequence, it will end its asset purchases first; then after the balance sheets stops growing, the Fed will hike its policy rates; then later, the Fed may shrink its balance sheet. This was the sequence last time, when inflation was still below the Fed’s target, and that’s the plan going forward.

The gradual pace assumes that this raging inflation, the worst since 1983 even according the Fed’s own low-ball measure, of today is truly “temporary.” But if it turns out that business and consumer behavior with regards to inflation has changed — as I see and allege all over the place, including in the largest retail category, auto sales — which would render this raging inflation much more persistent, then the Fed may belatedly come up with its own shock-and-awe treatment to get a handle on it.

[DoINeedOne]

I always enjoy listening too Tony Deden 

From Twitter a quick read

A great piece on resilience from Michael Weeks of Edelweiss Holdings (headed by Tony Deden)

Small clip from the PDF 

A more effective way to add resilience to one’s savings is by ruthlessly avoiding its opposite: economic fragility.

Thankfully, unlike resilience, fragility is often staring you in the face. This is where financial analysis really starts to shine. Is the company dependent on a few key customers and suppliers? Is the company overleveraged or buying back shares at indecent prices, just because it can? Are there elements of pricing power, or do their earnings evaporate at the first sign of trouble?

Could a government ruling or decree suddenly break their business? Can their customers really afford to buy their products next year?

There are about 2’700 listed businesses presently valued at more than $1 billion in Europe and North America. One-fifth of them were loss-making in the three years before Covid.

Thirty percent were loss-making in the last twelve months. If a company is struggling during ‘normal’ times, what does that say about its ability to survive when times are hard? Admittedly, fragility can be hidden too and will sometimes slip through the cracks, but much of the time it can simply be avoided.

 

https://edelweissjournal.com/pdfs/EdelweissJournal-020.pdf

[MrXxxx]

If you have shares in shale best hope that you picked the right company!

https://www.ft.com/content/0d60da9b-54ad-4027-b054-2ff25261e506

[DoINeedOne]

15 minutes ago, MrXxxx said:

If you have shares in shale best hope that you picked the right company!

https://www.ft.com/content/0d60da9b-54ad-4027-b054-2ff25261e506

https://archive.ph/HCOD4 for anyone getting paywalled

[Barnsey]

19 hours ago, DurhamBorn said:

Amazing how this reflation is kicking in and amazing how the MSM and most investors havent worked out the massive energy demands needed for a cycle.

Current reflation sentiment check:

Wage inflation becoming a real likelihood too, which will only add fuel to everything in time.

 

Giveth to those who spend the most...

UK employers struggle with worst labour shortage since 1997

https://www.theguardian.com/business/2021/jul/08/uk-employers-struggle-with-worst-labour-shortage-since-1997

And taketh away from those who spend the least...

 

[DurhamBorn]

24 minutes ago, Barnsey said:

Current reflation sentiment check:

Wage inflation becoming a real likelihood too, which will only add fuel to everything in time.

 

Giveth to those who spend the most...

UK employers struggle with worst labour shortage since 1997

https://www.theguardian.com/business/2021/jul/08/uk-employers-struggle-with-worst-labour-shortage-since-1997

And taketh away from those who spend the least...

 

Its as clear as day to a macro person what they are doing and its simply to lift everything up by around 30%,liquidity.Thats the level where tax should increase faster than spending.However that relies on governments keeping public sector pensions,pay and all benefits much below real inflation.The UK is in such a bad position because of the amount of public sector handouts.There is a huge structural problem there.

Wages are going up arent they.We have said it all along,even when it seemed everyone else was saying it was going to be mass unemployment and collapsing wages.In simple terms shipping items,especially bulky items a long way has dozens of inflation touch points.In a reflation each one adds its own costs.Suddenly  its much cheaper to pay a £14 an hour wage here,than a £6 one in China.Small items of course no so much.Its all about unit cost in the shipping/mocing etc.

This is why iv been positioning into sectors that can hopefully leverage the inflation,or at worst keep pace.

The key is patience and confidence.Some sectors will pop faster than others,as @sancho panza mentioned a prime example in Cameco.

Its fascinating watching this cycle turn and build,and the fact most still dont accept it.Markets will keep shaking people out though and top slicing when you can and adding again or others on pullbacks would likely add to gains,if your good at it.

 

[M S E Refugee]

4 minutes ago, DurhamBorn said:

Its as clear as day to a macro person what they are doing and its simply to lift everything up by around 30%,liquidity.Thats the level where tax should increase faster than spending.However that relies on governments keeping public sector pensions,pay and all benefits much below real inflation.The UK is in such a bad position because of the amount of public sector handouts.There is a huge structural problem there.

Wages are going up arent they.We have said it all along,even when it seemed everyone else was saying it was going to be mass unemployment and collapsing wages.In simple terms shipping items,especially bulky items a long way has dozens of inflation touch points.In a reflation each one adds its own costs.Suddenly  its much cheaper to pay a £14 an hour wage here,than a £6 one in China.Small items of course no so much.Its all about unit cost in the shipping/mocing etc.

This is why iv been positioning into sectors that can hopefully leverage the inflation,or at worst keep pace.

The key is patience and confidence.Some sectors will pop faster than others,as @sancho panza mentioned a prime example in Cameco.

Its fascinating watching this cycle turn and build,and the fact most still dont accept it.Markets will keep shaking people out though and top slicing when you can and adding again or others on pullbacks would likely add to gains,if your good at it.

 

As I have got older it still amazes me how many things in Life are Counter-intuitive, you have a fantastic skill and a unique way of looking at things. 

[DoINeedOne]

20 hours ago, planit said:

I found "URANIUM PARTICIPATION CORP COM NPV" only when choosing Canada as the country on ii, the symbol was just 'U'

Hopefully the Sprott Uranium Trust will be added to HL

The vote from yesterday

#Uranium Participation Corp Shareholders voted 99.92% in Favour of the transition to become the Sprott
 Physical Uranium Trust

[sancho panza]

1 hour ago, DoINeedOne said:

https://archive.ph/HCOD4 for anyone getting paywalled

Thanks for psoting that.I won't subscribe to FT for a variety of political reasons and also that it isn't generally worth reading.

Harold Hamm,clearly a basement dweller......I claim my £5.

[Democorruptcy]

22 hours ago, planit said:

FT article today saying that Boris wants to agree "at least one nuclear plant" before the next election. I feel there will be a rush to nuclear once peoples negative perceptions are overcome.

Anglesey has a Tory MP so it could be Wylfa. Stick it in Wales in cases it leaks! (Bugger... I can see it from my window).