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

[JMD]

3 hours ago, sancho panza said:

I was looking at Gazprom and Lukoil. Any others you know of that I could have a buthcer's at Errol?

 

I'm with @kibuc on Sandstrom. Some of teh royalty co.s have had great runs and I would presume as the bull develops, then the miners will accelerate.

We own Sand (0.8%) and Osisko(0.3%) as part of our PM exposure.

thanks SP

re the 'Russians'... have you looked at Rosneft? It operates the gas lines into eastern Europe. BP own 20% of Rosneft but I seem to recall BP had to invest in return for Russia issuing it licenses to operate... though could be wrong on that? 

[sancho panza]

1 hour ago, JMD said:

Tdog, the sector overall is cheap, but I think you'll find on a company basis, reason is most have high debt or are mostly into shale, or both!... However, some in there are 'good', i.e. i've got devon energy and vermillion. Not advice of course, please dyor. 

 

There's a lot of cross overs between FCG and XOP (oil& Gas exploration/production) and also a few in FCG pop up in XLE as well.I scored all these on the coma scale a while back for a spray n pray op in the two sectors.Then weighted by market cap for purchase-you gotta split tehm somehow ..and the bigger they are the more likely they are to survive,smaller they are the more likely to triple bag or go bust.

In both FCG and XOP +SCS score =/>17

DVN 44334 17

CXO 24544 19

XEC 43344 18

EQT 42344 17

CNX 53344 19

AR 53334 18

 

only in FCG

ENBL 33444 18

ECA 52344

Dyor etc

 

Decl:I merged all the ones that looked good from FCG/XOP/XLE(and that aren't big oil eg XOM) and bought first tranche last week .CNX + AR missed the cut as market cap too small for my liking.

Only one missing from above is PXD 18

 

 

1 hour ago, JMD said:

thanks SP

re the 'Russians'... have you looked at Rosneft? It operates the gas lines into eastern Europe. BP own 20% of Rosneft but I seem to recall BP had to invest in return for Russia issuing it licenses to operate... though could be wrong on that? 

Looking at them all but charts are toppy.Wish I'd looked a year back.All 3 kicking off huge amount of net income/free cash flow.

[Majorpain]

https://www.theguardian.com/money/2019/oct/23/peer-to-peer-lender-funding-secure-administration-pawnbroker

I have too say that the entire peer to peer sector was always a dodgy concept, asking the average person on the street to accurately forecast the future ability of small business' and individuls to pay back the money lent is asking for trouble. 

Another piece of the jigsaw that things continue to deteriorate under the hood.

[DurhamBorn]

1 minute ago, Majorpain said:

https://www.theguardian.com/money/2019/oct/23/peer-to-peer-lender-funding-secure-administration-pawnbroker

I have too say that the entire peer to peer sector was always a dodgy concept, asking the average person on the street to accurately forecast the future ability of small business' and individuls to pay back the money lent is asking for trouble. 

Another piece of the jigsaw that things continue to deteriorate under the hood.

Agreed,lots of things that people think are the future arent.Uber might be a big one going down in a deflation.

[Talking Monkey]

2 minutes ago, DurhamBorn said:

Agreed,lots of things that people think are the future arent.Uber might be a big one going down in a deflation.

As disposable incomes get squeezed I can see cab rides being the first things to go and people using public transport or just walking. Some  folks get an Uber to avoid a 10-15 min walk, it's mad

[Harley]

On 22/10/2019 at 22:19, StrugglingMillennial said:

Can i ask a quick dummy question, i keep seeing people talking about laddering in.

Anyone care to explain?

 

I thought laddering was a way of getting out of an investment hole you'd dug yourself into!

I was going to ask a similar question as everyone probably does it differently and wanted to learn.

I use it to build an investment, hopefully cheaper than if I went all in on one day.  I start with an immediate small position and then add each time the stock hits a technically low price.

How much I put in each time depends on how good I think the price is and how quickly I want to build the position. 

I've been quite aggressive in building my income portfolio, using daily then weekly price data at about 25% of the target position per buy.

It has been a bit hit and miss with some further lows catching me out.  That's why I moved to weekly data but that was not enough.  Ideally I would have used monthly data but did not have the time to wait.  I should have been doing this a lot earlier.

I'm currently looking at using daily, weekly and monthly data combined.  That is buy on the daily data if the monthly and weekly data look like they may be about to turn up too.

Clearly, it won't prevent a bad investment and I have a few, for now!  But I did a review recently and the system was OK.  It may not have worked all the time but above alI I got crucified those times I did not use it, scratching my head when I looked at some "emotional" purchases with hindsight.  So yes, good for removing some expensive emotion.

[Harley]

14 hours ago, Loki said:

https://www.ukpowernetworks.co.uk/internet/en/about-us/suppliers-and-partners/

Seeing as their ridiculous ideas mean doubling the capacity of the grid, throw road worker firms and 11kV substation makers in the list.

Heat pumps don't work right when you need them most - cold nights. Cold still nights? That's wind out of the equation.  Solar stopped working at dusk, of course.

A neighbour told me recently he could not install solar as the local lines couldn't take the feed back.  Unclear if that was just the line from his house or it went further up the grid.

[sleepwello'nights]

5 hours ago, Harley said:

I thought laddering was a way of getting out of an investment hole you'd dug yourself into!

 

Not for me. They become long term investments in my portfolio . 

I've just had a look at the recent buys in my share account and despite my usual attempts at timing overall they're showing healthy gains. So that's given me cheery start to the day. 

Unfortunately my index linked gilts have fallen from their recent highs. 

[Hardhat]

11 hours ago, Talking Monkey said:

Some  folks get an Uber to avoid a 10-15 min walk, it's mad

There are some stats a Google away about how much Uber subsidise each trip by - if I remember correctly is 30-40% of the actual price of the trip (by e.g. a black cab). I use uber fairly often (I don't have a car and use it to transport large items) but I essentially see it as payback for QE otherwise destroying my quality of life. If big VC want to subsidise my taxi rides it's fine by me

On a serious note though I can't see how anyone can think uber is a serious long term proposition with the amount of loss they are making? It seems completely mad to me. They've put my favourite local minicab firm out of business though,  who unfortunately didn't have VC funding. Thing is,  they weren't even that much more expensive than uber,  maybe £2-3 a ride. If/when uber goes uber these minicab firms will just reappear. I guess uber's strategy is essentially to monopolise and then put up prices to a profitable level, but I don't see what stops other minicab firms from challenging them once they get there as the subsidy will be gone and playing field level again.  

Anyone own any?

[feed]

30 minutes ago, Hardhat said:

There are some stats a Google away about how much Uber subsidise each trip by - if I remember correctly is 30-40% of the actual price of the trip (by e.g. a black cab). I use uber fairly often (I don't have a car and use it to transport large items) but I essentially see it as payback for QE otherwise destroying my quality of life. If big VC want to subsidise my taxi rides it's fine by me

On a serious note though I can't see how anyone can think uber is a serious long term proposition with the amount of loss they are making? It seems completely mad to me. They've put my favourite local minicab firm out of business though,  who unfortunately didn't have VC funding. Thing is,  they weren't even that much more expensive than uber,  maybe £2-3 a ride. If/when uber goes uber these minicab firms will just reappear. I guess uber's strategy is essentially to monopolise and then put up prices to a profitable level, but I don't see what stops other minicab firms from challenging them once they get there as the subsidy will be gone and playing field level again.  

Anyone own any?

Don’t own. 
As I understand it the value of Uber is attributed to the customer network they’ve built and data acquisition.
Cheap rides being just a way to get people to give them their data.  So a taxi service isn’t really their core business.   
 

[Talking Monkey]

2 minutes ago, feed said:

Don’t own. 
As I understand it the value of Uber is attributed to the customer network they’ve built and data acquisition.
Cheap rides being just a way to get people to give them their data.  So a taxi service isn’t really their core business.   
 

But what data are they acquiring other than the taxi journeys of their customers, I can't see anything other than a taxi service at its core, the data acquisition is too narrow to be a material profit centre

[feed]

17 minutes ago, Talking Monkey said:

But what data are they acquiring other than the taxi journeys of their customers, I can't see anything other than a taxi service at its core, the data acquisition is too narrow to be a material profit centre

Place of work, residence, how often you travel, where you travel too - work/food/shopping/social activities.  These are all indicators of social economic status.  Look at who they've partnered with, sure some of that is about providing a service for those companies existing customers, but much of it is harvesting data from their network to sell back.   Think what American Airlines is doing with all of the travel data uber have.   
 

[sancho panza]

59 minutes ago, Talking Monkey said:

But what data are they acquiring other than the taxi journeys of their customers, I can't see anything other than a taxi service at its core, the data acquisition is too narrow to be a material profit centre

Have to agree.Can't see the data they're gathering being much you can sell into.

 

Wolf has a great piece t'other day on the algo's that drive internet marketing and pricing.Incredible.

https://wolfstreet.com/2019/10/22/are-prices-on-black-friday-actually-good-deals-beware-dynamic-pricing-online/

So other factors than supply and demand are used in dynamic pricing. Amazon is king of the hill in this strategy, but they’re all doing it. Real-time algorithm-driven – or to add some linguistic oomph to it, artificial-intelligence driven – pricing on the internet is now standard procedure. The algo looks at all the available data on hand about the customer, the product, and the competition, and puts a price in front of the customer’s eyes that is designed to trigger an on-the-spot buy-decision at the highest price the customer would bear.

The data that these algos look at include what the retailer’s website knows about you (are you logged in?), or knows about you from your history affiliated with your IP address, or knows about you based on the browsing data stored in your browser, or based on data from your smart speaker, smart TV, smart thermostat, or smart fridge, or based on data from various apps on your smartphone, such as fitness apps or retailers’ apps, or any other apps that collect data on you and send it back to wherever.

 

 

[feed]

20 minutes ago, sancho panza said:

Have to agree.Can't see the data they're gathering being much you can sell into.

i think you're missing how many people use uber and how many people use uber for everything.  

https://www.forbes.com/sites/ronhirson/2015/03/23/uber-the-big-data-company/#7165c50618c7

Article is couple of years old but it's the direction they've been travelling.   

[sancho panza]

SCS scores for TPYP if anyone's interested.Halfway through.Some debt soaked balance sheets in there.Personally,if we have a nibble we'll be steering clear of anything with a 1 or 2 in the middle ni this sector unless they're one of the bigger ones.Public utilities they ain't.

 

Just to reiterate,I only do these for spray n pray (ie where I'm looking for sector exposure above exposure to a stock).The scores are my personal view and there's a lot of grey areas at the peripheries but if in doubt ,I score it down.DYOR

KMI/EPD/PAA...............

Company	Sancho Coma Scores	SCS Total	Mcap USD
Enbridge ENB	24234	15	$73bn
TC Energy Corp TRP	14244	15	$10bn
Kinder Morgan KMI	34334	17	$46bn
Williams WMB	33134	15	$28bn
Oneok Inc OKE	14214	12	$29bn
Pembina Pipeline Co PBA	14334	15	$5.6bn
Entreprise Prod Partners EPD	24344	17	$60bn
Cheniere Energy Inc LNG	11114	8	$16bn
Atmos Energy ATO	15334	16	$13bn
Energy Transfer Equity LP ET	33144	15	$33bn
NiSource Inc NI	12224	11	$10bn
Targa resources TRGP	42234	15	$10bn
Inter Pipeline Ltd IPL	35244	18	$7bn
Magellan Midstream MMP	25244	17	$12bn
One Gas OGS	14234	14	$7bn
Keyera KEY	14234	14	$10bn
Southwest Gas SWX	13144	13	$4.8bn
Spire Inc SR	14234	14	$4bn
Alta gas ALA	32234	14	$5bn
New Jersey Resources NJR	14134	13	$4bn
National Fuel Gas NFG	23244	15	$4bn
MPLX MPLX	45134	17	$28bn
Plains All American PAA	44344	19	$13bn
Equitrans Midstream ETRN	33144	15	$4bn
South jersey Industries SJI	13134	12	$3bn
Gibson Energy GEI	22134	12	$3bn
Buckeye Partners BPL	34324	16	$6bn
Northwest Natural gas	13144	13	$2bn

[sancho panza]

2 minutes ago, feed said:

i think you're missing how many people use uber and how many people use uber for everything.  

https://www.forbes.com/sites/ronhirson/2015/03/23/uber-the-big-data-company/#7165c50618c7

Article is couple of years old but it's the direction they've been travelling.   

I take the point but would argue that the market valuation of Uber is a long way above of the value of it's data.When you add in the losses from the rides then the discrepancy is even larger ie if they lose an average $3 per ride,are they recouping that from selling the data?

This is the Amazon model and it's done very well for shareholders thus far.

I have no position but would short if I saw an entry point.

Longer term,there's currently a lot of goodwill value in the data,how much cash will eventually flow from it is the issue.

[sancho panza]

2 hours ago, Hardhat said:

There are some stats a Google away about how much Uber subsidise each trip by - if I remember correctly is 30-40% of the actual price of the trip (by e.g. a black cab). I use uber fairly often (I don't have a car and use it to transport large items) but I essentially see it as payback for QE otherwise destroying my quality of life. If big VC want to subsidise my taxi rides it's fine by me

On a serious note though I can't see how anyone can think uber is a serious long term proposition with the amount of loss they are making? It seems completely mad to me. They've put my favourite local minicab firm out of business though,  who unfortunately didn't have VC funding. Thing is,  they weren't even that much more expensive than uber,  maybe £2-3 a ride. If/when uber goes uber these minicab firms will just reappear. I guess uber's strategy is essentially to monopolise and then put up prices to a profitable level, but I don't see what stops other minicab firms from challenging them once they get there as the subsidy will be gone and playing field level again.  

Anyone own any?

I think that seems to be the aim.Local cab firms are still surviving but last cabbie I spoke to said mainly over 40's don't use Uber.That will change I guess.But I think there's a lot of life left in small cab offices as many of the Uber drivers do both.Also Uber need to get into the school run stuff,then they really might do away with the competition.

[kibuc]

46 minutes ago, sancho panza said:

Have to agree.Can't see the data they're gathering being much you can sell into.

 

Wolf has a great piece t'other day on the algo's that drive internet marketing and pricing.Incredible.

https://wolfstreet.com/2019/10/22/are-prices-on-black-friday-actually-good-deals-beware-dynamic-pricing-online/

So other factors than supply and demand are used in dynamic pricing. Amazon is king of the hill in this strategy, but they’re all doing it. Real-time algorithm-driven – or to add some linguistic oomph to it, artificial-intelligence driven – pricing on the internet is now standard procedure. The algo looks at all the available data on hand about the customer, the product, and the competition, and puts a price in front of the customer’s eyes that is designed to trigger an on-the-spot buy-decision at the highest price the customer would bear.

The data that these algos look at include what the retailer’s website knows about you (are you logged in?), or knows about you from your history affiliated with your IP address, or knows about you based on the browsing data stored in your browser, or based on data from your smart speaker, smart TV, smart thermostat, or smart fridge, or based on data from various apps on your smartphone, such as fitness apps or retailers’ apps, or any other apps that collect data on you and send it back to wherever.

 

 

Travel data may not be worth too much on its own, but the trick is in combining loosely correlated data from various sources, as mentioned in the Wolf's piece.

[feed]

13 minutes ago, sancho panza said:

I think that seems to be the aim.Local cab firms are still surviving but last cabbie I spoke to said mainly over 40's don't use Uber.That will change I guess.But I think there's a lot of life left in small cab offices as many of the Uber drivers do both.Also Uber need to get into the school run stuff,then they really might do away with the competition.

I’m not sure that monopoly can be their plan. Uber are not the only ride sharing company, removing existing cab companies will not create a monopoly for them.  And in disrupting the industry so well, they’ve potentially created additional competitors, as the traditional car manufactures are looking to engage in the ride sharing market.  And even Bezos has announced he wants slice of the people transportation market.  These could occupy different niches, but it’s likely to be just as crowded without the small cab office.  

I agree with your point on the current market value of uber.  Which is why I don’t think they or the market see them as being just a taxi service with an app.  Whether they’ll be successful or not, I’ve no idea.   
 

[sancho panza]

On 03/09/2019 at 17:32, kibuc said:

In the same time span:

Impact Silver - flat

Great Panther - down 4%

My two larges silver holdings. Luckily Alexco and Endeavour more than make up for it. Endeavour acts exactly as I'd expect from a speculative play on silver.

It's fascinating that we got here with DXY at 99.

Just flicking thru some early pages and this comment caught my eye.DXY on the monthlies showing a fade but still not clear if the recent sept 19 peak will hold for a few years.If DXY gives then interesting times will begin.Still can't get over what silver and gold have done with a strong DXY.

[JMD]

5 hours ago, feed said:

i think you're missing how many people use uber and how many people use uber for everything.  

https://www.forbes.com/sites/ronhirson/2015/03/23/uber-the-big-data-company/#7165c50618c7

Article is couple of years old but it's the direction they've been travelling.   

I get what Uber and others are trying to do (with big data/behavioural psychology crossover) but isn't this just what Cambridge Analytica did but got busted over? The difference maybe is Uber has an App and millennials love an App... But i'm not just being cynical here - surely none of us wants to be part of a (not so) grand monetising experiment? Facebook, etc, may all be doing the same thing but these companies are being scrutinised more and more.

I think companies using this type of business model will become increasingly unpopular. And because they don't provide anything crucial in terms of health services, etc, they will become an easy target for politicians taking a populist approach to regulate such companies until they are no longer profit-making companies, becoming perhaps non-profit trusts. (Mark Zuckerberg has already stated he will give away 99% of his wealth in his lifetime, I think he should start selling up his shares.)    

 

For those who may be interested on more about this subject, see Jaron Lanier's book 'You are not a Gadget', it's a thought provoking take on the whole subject of who should own our data. He is an ex-computer science/tech startup entrepreneur so knows his stuff. The guy is a bit weird looking but looks are deceiving, particularly so in his case and the book is 8 years old so perhaps proving guy is ahead of his time. Anyway, his take is that in the future we will all take back control of our personal data (his thesis is the alternative is not worth thinking about; see today's China for how things will work out if we don't change course), he also suggests that such changes could possibly provide incomes for people in the future where jobs will be scarce.

[JMD]

5 hours ago, sancho panza said:

SCS scores for TPYP if anyone's interested.Halfway through.Some debt soaked balance sheets in there.Personally,if we have a nibble we'll be steering clear of anything with a 1 or 2 in the middle ni this sector unless they're one of the bigger ones.Public utilities they ain't.

Just to reiterate, I only do these for spray n pray (ie where I'm looking for sector exposure above exposure to a stock).The scores are my personal view and there's a lot of grey areas at the peripheries but if in doubt ,I score it down.DYOR

KMI/EPD/PAA...............

Company	Sancho Coma Scores	SCS Total	Mcap USD
Enbridge ENB	24234	15	$73bn
TC Energy Corp TRP	14244	15	$10bn
Kinder Morgan KMI	34334	17	$46bn
Williams WMB	33134	15	$28bn
Oneok Inc OKE	14214	12	$29bn
	14334	15	$5.6bn

thanks SP, I think its very generous to share this, have you considered doing all 8000 (or more?) entire world market stocks and publishing?! Then again I suppose some outfit already does do this, but imagine the updating (daily!!)?

Could I ask, I believe that the 3rd column is for 'balance sheet'. How do you come to this figure and what weighting do you give company debt? I ask because debt is an important corporate component/consideration on this blog, especially I think as it concerns 5-10 year debt which might/will be hit by crippling interest premiums.   

 

...on a related note, did you finish doing the utilities you were working on?

[DurhamBorn]

19 hours ago, Talking Monkey said:

As disposable incomes get squeezed I can see cab rides being the first things to go and people using public transport or just walking. Some  folks get an Uber to avoid a 10-15 min walk, it's mad

Those who bought Uber are down 33% on their investment,those who bought Go Ahead are up 50%.Uber will likely fail once the debt inflation kicks in.Economics dont work for single transit when there is an extra layer on top.The data Uber gather wont be worth much.These sort of ideas are what bubbles do.

@sancho panza pleased to see Plains American coming out top in your list,it was the one i liked most from a quick look at the companies.

[kibuc]

Agnico Eagle reported Q3 financials yesterday, with great numbers. Yamana reports today after close, and others will soon follow. If big boys show us the money, it should give juniors a solid boost as well. 

[Noallegiance]

Is what the Fed are doing going to kick start the downward pressure on the $?