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

[DurhamBorn]

1 minute ago, Cattle Prod said:

Possibly a dumb question that has been answered, why is nuclear the problem with Centrica? I'm very bullish nuclear from here on, it will be essential base load for any green economy. Is it the quality (or lack of ) their nuclear assets? Shame if they know how to run nuclear reactors and lose those skills, they will be needed. I wish the technology would move on though, it's still stuck in Cold War mentality with weapons material as a by product. I was very interested in the small scale reactors BAE proposed, govt seemed uninterested.

I think its a problem to a potential bidder for the company.Nuclear carries a lot of risk and im not sure many companies would want to take that on.The government made a massive mistake though forcing down the likes of Centrica because in doing so they have had to look to selling assets etc.Political point scoring that hurts the country long term.Politicians also have zero backbone now and seem to simply want to keep their seat and their pensions.

I notice uranium had gone up around 14% as well.I miss the etf URA,made me a lot of money over the years,very cyclical.

On uranium though,if the price keeps rising Harmony Gold produce a lot of Uranium from their mines in SA and they have huge amounts on their tailings.

[Loki]

1 hour ago, PaulParanoia said:

What's the collective thoughts on this one?  Takeoff or a fake rally?

I've only invested a 3rd of my pot so far, taking a cautious approach in case of multi month falls in share prices.

Is £14.50 still a good price for Shell.  Getting some serious FOMO this morning.

My gut feel is that it will drop again.  My holdings are both up and although it's nice to see I'm not even tempted to sell and try and time a rebuy.  Don't forget you'll get a generous divi from either when you do buy (verify this yourself of course)

[Democorruptcy]

48 minutes ago, DurhamBorn said:

Its always best to remove the emotion and set ladders.Anyone who has should of tagged the bottom on Shell and BP,at least so far.There is always a risk things go lower,markets are never linear,but removing the emotion is crucial.Iv learned through hard work and plenty of mistakes (mistakes stillcome and always will,just hopefully less over time) that you put the work in before things happen,work out the likely road map of the forward cycle and then act.

Its then best to let the cycle play out and keep investing the dividends that come your way in reflation sectors that might be lagging.An example now would be to use and oil dividends for potash and telcos.I wont be using ladders much going forward apart from ones already set.Im also slowly starting to buy a few none reflation companies who i think might hold their own in the cycle,and likely under-valued.

The aim is a well balanced portfolio that leans to the cycles headwinds.

Oh and Centrica is a shocker,but the management were too slow to sell nuclear.If they had sold that they would of been bought out i expect at a much higher price.Nuclear is why people are holding back buying them out,and the chance of them being able to sell to the Chinese is now pretty remote.In the scheme of a portfolio though their loss is 1/3 of the profit Harmony Gold provided.Still not nice,but part of investing.Its highly likely if they get through this though they will see most of the smaller players gone.I still think Shell and BP must be looking hard at them though.Access to that many electricity customers must be very tempting.Again nuclear will be the problem.

Re Shell I love to read stuff like this, it doesn't put me off just makes me want to buy more.

Could oil prices fall below zero?

As to the unmentionable, no divi now. I'm still a buyer in the 20p's 

 

[StrugglingMillennial]

I dont think i need to point out the bounce shell has had over the last week but i do feel like its not going to last in the short term.

It looks like all companies will be in for a bumpy ride regardless of who they are.

https://www.dailymail.co.uk/money/markets/article-8171247/Royal-Dutch-Shell-expects-650m-cost-Covid-19-Saudi-Russia-price-war.html

[BoSon]

13 hours ago, sancho panza said:

Look at it.Japan is only now broaching the issue of a lock down.Countries with the lowest corona figures??????????? South Korea/Singapore,no lock down.Japan thus far,no lock down.

Commonality-high testing rates.

Our govt-low testing rates

Could it be chickens coming home to roost in that the testing capacity of the west (seemingly except Germany) is largely dependent on equipment and supplies from the far east, so the west are having to botch their handling of it in comparison to Singapore/Japan/South Korea, and without the strict lockdown ability of China and North Korea, so while trying to keep their economy alive they are sacrificing most of it and also putting a higher proportion of the population at risk both economic and health wise?

As some in the NHS said last week, it's all months too late as the west was aware of this pandemic threat since late last year so why the lack of preparedness both in planning and equipment? Incompetence, reliant on academic forecasts, or hiding their true motivations?

Seems those that handled this better are going to come out of this stronger economy wise and while there is no vaccine the rest of the world should be following their lead if they don't want to be in lockdown for months and months to come. Only a fraction of the UK population has caught the virus so far, so it's all about managing the numbers to not overwhelm the NHS so the death numbers don't shoot up so those in power can try to come out of this intact.

The USA are just at the start of their pain for a similar mishandling of it due in no small part to Trump, so at the moment I'm not putting my cash anywhere other than into food as it seems obvious the global economy is going to suffer for months to come based on the USA and therefore demand for all the exports from the far east, and therefore oil demand and other commodities. So even if the far east countries fare better health wise their economies are still reliant on the west being fit for business. 

Unless the west decides to throw the vulnerable under the bus and take the deaths on the nose, the economy is still in the early days of feeling the true impact of these lockdowns. I won't be taking any vaccine rushed through this year as it could well have other long term health issues, so I don't see unless they force us to adopt their solutions how this can all return to normal anytime soon. It's going to be next year as things stand with the ongoing mismanagement of the situation until then.

[NogintheNog]

1 hour ago, Loki said:

2 hours ago, PaulParanoia said:

What's the collective thoughts on this one?  Takeoff or a fake rally?

I've only invested a 3rd of my pot so far, taking a cautious approach in case of multi month falls in share prices.

Is £14.50 still a good price for Shell.  Getting some serious FOMO this morning.

My gut feel is that it will drop again.  My holdings are both up and although it's nice to see I'm not even tempted to sell and try and time a rebuy.  Don't forget you'll get a generous divi from either when you do buy (verify this yourself of course)

I don't know how large your 'pot' is, but I think DB's strategy is the way to play this. FOMO could easily turn into WTF!

So, did you buy any below £14.50? If you did, sit tight and set some lower ladders. I have RDSB that I have bought between £10 and £22.50, and as things stand I'm still down on them collectively. The next ladder I have is at £8.50, but I'm not sure we'll ever see that ladder hit. I may adjust it (on gut feeling) up to the £10 mark again.

If you didn't buy any below £14.50 then buy a chunk now and then set some lower ladders.

There has been some discussion on here and Cattle Prod has said he is convinced that Shell will not cut the dividend. I'm not convinced but if you are gonna buy a strong dividend share for the future then (barring a Deepwater Horizon type event) Shell is the one to buy for the medium/long term.

[Loki]

All my RDSB was bought under 1350 but above 1000.  Bit of luck, bit of judgement from this thread

My pot is nothing compared to the sums I've seen here but a now have a clearer plan after pretty much drifting financially my whole life. Not a spending junky at all but never had a clear aim.

[NogintheNog]

Just now, Loki said:

All my RDSB was bought under 1350 but above 1000.  Bit of luck, bit of judgement from this thread

My pot is nothing compared to the sums I've seen here but a now have a clearer plan after pretty much drifting financially my whole life. Not a spending junky at all but never had a clear aim.

I so wish that's where all my purchases had been!!!

Be interested to see if it's the same for PaulParanoia...

[Shamone]

2 hours ago, PaulParanoia said:

What's the collective thoughts on this one?  Takeoff or a fake rally?

I've only invested a 3rd of my pot so far, taking a cautious approach in case of multi month falls in share prices.

Is £14.50 still a good price for Shell.  Getting some serious FOMO this morning.

Me too for sure!

[CVG]

Is this news a positive show of strength form Shell ("you wont be buying shares this cheap again") or does it mean something completely different that I have misunderstood?

2 April 2020

Not for distribution, directly or indirectly, in or into the United States or any jurisdiction in which such distribution would be unlawful.

Shell International Finance B.V.

Stabilisation Notice

Morgan Stanley & Co. International plc (contact: Morgan Stanley Debt Syndicate - Dan Shane; telephone: +442076777070) hereby gives notice, as Coordinating Stabilisation Manager, that the Stabilisation Manager(s) named below may stabilise the offer of the following securities in accordance with Commission Delegated Regulation (EU) 2016/1052 of 8 March 2016 supplementing Regulation (EU) No 596/2014.

 

Securities
Issuer:	Shell International Finance B.V.
Guarantor (if any):	Royal Dutch Shell plc
Aggregate nominal amount:	TBD
Description:	EUR [ ]bn [ ]% Notes due [ ] April 2028 (the "Notes")
Offer price:	TBD
Stabilisation
Stabilisation Manager(s):	Morgan Stanley & Co. International plc Barclays Bank PLC Merrill Lynch International Wells Fargo Securities International Limited
Stabilisation period expected to start on:	2 April 2020
Stabilisation period expected to end no later than:	9 May 2020
Existence, maximum size and conditions of use of over-allotment facility:	The Stabilisation Manager(s) may over-allot the securities to the extent permitted in accordance with applicable laws and rules.
Stabilisation trading venue:	Regulated Market of the London Stock Exchange

 

In connection with the offer of the above securities, the Stabilisation Manager(s) may over-allot the securities or effect transactions with a view to supporting the market price of the securities during the stabilisation period at a level higher than that which might otherwise prevail. However, stabilisation may not necessarily occur and any stabilisation action, if begun, may cease at any time.  Any stabilisation action or over-allotment shall be conducted in accordance with all applicable laws and rules.

This announcement is for information purposes only and does not constitute an invitation or offer to underwrite, subscribe for or otherwise acquire or dispose of any securities of the Issuer in any jurisdiction.

This announcement and the offer of the securities to which it relates are only addressed to and directed at persons outside the United Kingdom and persons in the United Kingdom who have professional experience in matters related to investments or who are high net worth persons within article 12(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and must not be acted on or relied on by other persons in the United Kingdom.

In addition, if and to the extent that this announcement is communicated in, or the offer of the securities to which it relates is made in, any EEA Member State or the United Kingdom (each, for the purposes of this provision, a "Relevant State") before the publication of a prospectus in relation to the securities which has been approved by the competent authority in that Relevant State in accordance with Regulation (EU) 2017/1129 (the "Prospectus Regulation") (or which has been approved by a competent authority in another Relevant State and notified to the competent authority in that Relevant State in accordance with the Prospectus Regulation), this announcement and the offer are only addressed to and directed at persons in that Relevant State who are qualified investors within the meaning of the Prospectus Regulation (or who are other persons to whom the offer may lawfully be addressed) and must not be acted on or relied on by other persons in that Relevant State.

This announcement is not an offer of securities for sale into the United States. The securities have not been, and will not be, registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an exemption from registration.  There will be no public offer of securities in the United States.

END.

[Loki]

12 minutes ago, CVG said:

Is this news a positive show of strength form Shell ("you wont be buying shares this cheap again") or does it mean something completely different that I have misunderstood?

Having picked the bones out of that word soup i quite understand your confusion! why would RDSB need the PPT?

[Yellow_Reduced_Sticker]

On 31/03/2020 at 22:23, DurhamBorn said:

Cant see it running up fast,but id be buying it now if i wanted it.Id also be trying to find somewhere to store it.On my gas/electric my fix runs out next month and im going to try to get the longest fix i can.I probably wont see deflation again in my lifetime.Id by a coffin now if our lass would let me keep it in the garage.

 

Blimey @DurhamBorn I nearly spate out my morning coffee when i read that!

 

Do YOU ...OR anyone here know a decent comparison site for gas/electric deals i need to get mine done (there are so MANY sites it does my head-in!)

 

Now on to a MORE IMPORTANT subject yes the good 'ol YRS's!

 

Hows folks here doing on these?

 

I'm getting bugger all, not only that grub INFLATION is hitting already, the shop where i splash out and get my weekly sourdough bread loaf has jacked his price from £3 ...to £3.50!

 

Well he ain't getting my moolah, I've given him a ban, when times get tough the tough get going...so i've been making me own!

 

I bought a kilo of reduced hovis bread flour for 50p before all the Ho-ha over CV ...anyway making flat bread with NO yeast, even done some with cheese in the middle (cheese toastie) absolutely DELICIOUS!

 

Even the heavy Meyer frying-pan i got for a quid last year at the boot sale, actually the frying-pan is FREE ...cos I got in the boot sale through a hole in the fence ...hence didn't pay the rip-off £2 entrance fee!

 

 

 

If ya's don't know how to make flat bread - here's a video:

 

 

[Bobthebuilder]

8 minutes ago, Yellow_Reduced_Sticker said:

Hows folks here doing on these?

My wife went to M&S the other day as it had no queue outside i suppose everyone thought it too expensive, she got 2 whole legs of lamb for £5 each, nice.

As for energy comparison Martins money saving expert is pretty good.

[JMD]

15 hours ago, Loki said:

Does anyone have any countries that might be particularly well placed for the cycle ahead? Occurred to me today that while nothing is keeping me here i don't know how well the ideas here would translate to another country. They sound pretty universal but what do i know other than access to stocks is easier now than any other time

Not advise of course as inv. term/risk/bias is different for everyone, but for me it would be Emerging Markets (using value/themed etf's once markets are at lowest) - but focusing on: SE Asia, especially S Korea, Vietnam (both have big us investment). Russia for when it has made up with the West - I see it is currently sending ventilators to the US to help out. And Australia for commods. 

I believe that Egypt has been tipped (oecd?) for massive growth but unsure why. Will it I wonder become the next proxy regional power (i.e. US military bases) after US shun Saudi Arabia? Does anyone have more info. and views about the geo-political/economic future for Egypt? 

[Loki]

Good ideas there @JMD Phone posting so just a quick one to say thanks

[janch]

1 hour ago, BoSon said:

Only a fraction of the UK population has caught the virus so far,

I'm not so sure about this as I think I may have had it in Dec/Jan plus I've heard of several others who say the same.

If they could only get on with the antibody test and roll that out quickly then all those who are already immune could all go back to work and come out of lockdown.  This could come fairly quickly if they pull their finger out.  I would be prepared to lay bets that a good proportion of the public have immunity to the virus.

If so the economy will be able to recover, if not we are in for the long haul.

[XswampyX]

4 minutes ago, janch said:

I'm not so sure about this as I think I may have had it in Dec/Jan plus I've heard of several others who say the same.

If they could only get on with the antibody test and roll that out quickly then all those who are already immune could all go back to work and come out of lockdown.  This could come fairly quickly if they pull their finger out.  I would be prepared to lay bets that a good proportion of the public have immunity to the virus.

If so the economy will be able to recover, if not we are in for the long haul.

What do you think the average 20 year old is going to do...

a) Get tested, find out they haven't had it and sit around at home all day.

b) Pretend they have been tested and go out anyway.

So then the police will have to keep stopping everybody and check their identity and test results.

 

[janch]

8 minutes ago, XswampyX said:

What do you think the average 20 year old is going to do...

a) Get tested, find out they haven't had it and sit around at home all day.

b) Pretend they have been tested and go out anyway.

So then the police will have to keep stopping everybody and check their identity and test results.

 

If it was a good proportion (say 40%) who showed immunity then they could lift the lockdown for everyone except those who are elderly and/or have underlying health conditions. I don't know the percentage they use for supposed "herd immunity"

At the moment the "cure" ie lockdown may well end up being worse than the problem.

[XswampyX]

6 minutes ago, janch said:

I don't know the percentage they use for supposed "herd immunity"

For Covid-19 it's 29 - 74 % depending on it's actual R0 number.... 

[TheCountOfNowhere]

Ahhh, the british herd

 

[reformed nice guy]

25 minutes ago, janch said:

If it was a good proportion (say 40%) who showed immunity then they could lift the lockdown for everyone except those who are elderly and/or have underlying health conditions. I don't know the percentage they use for supposed "herd immunity"

At the moment the "cure" ie lockdown may well end up being worse than the problem.

We used to have herd immunity for TB but with open borders....

[DurhamBorn]

2 hours ago, Cattle Prod said:

Interesting, thanks, I didn't know that.

Mohab Khotsong has the largest Uranium reserves in SA.Deep level gold mines there nearly all produce Uranium and Harmony now owns most of the industry.I think a few other of their mines produce Uranium,and they have a lot on their dry tailings.I saw the CEO give an interview where he said at the moment it breaks even on the uranium,but planned on exploring things down the road.The also own the only Uranium cake plant in South Africa,probably most of Africa.

https://www.harmony.co.za/downloads/send/143-2018/3522-moab-khotsong-operations

[Noallegiance]

59 minutes ago, XswampyX said:

What do you think the average 20 year old is going to do...

a) Get tested, find out they haven't had it and sit around at home all day.

b) Pretend they have been tested and go out anyway.

So then the police will have to keep stopping everybody and check their identity and test results.

 

Or.....

Maybe everyone can stop being told to be paranoid.

[JMD]

17 hours ago, sancho panza said:

Look at it. Japan is only now broaching the issue of a lock down. Countries with the lowest corona figures??????????? South Korea/Singapore, no lock down. Japan thus far, no lock down.

Commonality-high testing rates.               

Our govt-low testing rates

SP, I written here I have been critical our lack of virus testing since start of its outbreak here. Actually, I find how virus's spread fascinating. I do respect your professional insight into these things but some thoughts occur to me... especially in regard to the impact of virus's in relation to different societies/cultures... 

Aren't there other differences between the UK and those countries you mention - proximity to China meant that those countries probably mistrust and knew China was underreporting the virus threat (whereas we in the West were debating whether this was/wasn't even a pandemic); an adherence to rules, so although no government lock-down, they operate in a culture that is/was already in many ways already self-isolating; and perhaps most crucial of all - more cleanliness, and an everyday use of face masks. i.e. I notice today that there are reports that face masks may be at least as protective against the virus as the obeyance of performing social distancing rules.

 

However, ultimately for me 'closing-down' the economy, lock-downs, etc, are a massive over reaction. I would have preferred a very focused isolation of the old, ill/vulnerable, along with proper support including extra hospital beds, etc. Couldn't the achievement of 'herd immunity' and 'flattening the curve' been equally as successful by using these measures?  

Too be honest I have become very uneasy about why government's have rushed to implement such policies. I'm not into conspiracies (and please don't have nightmares!) but I shall pose the question: Have we just witnessed a 'power grab' of the economy by the authorities?

For example, the recent Radio4 interview with Lord Sumption, a former justice of the supreme court, is rather sobering...full interview link and transcript extract below... https://www.bbc.co.uk/sounds/play/m000gt59

Lord Sumption - The real problem is that when human societies lose their freedom, it's not usually because tyrants have taken it away. It's usually because people willingly surrender their freedom in return for protection against some external threat. That's what I fear we are seeing now. The pressure on politicians has come from the public. They want action. They don't pause to ask whether the action will work. They don't ask themselves whether the cost will be worth paying. They want action anyway.   And anyone who has studied history will recognise here the classic symptoms of collective hysteria.     

Hysteria is infectious. We are working ourselves up into a lather in which we exaggerate the threat and stop asking ourselves whether the cure may be worse than the disease.    

 

Q    At a time like this as you acknowledge , citizens do look to the state for protection, for assistance, we shouldn't be surprised then if the state takes on new powers, that is what it has been asked to do, almost demanded of it.    

A    Yes that is absolutely true. We should not be surprised. But we have to recognise that this is how societies become despotisms. And we also have to recognise this is a process which leads naturally to exaggeration. The symptoms of coronavirus are clearly serious for those with other significant medical conditions especially if they're old. There are exceptional cases in which young people have been struck down, which have had a lot of publicity, but the numbers are pretty small.  The Italian evidence for instance suggests that only 12% of deaths is it possible to say coronavirus was the main cause of death. So yes this is serious and yes it's understandable that people cry out to the government. But the real question is: Is this serious enough to warrant putting most of our population into house imprisonment, wrecking our economy for an indefinite period, destroying businesses that honest and hardworking people have taken years to build up , saddling future generations with debt, depression, stress, heart attacks, suicides and unbelievable distress inflicted on millions of people who are not especially vulnerable and will suffer only mild symptoms or none at all. 

What I say to them is I am not a scientist but it is the right and duty of every citizen to look and see what the scientists have said and to analyse it for themselves and to draw common sense conclusions. We are all perfectly capable of doing that and there's no particular reason why the scientific nature of the problem should mean we have to resign our liberty into the hands of scientists. We all have critical faculties and it's rather important, in a moment of national panic, that we should maintain them.   

[Harley]

5 hours ago, AlfredTheLittle said:

That's right, businesses pay wages as usual (or whatever proportion of wages they've agreed to pay employees) then the government will eventually reimburse 80%, although it's not yet clear how or when. All the rescue schemes are somewhat opaque and lacking detail, and less generous than they sounded when announced - in a way you can't blame the government, as they don't want to be giving out free money to people who don't need it, but they'd have been far better off keeping things simple, rather than creating a huge new bureaucratic nightmare.

Madness?  Just pay a temporary universal basic income (or an insurance payout to be more accurate) to those with an NI number, etc.  They mostly have all the data and systems (e.g. the ones they use for tax refunds, salary payments, etc).  And far fairer.  They've been amassing the data, etc for quite a while now, although that was intended to net more, not negative, tax!  Hell, why not start paying people according to their NI record (i.e. what they've put in) again!  Those without an NI number were obviously not working anyway so would not get paid anyway!!!