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


spunko

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sancho panza
13 hours ago, CVG said:

Water. We don't talk about water much. SP, this was in an article from Moneyweek in 2018 - any idea what the current position is?

"Early this year Cape Town's four million residents were keeping an eye on dam water levels with an obsessiveness usually reserved for Twitter, as local academic Hedley Twidle puts it in the Financial Times. Daily water consumption was restricted to just 50 litres per person per day about a third of average UK usage. "Day Zero" the date the city's rapidly evaporating reservoirs were expected to reach critical levels was months away.

At that point, the taps were to be shut off and about a million households would have to queue at water-collection points for daily rations of just 25 litres. Following an unprecedented drought, Cape Town was on course to become the world's first city to run out of water."

The article goes on to talk about rising worldwide demand, water wars, infrastructure investment ("Others say even more spending is needed, with estimates ranging from $6.7trn by 2030 to $22.6trn by 2050"), etc. I wont cut and paste the whole article, but the following were the investment suggestions:

"The water stocks to buy now

 

Water is probably the most decomplex of trades besides oxygen.....it's jsut whether there are viable ways to play it.For me you need to be able to 'spray n pray' a sector and be pretty sure you'll get the uplift.Potash and oil are easier in that respect than water as it's not worht transporting.Water plays in the UK face different issues to water plays in Africa.

The thesis is super it's working out a decomplex way to play the decomplex trade.

 

As soon as you start trying to pick through the raft of small to medium size companies that are in some way a play on water shrotage,then it's on it's way to becoming a complex trade.I'm open to any ideas if wanyone has suggestions.It's super idea but one one that's fraught with more political risk than oil,which is saying somethign.

Very similar in principle to solar from an invesment point of view imho.

12 hours ago, spygirl said:

That's the full default.

You are getting v high levels of non payment.

The current student loan system and HE sector wont survive the first cursory analysis of the numbers.

Of course our fearless, probing press are ... just asking pointless virus questions everyday.

Useless.

Labour cant or wont raise the issue as the solution is to scale back I.e halve HE sector, so poof! That's a large part of its vote base.

 

I read a while back,they sold off a load of the inital 90's debts to thrid parties.

Which should worry anyone who's managed to evade the British govt and build a nice stockpile of assets abroad or a hosue in Australia.

11 hours ago, TheCountOfNowhere said:

£5 for a cabbage...people start growing their own cabbages.  So they still need potash ?

 

I look at the food we're growing in the garden.Scratching the surface Count.Potash is used in the large scale food prosduction for the 7bn on the planet.

decl:longgggg.

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12 hours ago, spygirl said:

That's the full default.

You are getting v high levels of non payment.

The current student loan system and HE sector wont survive the first cursory analysis of the numbers.

Of course our fearless, probing press are ... just asking pointless virus questions everyday.

Useless.

Labour cant or wont raise the issue as the solution is to scale back I.e halve HE sector, so poof! That's a large part of its vote base.

 

I believe my age group were one of the first to have student loans. They weren’t much, a grand or so a year. I never earned much so never had to pay it. Got sold on a number of times, the last one some dodgy PO Box number in the Welsh valleys. Schmucks. It’s been cancelled now.
 

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sancho panza

 

8 hours ago, Cattle Prod said:

I'm thinking of tapping up local farmers. They are very possessive of their land, but they often have an acre or two they don't use. And everyone loves cash. 15-20k acre around me though it seems, jesus. They are being marketed as future rezoning opportunites though, the sooner that dies the better. Here is one about 10 miles from me:

https://www.uklandandfarms.co.uk/rural-property-for-sale/south-east/surrey/guildford-ptlmgfml/

Woodland seems to be a bit cheaper. Think I'll wait for the housing market to take a kicking, at least take that element out of the price.

 

 

Housing market has destroyed the 1-10 acre market as virtually every seller sticks in a clawback clause(or whatever it's called) in case you get planning.Then they all want top dollar even if it's miles from anywhere.

Some farmers are more practical but those lots can be huge.

With a bit of luck,we'll get a downdraft in the hosuing market and the probates will jsut want their cash as things drop in value.

7 hours ago, JMD said:

Very interesting site, that puts 'our' government house-arrest policy and its trashing of the economy, into perspective...

http://inproportion2.talkigy.com/

Most sobering fact for me: Asian flu killed 80,00 in the UK back in 1969, yet no panic-policy was enacted. Also, that particular epidemic took over 2-months to land on our shores, and yet still there were no panic measures put in place.

I post this not because covid19 is so fascinating (its not), but because as I and others have alluded to from the beginning, there is 'something' more going on here than a flu outbreak... perhaps sinister/perhaps not, perhaps merely a sign of our catastrophising times, or an example of our ineffective political leadership, along with our alarmingly nodding donkey press and exceedingly accommodating opposition parties. Whatever it is thats going on, it points to great changes ahead, new forms of leadership and new far reaching policies. All things predicted by this great blog of course. 

Have a butchers at

https://lockdownsceptics.org/

super site.easy reading,makes the sceptics case.some amazing condemnation of Fergusons code in there

https://streetwiseprofessor.com/code-violation-other-than-that-how-was-the-play-mrs-lincoln/

https://chrisvoncsefalvay.com/2020/05/09/imperial-covid-model/

 

5 hours ago, Starsend said:

Thanks DB, I'll take a look at CityIndex. Yes, I think they've fecked up and probably stood to lose a lot of money so they think they can jack up holding costs and change the price to track something different. Mental.

I've used IG in the past and found them very good.

have a look at trading options instead,then you don't have issues with margin requirements

2 hours ago, Vendetta said:

 

Apart from NDR and SDF fo you favour any other companies in the potash/fertiliser sector? AAL & VALE have the large cap and a wider exposure to metals as well. 

 

 

I see you've got msot of these.I coma scaled the sector last year for the safer plays.As DB says SDF has a balance sheet issues but they're only excessive by the standards of the sector.

https://www.investing.com/equities/k-s-ag-financial-summary

image.png.0695c956c792ecb3aad23eda3c70c4df.png

by comparison

https://www.investing.com/equities/nutrien-financial-summary?cid=1057244

image.png.5eb89a4c8b4c8de80d42231048dc6c46.png

image.png.8b4de153f3550fa7794238342b61e535.png

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reformed nice guy
On 03/01/2020 at 23:37, sancho panza said:

 

Coma scale scores on which I based our purchase from the SOIL ETF.dyor natch Tdog

Nutrien 18

yara 17

SQM 18

IPL 19

ICL 17

K+S 17

 

To save some people some time...

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On 29/04/2020 at 06:55, sancho panza said:

''I was expecting the sort of correlation which I think people have seen with Kondratiev cycles and major conflicts.'

A point I would make here,is that with all cycles work you have to adjsut for average lifespans.Kondratiev lived in a time and a place where many died at 40-50. I think it's signifcant that it was only after the people who'd been young men and women during the Great Depression left public office in the main,that you got the repeal of Glass Steagall in 1998.It's not a coincidence.

Not been here much and just caught up on reading- i've been recovering from a major op, a bizarre experience during NZ lockdown, but the care (public system) I received was top notch.  Was told it's the best time to be having one - all specialist docs were on call as they had not much to do and the nurses told me they were bored. All good now.
 
Armstrong also has his view on the K wave which i thought might be another point of view looking at cycles and how they work. I'm not biased to any one person and try to read as widely as possible. Interesting to read your thoughts re generational change, definitely something to take into consideration.
 
'The basis of Kondratieff’s argument came from his empirical study of the economy’s performance of the USA, England, France, and Germany between 1790 and 1920. Kondratieff took the wholesale price levels, interest rates, production and consumption of coal, pig iron, and lead for each economy. He then sought to smooth the data using an averaging mathematical approach of nine years to eliminate the trend as well as shorter waves. Kondratieff thus arrived at his long-wave theory suggesting that the economic process was a process of continuous waves of boom and bust.
The problem with his data was that it properly reflected the beginning of his study. But as the Industrial Revolution took place, agriculture, which was 70% of the economy in 1850, fell to 40% by 1900 and eventually to 3% by 1980. His model failed because there was a cycle to the economy as well which he did not take into account. We moved from a commodity based system, to industrial, and then to primarily service industry. As we move further down this road, we can see that economic growth has declined for government has grown too big and is now consuming 40% of GDP compared to less than 10% at the beginning of his work. Government reduces GDP it produces nothing. Then we now have the internet displacing jobs in stores (service industry) just as the invention of automobiles displaced the horse and buggy. There is a cycle to change or innovation as well and this is absent from the K-Wave....we can even see from the chart, that his original wave varied greatly both in time duration 47 to 63 years, as well as intensity. Moreover, Kondratieff himself explained the cause was shifts in production, war, and great booms and busts in the discovery of gold. So the K-Wave offers no reliable method to forecast the economy, yet it stands as a testament to the existence of a complex business cycle.'

 

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DurhamBorn

While the green lobby and the MSM say big oil is dead,big oil has the capital to own the future energy.

https://renewablesnow.com/news/shell-eneco-join-hands-in-700-mw-dutch-tender-for-hollandse-kust-noord-697983/

If CrossWind’s plan is implemented, the offshore wind farm will most likely power a 200-MW hydrogen plant that Shell will install on the Tweede Maasvlakte, creating a green hydrogen hub in the port of Rotterdam. The final investment decision for this project has still not been taken but Shell and its partners intend to bring the plant online by 2023 and initially produce green hydrogen for Shell’s refinery in Pernis. Once fully operational, the facility will be able to produce between 50,000 kg and 60,000 kg of hydrogen daily.

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On 29/04/2020 at 09:54, sancho panza said:

I must say that people sometimes overly focus on Armstrong's Pye theory,they forget that's he's written some great pieces on economic history.

That last few sentences above are bang on.Infaltion,cause and effect change between eras.

One piece of his I remember from a few years back was wehn he was talking around generational changes and talked about how we go from big govt to small govt, and how the current trend to big govt will eventually lead to an era of smaller govt.Something that has an indelible logic to it.

I wonder if you're referring to Armstrong's alternating cycles of Public (government) and Private (sector) waves which is what his Economic Confidence Model (ECM) is based upon. 
Using Pi, amongst other things, he calculates a business cycle to be 8.6yrs. These can be broken down into smaller or larger cycles using Pi.
 
The peak of the last Public wave 1981 ties in with the start of Durhamborn's disinflationary cycle.
 
Durhamborn says his friend hopes to be dead by the end of the next cycle at the end of the 2020s.  Armstrong says exactly the same thing because of what we might face (plus he'll be in his 80s).  His ECM date for a peak in that cycle is similar at 2032.
mail?url=https%3A%2F%2Fd33wjekvz3zs1a.cl
During the Public Wave that began in 1934 and ended in 1985, the bond market performed at its best and stocks became extremely undervalued. This started to readjust only after the Public Wave ended in 1985. Only during the final wave (1981.35-1985.65) does the government start to unravel in a Public Wave. In a Private Wave, stock markets outperform bond markets. Here, people lose their faith in government rapidly. By the half-way mark in a Private Wave, the government becomes aggressive because it sees it is losing control of society. This is why governments will become much more aggressive during the last part of this Private wave into 2032..'
mail?url=https%3A%2F%2Fd33wjekvz3zs1a.cl
"QUESTION:what is the significance of the six repetitions in the ECM? Six 8.6 years make a cycle and six of these make a larger cycle and then six of these make a super-cycle. Why six? Why not five or seven? Can you explain the significance?..
ANSWER: The Economic Confidence Model is actually a three-dimensional wave structure. The volatility is a different frequency and that is what determines the number of 8.6-year waves for this is building in intensity. I have overlaid the Schumpeter Waves of Innovation theory of explanation. However, politically, the economy goes through major changes as well at the end of each wave. These are generally very profound changes. This is what we face with the next peak in 2032.95.What you get at the end of these 51.6-year waves is very profound. ..................Then the next wave was 1981.35 which marked the peak in interest rates even to the day. The next one will be 2032 and this will be followed by the shift from the West to the East in economic power..'
 
The overall character of the present wave is a PRIVATE WAVE meaning that in such waves markets advance more rapidly and volatility rises. During a PUBLIC WAVE that ended in 1985, the leading trend was confidence in government so the bond markets did best and the Dow could not get through the 1000 level until the wave changed to private in 1985.
At the 309.6 year level, there are still tendencies for the PUBLIC v PRIVATE aspect. At this level it is a bit different. It is the rise and fall of empires so we have the most drastic elements at that level – the swing between civilization and isolationism through fragmentation. This is typically caused by government becoming so corrupt that people abandon the idea of collective societies as being beneficial. The Romans called the abandonment of the cities – suburbium.
When Rome collapsed, you moved away from government and feudalism began. The same in Japan. There is a danger of a dark age perhaps after 2032. Hopefully I will be dead by then. But it is hard to put the odds on that. But this is why we are in a growing trend of dissatisfaction that is manifesting in separatist movements. This is the opposite of civilization. People are getting fed up with government and because this is the LAST 51.6 year wave in this 309.6 year cycle, it is the PHASE TRANSITION period so things can get really nuts.
...At the 309 year level, weather has played a greater role in altering the behavior of society.'
 
'..but now you are at the 309+ year level where major change begins to appear. The big one comes on the Sixth Wave of the 309.6 Year level. This is the only reason I do what I do. I have written many times that when this wave peaks in 2032, when we come to a crossroads. We either regress contracting into authoritarianism, then break-up into a fragmented feudal type system of local tribes basically, or we can perhaps crash and burn, but then see the light and we make a major technological leap forward.
Even at each 51.6 year wave culmination there is a major structural reset.
 
We have to understand that this will be the third such sequence of the Sixth Wave. At the end of the first sequence, we have civilization going into a Dark Age. That also coincided with the energy output of the sun declining and the massive volcanic eruption of Thera (Santorini), which ended the Minoan culture..
. ..The second sequence saw the invasion of the barbarians as they moved south and overthrew the Roman Empire. The wall around Rome was not built until 270 AD.
..This is the cycle, it is NOT my “opinion”..This is clearly the end of the West as a world economic power. The financial capital of the world will be shifting to China and Asia after 2032..'
 
The deflation comes from the rise in the cost of government, in addition to the collapse in leverage. As governments with power turn to extracting more from the people, rather than from the weak government, you get massive deflation and never hyperinflation. As was the case with the revolutionary new government in Germany during the 1920s. Their own power leads them down the path of suicide. Of course, that can migrate to full economic totalitarianism akin to communism. Whether you technically own your home and are taxed twice its value, or if the state owns it and allows you to live there, is just a technical point. The bottom-line is both are deflationary – not inflationary...
However, while this is typically the first wave, the second wave of inflation comes when CONFIDENCE in government collapses. This can take place with a full-length cycle of 72 years, as was the case with Russia (1917 – 1989). You will recall that the volatility portion of the Economic Confidence travels in waves of 6, whereas that frequency builds into groups of 12, forming the major volatility wave of 72 years. In finance, this is known as the Rule of 72. The rule number (e.g., 72) is divided by the interest percentage per period to obtain the approximate number of periods (usually years) required for doubling. It is interesting that this appears in volatility.
Therefore, at the worst we face a 72-year cycle of Economic Totalitarianism. However, the admixture of the fact that about half the world has already collapsed in 1989, we have a 26-year cycle from 1989, bringing us to Big Bang in 2015. We can see this materializing before our eyes and this is what the crash in government in the West is all about – the collapse in Socialism. We have a change for a reversal of this trend in 2016 with the U.S. Presidential election (Trump elected Nov 2016 )..Consequently, we have a rare opportunity to prevent a 72-year wave of Economic Totalitarianism, but the price will still be the economic decline of the West as the financial and economic power of being the Financial Capital of the World migrates to China. That is inevitable.So the deflation comes to an end when people run for the hills and begin buying anything tangible
Keep in mind that deflation has nothing to do with the supply of money. That is the problem with most analyses. When you correlate everything, you see that government increases the supply of money in response to the collapse in CONFIDENCE, not the other way around. With that collapse, we in the West will have to learn not to rely upon government and reemerge as self-sufficient to save the day, at least on a personal level..'
mail?url=https%3A%2F%2Fask-socrates.com%
 

 

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A message  from HL this morning  'Exxon Mobil Corp – Mini-Tender Offer. ...Ponos Industries LLC has announced details of a Mini-Tender Offer for up to 1 million Common Shares of Exxon Mobil Corp. As the Tender Offer is for a limited number of Exxon Mobil Corp Shares tenders may be subject to pro rata scaling back. The Tender Offer price is USD48.00 per Share.The offer is conditional on the closing price of Exxon Mobil Corp Shares on the New York Stock Exchange on the last full trading day prior to the Expiration Date exceeding the USD48.00 offer price. This means that Ponos Industries could extend and delay the offer for an infinite amount of time until the share price of Exxon Mobil Corp is above USD48.00. If you give an instruction to tender a number of shares, you could have your shares unavailable to you for an unspecified period of time (until the share price goes above USD48.00) and you would have no rights to withdraw your election....'

Any thoughts?

 

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Jesus Wept
4 hours ago, Viceroy said:
.............., but the price will still be the economic decline of the West as the financial and economic power of being the Financial Capital of the World migrates to China. That is inevitable.So the deflation comes to an end when people run for the hills and begin buying anything tangible
Keep in mind that deflation has nothing to do with the supply of money. That is the problem with most analyses. When you correlate everything, you see that government increases the supply of money in response to the collapse in CONFIDENCE, not the other way around. With that collapse, we in the West will have to learn not to rely upon government and reemerge as self-sufficient to save the day, at least on a personal level..'
mail?url=https%3A%2F%2Fask-socrates.com%
 

 

 

Very interesting post @Viceroy


So in other words.... 

....’Dash for assets’ and resultant ‘Crack-up Boom’.....? 

Your article is pointing to 4 years of massive deflation yes? 2020-24 followed by inflation and commodity boom? 
 

2020.05 (start of Monetary Crisis) equates to 18th January 2020.

Any significance of this date....?

Spooky..... 😂

 

 

22345ED4-E1F8-4ACE-9F13-076533BBE84E.jpeg

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Castlevania
51 minutes ago, Elbrus said:

A message  from HL this morning  'Exxon Mobil Corp – Mini-Tender Offer. ...Ponos Industries LLC has announced details of a Mini-Tender Offer for up to 1 million Common Shares of Exxon Mobil Corp. As the Tender Offer is for a limited number of Exxon Mobil Corp Shares tenders may be subject to pro rata scaling back. The Tender Offer price is USD48.00 per Share.The offer is conditional on the closing price of Exxon Mobil Corp Shares on the New York Stock Exchange on the last full trading day prior to the Expiration Date exceeding the USD48.00 offer price. This means that Ponos Industries could extend and delay the offer for an infinite amount of time until the share price of Exxon Mobil Corp is above USD48.00. If you give an instruction to tender a number of shares, you could have your shares unavailable to you for an unspecified period of time (until the share price goes above USD48.00) and you would have no rights to withdraw your election....'

Any thoughts?

 

Ignore it. Why sell for 48 if the price is above that.

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NogintheNog
8 minutes ago, Castlevania said:
1 hour ago, Elbrus said:

A message  from HL this morning  'Exxon Mobil Corp – Mini-Tender Offer. ...Ponos Industries LLC has announced details of a Mini-Tender Offer for up to 1 million Common Shares of Exxon Mobil Corp. As the Tender Offer is for a limited number of Exxon Mobil Corp Shares tenders may be subject to pro rata scaling back. The Tender Offer price is USD48.00 per Share.The offer is conditional on the closing price of Exxon Mobil Corp Shares on the New York Stock Exchange on the last full trading day prior to the Expiration Date exceeding the USD48.00 offer price. This means that Ponos Industries could extend and delay the offer for an infinite amount of time until the share price of Exxon Mobil Corp is above USD48.00. If you give an instruction to tender a number of shares, you could have your shares unavailable to you for an unspecified period of time (until the share price goes above USD48.00) and you would have no rights to withdraw your election....'

Any thoughts?

 

Ignore it. Why sell for 48 if the price is above that.

To be fair this was issued a few days back when the price was lower. But why would you, when in two years the price is likely to be twice what it is now! I took the sell none option!:)

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NogintheNog
On 03/05/2020 at 16:41, 5min OCD speculator said:
On 03/05/2020 at 14:32, NogintheNog said:

Last month was one of the best in terms of rallies on markets.....???

stocks rocketed last month after the FED said it would provide 'unlimited liquidity/support' to the markets....

Yes OCD, they rallied due to the FED statements. However if you read what Troy pointed out;

Quote

This pattern is not unusual.
One common misconception is that large daily
rises for stock markets belong only to bull
markets. On the contrary, the fastest rallies occur
in bear markets
. It is easy to be deceived by
short covering – the repurchasing of stocks to
close out short positions
. This, if sustained, often
leads to further buying driven by the fear of
missing out. In the last week of March, the S&P
500 Index had its best three-day streak since
October 93. This hardly inspires confidence
that we have entered a new bull market.

They haven't done enough, and I think during this year we are likely to test new lows and this is likely still going to be a bear market. Those strong rallies are a sign that that's exactly what it is.

It's one thing saying you are going to provide 'unlimited liquidity/support', it's another to actually do it!

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TheCountOfNowhere

I see vodafone is flying today, back in profit now.

 

Any thoughts on this lot ?

Land Securities Group plc
LON: LAND

538.19 GBX −94.21 (14.90%)

 

 

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DurhamBorn
19 minutes ago, TheCountOfNowhere said:

I see vodafone is flying today, back in profit now.

 

Any thoughts on this lot ?

Land Securities Group plc
LON: LAND

538.19 GBX −94.21 (14.90%)

 

 

Whole sector hugely undervalued,

This is the main thing buried in the statement

"Our leading global Internet of Things (“IoT”) platform continues to resonate with Business customers and we added 19.5 million new SIM connections during the year. Our IoT connections support a range of industries including car manufacturers, logistics, energy and healthcare.  In December, we were the first telecommunications operator in Europe to announce an agreement with Amazon Web Services(“AWS”)to support ultra-lowlatencymobile edge computing services by deploying AWS Wavelength solutions at the edge of Vodafone's 5G networks, as part of our multi-cloud strategy. With low latency, the new services will help support artificial intelligence, augmented and virtual reality, video analytics, autonomous vehicles, robotics and drone control, and will generate incremental revenuesfor the Group"

There is going to be a massive move to the edge of the network for cloud based services over the next 20 years and very large parts will flow to free cash.

Telcos are reaching the end of a 25 year capital spend that kept increasing though a whole dis-inflation cycle.Its left them all with big debts,but they are mostly structured over a long period and at very low rates.They should be able to slowly pay down as they come due,and shouldnt have to roll them all over at higher rates.

As Capex starts to fall and connections increase free cash should start to grow and expand.Recession ahead should help as regulators are desperate and should wave through mergers in the sector.Telcos look like Tobacco did just before they consolidated the industry and made massive profits for investors.I dont expect the same returns but i think 250% to 400% including dividends are possible over the cycle.

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1 hour ago, TheCountOfNowhere said:

Any thoughts on this lot ?

Land Securities Group plc
LON: LAND

538.19 GBX −94.21 (14.90%)

 

 

They own the Xscape complex near Castleford and presumably lots of other operations like this - mixture of retail, restaurants plus an indoor ski slope, indoor laser zone etc. Deadsville at the moment. It might come back in due course but only if Ask, Nandos etc can still make a profit whilst maintaining social distancing. We call in from time to time as its a stopping off point when visiting family. Nearly always rammed with people but of course it needs to be rammed to make money (like all indoor malls). A few voids plus lower visitor numbers = disaster.

Tricky sector at the moment!

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12 hours ago, Viceroy said:
Not been here much and just caught up on reading- i've been recovering from a major op, a bizarre experience during NZ lockdown, but the care (public system) I received was top notch.  Was told it's the best time to be having one - all specialist docs were on call as they had not much to do and the nurses told me they were bored. All good now.
 
Armstrong also has his view on the K wave which i thought might be another point of view looking at cycles and how they work. I'm not biased to any one person and try to read as widely as possible. Interesting to read your thoughts re generational change, definitely something to take into consideration.
 
'The basis of Kondratieff’s argument came from his empirical study of the economy’s performance of the USA, England, France, and Germany between 1790 and 1920. Kondratieff took the wholesale price levels, interest rates, production and consumption of coal, pig iron, and lead for each economy. He then sought to smooth the data using an averaging mathematical approach of nine years to eliminate the trend as well as shorter waves. Kondratieff thus arrived at his long-wave theory suggesting that the economic process was a process of continuous waves of boom and bust.
The problem with his data was that it properly reflected the beginning of his study. But as the Industrial Revolution took place, agriculture, which was 70% of the economy in 1850, fell to 40% by 1900 and eventually to 3% by 1980. His model failed because there was a cycle to the economy as well which he did not take into account. We moved from a commodity based system, to industrial, and then to primarily service industry. As we move further down this road, we can see that economic growth has declined for government has grown too big and is now consuming 40% of GDP compared to less than 10% at the beginning of his work. Government reduces GDP it produces nothing. Then we now have the internet displacing jobs in stores (service industry) just as the invention of automobiles displaced the horse and buggy. There is a cycle to change or innovation as well and this is absent from the K-Wave....we can even see from the chart, that his original wave varied greatly both in time duration 47 to 63 years, as well as intensity. Moreover, Kondratieff himself explained the cause was shifts in production, war, and great booms and busts in the discovery of gold. So the K-Wave offers no reliable method to forecast the economy, yet it stands as a testament to the existence of a complex business cycle.'

 

Hi Viceroy, wishing you a speedy recovery from your op (oh, and big thanks to your compatriot(?) the NHS New Zealand nurse who stood vigil by our pm's bedside, throughout the entire night apparently, during his stay in icu). That cynicism not directed at you btw! Instead thank you for the great post.                                                                                           Anyway, can I assume that as you visit here you are in broad agreement with this blog? Especially in relation to the economic cycle theory you have posted. Would be very interested to know if/how you divert from say DurhamBorn's thinking re the coming investment cycle in terms of how we fellow 'pleb' investors should position, ie. what are your own investment priorities and strategies. Not asking for details and hope I'm not prying to much, but new insights (or perhaps you are generally in agreement with rest of this forum?) from others is always valuable knowledge.

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Ellandback
1 hour ago, Sasquatch said:

They own the Xscape complex near Castleford and presumably lots of other operations like this - mixture of retail, restaurants plus an indoor ski slope, indoor laser zone etc. Deadsville at the moment. It might come back in due course but only if Ask, Nandos etc can still make a profit whilst maintaining social distancing. We call in from time to time as its a stopping off point when visiting family. Nearly always rammed with people but of course it needs to be rammed to make money (like all indoor malls). A few voids plus lower visitor numbers = disaster.

Tricky sector at the moment!

Indeed. I spent 10 years working for them, as well as the retail side they have a large property portfolio including big chunks of London. They were in the PFI game but offloaded the property outsourcing arm to William Pears Group following the GFC, I suspect similar drastic action will be required with what's approaching.

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sancho panza
13 hours ago, DurhamBorn said:

Looks very interesting

There's an ADR and not too pricey historically ,balance sheet on the edge of average on the downside.

https://www.investing.com/equities/wartsila-b

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sancho panza
2 hours ago, DurhamBorn said:

Whole sector hugely undervalued,

This is the main thing buried in the statement

"Our leading global Internet of Things (“IoT”) platform continues to resonate with Business customers and we added 19.5 million new SIM connections during the year. Our IoT connections support a range of industries including car manufacturers, logistics, energy and healthcare.  In December, we were the first telecommunications operator in Europe to announce an agreement with Amazon Web Services(“AWS”)to support ultra-lowlatencymobile edge computing services by deploying AWS Wavelength solutions at the edge of Vodafone's 5G networks, as part of our multi-cloud strategy. With low latency, the new services will help support artificial intelligence, augmented and virtual reality, video analytics, autonomous vehicles, robotics and drone control, and will generate incremental revenuesfor the Group"

There is going to be a massive move to the edge of the network for cloud based services over the next 20 years and very large parts will flow to free cash.

Telcos are reaching the end of a 25 year capital spend that kept increasing though a whole dis-inflation cycle.Its left them all with big debts,but they are mostly structured over a long period and at very low rates.They should be able to slowly pay down as they come due,and shouldnt have to roll them all over at higher rates.

As Capex starts to fall and connections increase free cash should start to grow and expand.Recession ahead should help as regulators are desperate and should wave through mergers in the sector.Telcos look like Tobacco did just before they consolidated the industry and made massive profits for investors.I dont expect the same returns but i think 250% to 400% including dividends are possible over the cycle.

There are even some that aren't that indebted.

We really need to up our exposure in the sector .o/t fact Vodafone actually went up during the 08 bust.

I need to start coma scaling those telcoms and working out where our targets are.We already own Vod but will buy more.Like SIngtel too.US ones I'm not so bothered about.Telstra?

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sancho panza
9 hours ago, Viceroy said:
I wonder if you're referring to Armstrong's alternating cycles of Public (government) and Private (sector) waves which is what his Economic Confidence Model (ECM) is based upon. 
Using Pi, amongst other things, he calculates a business cycle to be 8.6yrs. These can be broken down into smaller or larger cycles using Pi.
 
The peak of the last Public wave 1981 ties in with the start of Durhamborn's disinflationary cycle.
 
Durhamborn says his friend hopes to be dead by the end of the next cycle at the end of the 2020s.  Armstrong says exactly the same thing because of what we might face (plus he'll be in his 80s).  His ECM date for a peak in that cycle is similar at 2032.
 

I read him years ago and what he siad abotu a return to small govt(this could have been around 2010) I thought made a lot of sense.I'm obviously taking it out of context.In context it was very well reasoned with hsitorical context..I'll return to examine this post more thoughtfully tmrw night as I'm on a night shift tonight and on childcare duties till I go.

Starnge that 1981 to 2028(DB's end cycle year genreally) is 47 years.........................a number you reference elsewhere in another post and for me a key Lucas number.I'm a substantial fan of the divine ratio..Correlation ,coincidence both begin with a C etc etc.......

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Don Coglione
13 hours ago, DurhamBorn said:

I can't speak for their in-depth financials, but I can say that this is (or certainly was, not dealt with them for a few years) a hugely bloated organisation, one which treats customers and suppliers alike with equal disdain and which is widely despised in its native Finland.

Make of that what you will.

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