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


spunko

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13 hours ago, Harley said:

Well, maybe a minor legend!  He's just resurfaced.  I liked his Real Vision interview with Raoul on YouTube for the hedgie banter.

PS:  WTF, he's now on Macrovoices!

https://www.macrovoices.com/868-macrovoices-227-hugh-hendry-he-s-baaaaack

 

I’m yet to watch this but as Hugh referenced it in the above I figure it worth putting here.

 

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2 hours ago, Sugarlips said:

I’m yet to watch this but as Hugh referenced it in the above I figure it worth putting here.

 

The 'Grand Japanese (Hara-Kiri) Economic experiment!', that ultimately failed - but that hopefully will warn off others from doing similar... at least that's what i thought many years ago when i first saw the documentary. Today, thanks mainly to this blog, i understand that there are no easy alternatives and all the Western leaders, etc can do - after kicking their own economic can for many years - is hope that our own looming collapse and its aftermath is historically different this time - And that there are no pitch-forks this time round, after all we are so much more civilised these days, and so the sharpest barbs will hopefully be reserved to prickly social media comment!  

But what also stood out for me was the difference in post-war justice as metered out by the US under its own influence in the pacific region. In Europe, German war criminals were hung, but in Japan many (unconvicted) 'Japanese war-criminals' were soon occupying high-ranking corporate/government positions. Ok i understand its how Empires throughout time have worked, spheres of (self) influence and all that... i get it, i accept it. I guess we should just be grateful for small mercies for how benign the US empire is, especially with the Chinese threat now looming on the horizon.

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sancho panza
13 hours ago, jamtomorrow said:

This part of the market looks so terrifyingly and exotically broken to me, I'd rather just sit it out until sanity returns. It seems to consist entirely of HFTs front-running retail front-running the Fed, with no discernable price discovery.

ZH posted this for TSLA, would love to see the same for FANGMAN -

 

I like your phrasing in bold.Utterly broken sums it up.And the bond markets aren't any better.

Here's the robin tracker link in case you haven't got it.It's fascinating running through them and seeing where those guys are putting their moeny to work.Correlation isn't causation but still.

http://robintrack.net/symbol/MSFT

8 hours ago, Shamone said:

Got a little bit of rolls Royce this week and a little bit of BP yesterday.

Under £3 and if I wasn't alreay chock full I'd have some more.

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A lot is made of the Robinhood traders, but assuming it is something like Freetrade, surely the average holding is going to be incredibly small like under $100?

I don't think they would make a meaningful contribution to prices for a company with the market cap of Tesla. There must be bigger institutions going in on it.

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sancho panza

 

 

He's back with more pearls...you really can't argue with the logic I think,especially as he starts off with a dig at nominal GDP with the clear implication that inflation measures are inadequate.Potential for a casacde of defaults.SOcial unrest stemming from declining propserity.

 

All things covered in this thread over time.

https://surplusenergyeconomics.wordpress.com/2020/07/06/177-poorer-angrier-riskier/

MODELLING THE CRUNCH

It became clear from a pretty early stage that the Wuhan coronavirus pandemic was going to have profoundly adverse consequences for the world economy. This discussion uses SEEDS to evaluate the immediate and lasting implications of the crisis, some of which may be explored in more detail – and perhaps at a regional or national level – in later articles.

Whilst it reinforces the view that a “V-shaped” rebound is improbable, this evaluation warns that we should beware of any purely cosmetic “recovery”, particularly where (a) unemployment remains highly elevated (there is no such thing as a “jobless recovery”), and (b) where extraordinary (and high-risk) financial manipulation is used to create purely statistical increases in headline GDP.

The bottom line is that the prosperity of the world’s average person, having turned down in 2018, is now set to deteriorate more rapidly than had previously been anticipated.

Governments, which for the most part have yet to understand this dynamic, are likely inadvertently to worsen this situation by setting unrealistic revenue expectations based on the increasingly misleading metric of GDP, resulting in a tightening squeeze on the discretionary (“left in your pocket”) prosperity of the average person.

Exacerbated by crisis effects, the average person’s share of aggregate government, household and business debt is poised to rise even more rapidly than had hitherto been the case.

These projections are summarised in the first set of charts.

Fig. 1

#177 Fig 1 personal

Consequences

The implication of this scenario for governments is that revenue and expenditure projections need to be scaled back, and priorities re-calibrated, amidst increasing popular dissatisfaction.

Businesses will need to be aware of deteriorating scope for consumer discretionary spending, and could benefit from front-running some of the tendencies (such as simplification and de-layering) which are likely to characterise “de-growth”.

The environmental focus will need to shift from ‘big ticket’ initiatives to incremental gains.

Amidst unsustainably high fiscal deficits, and the extreme use of newly-created QE money to monetise existing government debt, we need also to be aware of the risk that, in a reversal of the 2008 global financial crisis (GFC) sequence, a financial crash might follow, rather than precede, a severe economic downturn.

Methodology – the three challenges

Regular readers will be familiar with the principles of the surplus energy interpretation of the economy, but anyone needing an introduction to Surplus Energy Economics and the SEEDS system can find a briefing paper at the resources page of this site. What follows reflects detailed application of the model to the conditions and trends to be expected after the coronavirus crisis.

Simply put, SEE understands the economy as an energy system, in which money, lacking intrinsic value, plays a subsidiary (though important) role as a medium of exchange. A critical factor in the calibration of prosperity is ECoE (the Energy Cost of Energy), which determines, from any given quantity of accessed energy, how much is consumed (‘lost’) in the access process, and how much (‘surplus’) energy remains to power all economic activities other than the supply of energy itself.

Critically, the depletion process has long been exerting upwards pressure on the ECoEs of fossil fuel (FF) energy, which continues to account for more than four-fifths of the energy used in the economy. The ECoEs of renewable energy (RE) alternatives have been falling, but are unlikely ever to become low enough to restore prosperity growth made possible in the past by low-cost supplies of oil, gas and coal.

Accordingly, global prosperity per capita has turned downwards, a trend which can be disguised (but cannot be countered) by various forms of financial manipulation.

This means that, long before the coronavirus pandemic, the onset of “de-growth” was one of three main problems threatening the economy and the financial system. The others are (b) the threat of environmental degradation – which will never be tackled effectively until the economy is understood as an energy system – and (c) the over-extension of the financial system which has resulted from prolonged, futile and increasingly desperate efforts to overcome the physical, material deterioration in the economy by immaterial and artificial (monetary) means.

On these latter issues, the slump in economic activity has had some beneficial impact on climate change metrics, whilst we can expect a crisis to occur in the financial system because its essential predicate – perpetual growth – has been invalidated. The global financial system has long since taken on Ponzi characteristics and, like all such schemes, is wholly dependent on a continuity that has now been lost.

Top-line aggregates

With these parameters understood, the critical economic issue can be defined as the rate of deterioration in prosperity, for which the main aggregate projections from SEEDS are set out in fig. 2. Throughout this report, unless otherwise noted, all amounts are stated in constant international dollars, converted from other currencies using the PPP (purchasing power parity) convention.

During the current year, world GDP is projected to fall by 13%, recovering thereafter at rates of between 3% and 3.5%. This rebound trajectory, though, assumes extraordinary levels of credit and monetary support, reflected, in part, in an accelerated rate of increase in global debt.

Within debt projections, the greatest uncertainties are (a) the possible extent of defaults in the household and corporate sectors, and (b) the degree to which central banks will monetise new government issuance by the backdoor route of using newly-created QE money to buy up existing debt obligations.

This is a point of extreme risk in the financial system, where a cascade of defaults – and/or a slump in the credibility and purchasing power of fiat currencies – are very real possibilities, particularly if the ‘standard model’ of crisis response starts to assume permanent characteristics.

Fig.2

#177 Fig. 2 aggregates

Looking behind the distorting effects of monetary intervention, it’s likely that underlying or ‘clean’ output (C-GDP) will fall by about 17% this year and, after some measure of rebound during 2021 and 2022, will revert to a rate of growth which, at barely 0.2%, is appreciably lower than the rate (of just over 1.0%) at which world population numbers continue to increase. Additionally, ECoEs can be expected to continue their upwards path, driving a widening wedge between C-GDP and prosperity.

These effects are illustrated in fig. 3, which highlights, as a pink triangular wedge, the way in which ever-looser monetary policies have inflated apparent GDP to levels far above the underlying trajectory. This is the element of claimed “growth” that would cease if credit expansion stalled, and would go into reverse in the event of deleveraging. The gap between C-GDP and prosperity, meanwhile, reflects the relentless rise of trend ECoEs. This interpretation, as set out in the left-hand chart, is contextualised by the inclusion of debt in the centre chart.

Fig. 3

#177 Fig. 3 chart aggregates

Fig. 3 also highlights, in the right-hand chart, a major problem that cannot be identified using ‘conventional’ methods of economic interpretation. Essentially, rapid increases in debt serve artificially to inflate recorded GDP, such that ratios which compare debt with GDP have an intrinsic bias to the downside during periods of rapid expansion in debt.

Rebasing the debt metric to prosperity – which is not distorted by credit expansion – indicates that the debt ratio already stands at just over 350% of economic output, compared with slightly under 220% on a conventional GDP denominator. As the authorities ramp up deficit support – and, quite conceivably, make private borrowing even easier and cheaper than it already is – the true scale of indebtedness will become progressively higher, thus measured, than it appears on conventional metrics.

Personal prosperity – a worsening trend

The per capita equivalents of these projections are set out in fig. 4, which expresses global averages in thousands of constant PPP dollars per person. After a sharp (-18%) fall anticipated during the current year, prosperity per capita is expected to recover only partially before resuming the decline pattern that has been in evidence since the ‘long plateau’ ended in 2018, and the world’s average person started getting poorer.

Meanwhile, each person’s share of the aggregate of government, household and business debt is set to rise markedly, not just in 2020 but in subsequent years. By 2025, whilst prosperity per capita is set to be 17% ($1,930) lower than it was last year, the average person’s debt is projected to have risen by nearly $17,900 (45%).

These, in short, are prosperity and debt metrics which are set to worsen very rapidly indeed. The world’s average person, currently carrying a debt share of $40,000 on annual prosperity of $11,400, is likely, within five years, to be trying to carry debt of $58,000 on prosperity of only $9,450.

This may simply be too much of a burden for the system to withstand. We face a conundrum, posed by deteriorating prosperity, in which either debt becomes excessive in relation to the carrying capability of global prosperity, and/or a resort to larger-scale monetisation undermines the credibility and purchasing power of fiat currencies.

Fig. 4

#177 Fig. 4 per capita table

In fig. 5 – which sets out some per capita metrics in chart form – another adverse trend becomes apparent. This is the fact that taxation per capita has continued to rise even whilst the average person’s prosperity has flattened off and, latterly, has turned down.

What this means is that the discretionary (“left in your pocket”) prosperity of the average person has become subject to a squeeze, with top-line prosperity falling whilst the burden of tax continues to increase.

Fig. 5

#177 Fig. 5 per capita chart

This also means that, in addition to deteriorating prosperity itself, there are two leveraging processes which are accelerating the erosion of consumers’ ability to make non-essential purchases.

The first of these is the way in which taxation is absorbing an increasing proportion of household prosperity, and the second is the rising share of remaining (discretionary) prosperity that has to be allocated to essential categories of expenditure.

These are not wholly new trends – and they help explain the pre-crisis slumps in the sales of non-essentials such as cars and smartphones – but one of the clearest effects of the crisis is to increase the downwards pressure on consumers’ non-essential expenditures.

Governments – the hidden problem

This has implications for any business selling goods and services to the consumer, particularly where their product is non-essential. It also sets governments a fiscal problem of which most are, as yet, seemingly wholly unaware.

As can be seen in fig. 6, governments have, over an extended period, managed to slightly more than double tax revenues whilst maintaining the overall incidence of taxation at a remarkably consistent level of about 31% of GDP.

This has led them to conclude that the burden of taxation has not increased materially, even though their ability to fund public services has expanded at trend annual real rates of slightly over 3%. When – as has happened in France – the public expresses anger over taxation, governments seem genuinely surprised by popular discontent.

The problem, of course, is that, over time, GDP has become an ever less meaningful quantification of prosperity. When reassessed on the denominator of prosperity, the tax incidence worldwide has risen from 32% in 1999, and 39% in 2009, to 51% last year (and is higher still in some countries). On current trajectories, the tax ‘take’ from global prosperity per capita would reach almost 70% by 2030, a level which the public are unlikely to find acceptable, especially in those high-tax economies where the incidence would be even higher.

Conversely, if (as in the right-hand chart in fig. 6) taxation was to be pegged at the 51% of prosperity averaged in 2019, the resulting ‘sustainable’ path would see taxation fall from an estimated $43tn last year to $38tn (at constant values) by 2030. At -12%, this may not seem a huge fall in fiscal resources, but it is fully 27% ($14tn) lower than where, on the current trajectory, tax revenues otherwise would have been.

Fig. 6

#177 Fig. 6 world tax

Politically, there seems little doubt that the widespread popular discontent witnessed in many parts of the world during the coronavirus crisis has links to deteriorating prosperity. Historically, clear connections can be drawn between social unrest and the related factors of (a) material hardship and (b) perceived inequity.

At the same time, the sharp deterioration in prosperity seems certain to exacerbate international tensions, where countries competing for dwindling prosperity may also seek confrontation as a distraction technique. These are amongst the reasons why a world that is becoming poorer is also becoming both angrier and more dangerous.

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sancho panza
18 minutes ago, Boon said:

A lot is made of the Robinhood traders, but assuming it is something like Freetrade, surely the average holding is going to be incredibly small like under $100?

I don't think they would make a meaningful contribution to prices for a company with the market cap of Tesla. There must be bigger institutions going in on it.

AS I've said correaltion dosnt mean causation however,the most recent ramp up does seem to coincide with some generous furlough cheques landing on US hosueholder doormats.

The big players are the insto's,no doubt,but never undeestimate their willingness to separate a retial investor from his money.

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7 hours ago, Boon said:

A lot is made of the Robinhood traders, but assuming it is something like Freetrade, surely the average holding is going to be incredibly small like under $100?

I don't think they would make a meaningful contribution to prices for a company with the market cap of Tesla. There must be bigger institutions going in on it.

Robinhood, etc make many millions of dollars selling order details or routing orders.  Details on their websites (legal requirement).  Maybe the ensuing front running is a major factor in bidding up some stocks.  This is seemingly very 2000 with all the pluses and minuses that means.  

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Donald McFlurry
10 hours ago, Boon said:

A lot is made of the Robinhood traders, but assuming it is something like Freetrade, surely the average holding is going to be incredibly small like under $100?

I don't think they would make a meaningful contribution to prices for a company with the market cap of Tesla. There must be bigger institutions going in on it.

You can see here how many users are hodling the stock (but not the value). It's quite well correlated with the recent uptrend.

https://robintrack.net/symbol/TSLA

 

Edit: ignore this, just saw the same posted further up the thread.

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jamtomorrow
2 hours ago, Harley said:

Robinhood, etc make many millions of dollars selling order details or routing orders.  Details on their websites (legal requirement).  Maybe the ensuing front running is a major factor in bidding up some stocks.  This is seemingly very 2000 with all the pluses and minuses that means.  

Reading around on this, came across some interesting background material.

I was trying to put the MSFT data (MSFT as good an example as any) in SP's link ( thanks SP!) into some kind of context. That increase of 250k on users holding does look like chicken feed vs 30mn daily volume on MSFT, but then I read this: https://www.cnbc.com/2017/06/13/death-of-the-human-investor-just-10-percent-of-trading-is-regular-stock-picking-jpmorgan-estimates.html

Kolanovic estimates “fundamental discretionary traders” account for only about 10 percent of trading volume in stocks. Passive and quantitative investing accounts for about 60 percent, more than double the share a decade ago, he said.

So 3mn might be nearer the mark for the denominator.

As for the retail volume numerator (i.e. how to extrapolate the RH data over the whole market?) ... well retail is bigger than I would have guessed (I would have guessed 10% tops - NB: article is from 5Y ago, would be interested in a similar more recent analysis): https://www.forbes.com/sites/richdaly/2015/05/06/small-investors-are-bigger-than-you-think/#67a72a9e6308

To borrow from Mark Twain, the death of the retail investor has been greatly exaggerated.

Recent data from the U.S. Federal Reserve shows that only 14% of U.S. households own individual stocks. To put that in context, as one news outlet did, there are more cat owners in the U.S. than retail investors.

But the number is misleading. Retail investors directly hold more equities than any other segment of investor, including mutual funds and hedge funds: $12.5 trillion in stocks, according to other data from the Federal Reserve. That means the small investor still has discretion over the single largest pool of equity capital in the world.

Slide21.jpg.3eca3af0485da74dde934a8a1850dc22.jpg

Granted a big chunk of that will be passives, but you can still see how this might add up to something, especially with HFT amplification.

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@jamtomorrow the irony of the above is that like all ponzi's passive means the bigger they get the more they buy each month in passive investment.Of course disinflation cycles mask the real driver of long term equity returns and thats dividends.

If we take Amazon its going to have to get to around $100 billion in free cash flow profit a year if it is to hand out decent and growing dividends.Crazy.

Unloved sectors that have fallen then attract less passive buying,even though they are entering a new cycle.

Iv always though markets hurt the most people possible,and passive investing would really fit that in a perfect way.

QE a and forcing down the rate curve has meant lots of the huge bubble companies have got away with not paying out profits in divis and getting equity holders to fund everything.Its likely there will be massive capital loss among the big techs and likely they will never regain those highs,and divis wont claw back the loss for a very long time,if ever.

Of course at the moment everyone holding the stocks was right,but i find the market over the longer term rewards people more who are wrong wrong wrong right,than right right right wrong.At this stage of the cycle assets,not profits should be what people aim to buy while they wait for the massive money supply to feed into prices.

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https://www.ft.com/content/9522b2e6-dc9b-49c4-853b-489e2dbef3ca

This is a really great article from probably the CEO who understands the industry as well as anyone.As iv been predicting the sector will consolidate and do a tobacco over the longer term.Interesting to see the Scandi companies mentioned.Telia and Telenor could be big merger targets,though they themselves might also try to expand instead.Telefonica will be one of the big players who does some buying i expect,and longer term that should mean much higher divis.BT likely a target for DTE,though interesting to see how that plays out.BT might themselves go for the Scandi companies,though their equity would say they are more likely a target.

Telcos need to consolidate the market before big tech can enter the market by buying up telcos and then they will have the best hand over the over the top players.

Mr Álvarez-Pallete said the group’s infrastructure was still “totally undervalued”.

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OK long story so I'll not bother you with the detail how it all happened.

Yesterday I received a letter from London Royal (old co-op) advising me about a pension I'd forgotten all about that has a transfer value of just over £50k and has me retiring next year on my 65th birthday.

Any ideas what I should do with it?

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sancho panza
5 hours ago, jamtomorrow said:

Reading around on this, came across some interesting background material.

I was trying to put the MSFT data (MSFT as good an example as any) in SP's link ( thanks SP!) into some kind of context. That increase of 250k on users holding does look like chicken feed vs 30mn daily volume on MSFT, but then I read this: https://www.cnbc.com/2017/06/13/death-of-the-human-investor-just-10-percent-of-trading-is-regular-stock-picking-jpmorgan-estimates.html

Kolanovic estimates “fundamental discretionary traders” account for only about 10 percent of trading volume in stocks. Passive and quantitative investing accounts for about 60 percent, more than double the share a decade ago, he said.

So 3mn might be nearer the mark for the denominator.

As for the retail volume numerator (i.e. how to extrapolate the RH data over the whole market?) ... well retail is bigger than I would have guessed (I would have guessed 10% tops - NB: article is from 5Y ago, would be interested in a similar more recent analysis): https://www.forbes.com/sites/richdaly/2015/05/06/small-investors-are-bigger-than-you-think/#67a72a9e6308

To borrow from Mark Twain, the death of the retail investor has been greatly exaggerated.

Recent data from the U.S. Federal Reserve shows that only 14% of U.S. households own individual stocks. To put that in context, as one news outlet did, there are more cat owners in the U.S. than retail investors.

But the number is misleading. Retail investors directly hold more equities than any other segment of investor, including mutual funds and hedge funds: $12.5 trillion in stocks, according to other data from the Federal Reserve. That means the small investor still has discretion over the single largest pool of equity capital in the world.

Slide21.jpg.3eca3af0485da74dde934a8a1850dc22.jpg

Granted a big chunk of that will be passives, but you can still see how this might add up to something, especially with HFT amplification.

Bit of a cross over post between you and BDs reply but basically,I suspect any uptick in volume from retial has a disproportionate effect on daily volume

@AWW would have more knowledge of trading algo's but from what I udnerstand they trade the nosie that gets created by genuine new demand.One of the reasons we trade so infrequently or with a very strict plan.SOme of the price action on capitulation days during March was indicative of heavy mechanical trading.ALso entirely possible that passive vehicles were causing larger than normal overold/bought indicators-I remember Kinross having a friday close at 330 then getting to 475 by tuesday close..............

I remember reainf bernard grey 25 years ago and he said in the 70's 70% of stocks were owned by indivudals

2 hours ago, DurhamBorn said:

@jamtomorrow the irony of the above is that like all ponzi's passive means the bigger they get the more they buy each month in passive investment.Of course disinflation cycles mask the real driver of long term equity returns and thats dividends.

If we take Amazon its going to have to get to around $100 billion in free cash flow profit a year if it is to hand out decent and growing dividends.Crazy.

Unloved sectors that have fallen then attract less passive buying,even though they are entering a new cycle.

Iv always though markets hurt the most people possible,and passive investing would really fit that in a perfect way.

QE a and forcing down the rate curve has meant lots of the huge bubble companies have got away with not paying out profits in divis and getting equity holders to fund everything.Its likely there will be massive capital loss among the big techs and likely they will never regain those highs,and divis wont claw back the loss for a very long time,if ever.

Of course at the moment everyone holding the stocks was right,but i find the market over the longer term rewards people more who are wrong wrong wrong right,than right right right wrong.At this stage of the cycle assets,not profits should be what people aim to buy while they wait for the massive money supply to feed into prices.

I agree,it's al about assets. I like that analogy in bold.very true and particuarly with regard to the fangman stocks.with them you've only got to be worng once at these eye watering levels.GFI dropped 50% to near $2 after we boguth them in 2017 and then yoyoed around entry point for a few years..

I'd be genuinely interested to see how much markets have been skewed by HFT/ETF's over the last two decades.Worth noting as well that big broker dealers dont pay stamp duty on trades in the uk the way mere mortals do iirc.

 

I've been pciking throuhg the comments on the surplus energy blog which are very enlightened.Dr Tim Morgan interacts a bit and I'll post some more wednesday when I'm finished at work.This is one of the first and highlights the very real risk of the solvency phase that raoul pal talked about 100 sides back

image.png.aed66b3018a3a9413e6658d222bd705e.png

image.thumb.png.4a2ad037ffe888fdef49df13062f6975.png

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sancho panza

@DurhamBorn

have you looked at Japan Tobacco before?BAT's has been bobbing around this £28-£30 for nearly two years.I can't see the point of buying Imperial given the sheer scale of it's debts versus the others.Looks like another actor in the scottish play.....:ph34r:

https://www.investing.com/equities/japan-tobacco-adr-financial-summary

We already hold Nutrien(hangover from Postash Saskatwan,but am tempted to laod more.WE have some options on them to Jan 21.

Some real bargains out there.

ALso,ref telecoms,I've long been a prospective buyer of SIngtel(cross holdings acorss a lot of itneresting emerging Asian markets) and also Telstra although my scottish play induced aversion to debt laden companies makes me a little tentaive.

 

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22 minutes ago, sancho panza said:

@DurhamBorn

have you looked at Japan Tobacco before?BAT's has been bobbing around this £28-£30 for nearly two years.I can't see the point of buying Imperial given the sheer scale of it's debts versus the others.Looks like another actor in the scottish play.....:ph34r:

https://www.investing.com/equities/japan-tobacco-adr-financial-summary

We already hold Nutrien(hangover from Postash Saskatwan,but am tempted to laod more.WE have some options on them to Jan 21.

Some real bargains out there.

ALso,ref telecoms,I've long been a prospective buyer of SIngtel(cross holdings acorss a lot of itneresting emerging Asian markets) and also Telstra although my scottish play induced aversion to debt laden companies makes me a little tentaive.

 

I would buy Japan tobacco,but i prefer BAT,they are a money machine and have fantastic exposure,plus their next gen products are doing really well.Imperial made a mess of next gen but their tobacco business is still managing to grow free cash flow.They have around £700 million spare since the divi cut to pay down debt quicker or buy/expand.If they pay down debt with most/all of it i expect they are setting themselves up to be bought out.BAT and Japan might split them.

I hold BAT and Imperial again,im down about 17% on Imperial before divis and up 16% on BAT before divis.If in 10 years i was level on capital between the two id be happy as the divis are both over 8% on entry price,even after the Imperial cut.They both made me massive amounts in the past though and i sold them all near the top a few years ago.

I see so much value in European telcos i havent really botherd with many in other countries.Iv been buying more Nutrien this week and Telenor.Iv been slowly taking some profits on silver miners,some up 100%.I really like Nutrien.Great potash business,but also its retail side is able to slowly buy up other companies and there is a very fragmented industry to go after.I dont expect fireworks,but they are one of my 5 favourite stocks.

Our government has a massive problem on its hands.It over spending on welfare etc by a big magnitude,but business is re-trenching.Their crazy lockdown has casued them all sorts of problems.Councils who have feasted on retail assets are in for a shock as well.Business rates need massive cuts or towns will be hollowed out.A lot of guys i know across some big companies are saying massive job losses are being worked on.Cant see cars etc coming back anywhere near,and transport hangs on government funding it.If that stops the whole sector goes down.Im itching to buy the sector,but sold when they doubled after march lows,zero visability on how this plays out.

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1 hour ago, sancho panza said:

 

@AWW would have more knowledge of trading algo's

Sadly I can't add any insight here - my speciality is FX which obviously trades completely differently to equities.

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3 hours ago, Option5 said:

OK long story so I'll not bother you with the detail how it all happened.

Yesterday I received a letter from London Royal (old co-op) advising me about a pension I'd forgotten all about that has a transfer value of just over £50k and has me retiring next year on my 65th birthday.

Any ideas what I should do with it?

You'll get a few very different suggestions. Me? If the BK hasn't happened by the time you can cash out then stick it in PB and wait for the BK and then buy all the inflation loving shares discussed here. Perhaps squirt a little into Gold as a hedge. When inflation kicks in and the LT Gilts start to produce YTM above 5% I'll start switching and laddering into those for guaranteed income. I'm not a tremendous risk taker and want an easy life after age 70!

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Lightscribe
20 hours ago, Option5 said:

OK long story so I'll not bother you with the detail how it all happened.

Yesterday I received a letter from London Royal (old co-op) advising me about a pension I'd forgotten all about that has a transfer value of just over £50k and has me retiring next year on my 65th birthday.

Any ideas what I should do with it?

Not sure of your current pension setup etc, but if you were thinking of investing it rather than just taking cash by next year theres plently of sectors that look good value right now.

First off some of the silver miners like HOC have  been suffering with mine closures due to COVID etc. I think once the worst has passed, they’ll rally as silver is breaking out. FRES is already on a run, I’ve taken profit there already and was lucky that a limit order triggered on a slight pullback. I’ll be letting it ride now, my downfall is constantly taking profit too early.

Now gambling is back up and running (people still sitting at home) I think this could next do well. William Hill has been shedding staff and brick and mortar stores, which is a good thing going into the future.

As others have said, telcos, Vodafone is looking good value so I’ve been adding to my pile there. I’ve got some BT, but I’m still not convinced, if it makes through the other side then good or else gets bought out.

I’ve always stayed away from retail, I’m glad I stuck by that mantra (although Halfords would have been a fantastic rebound COVID stock in which I would now be selling).

Potash (Mosiac, Nutrigen) Military, I’ve been buying some BAE. Green energy, National Grid and my main monthly investment is building up captial in Shell and BP while they hover at these levels.

So all in all, keep mostly in cash for another sharp downward turn, but lots of value already to start putting some allocations in.

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And in addition to my above post, just to underline my own failure to comprehend not taking profit too early is in crypto with LINK. 

I sold out last month in ladders top being 49000. I expected to be able buy back in...that didn’t happen.

5712FE77-B200-4295-9471-AA28E32792A9.jpeg

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1 hour ago, Sideysid said:

Not sure of your current pension setup etc, but if you were thinking of investing it rather than just taking cash by next year theres plently of sectors that look good value right now.

First off some of the silver miners like HOC have  been suffering with mine closures due to COVID etc. I think once the worst has passed, they’ll rally as silver is breaking out. FRES is already on a run, I’ve taken profit there already and was lucky that a limit order triggered on a slight pullback. I’ll be letting it ride now, my downfall is constantly taking profit too early.

Now gambling is back up and running (people still sitting at home) I think this could next do well. William Hill has been shedding staff and brick and mortar stores, which is a good thing going into the future.

As others have said, telcos, Vodafone is looking good value so I’ve been adding to my pile there. I’ve got some BT, but I’m still not convinced, if it makes through the other side then good or else gets bought out.

I’ve always stayed away from retail, I’m glad I stuck by that mantra (although Halfords would have been a fantastic rebound COVID stock in which I would now be selling).

Potash (Mosiac, Nutrigen) Military, I’ve been buying some BAE. Green energy, National Grid and my main monthly investment is building up captial in Shell and BP while they hover at these levels.

So all in all, keep mostly in cash for another sharp downward turn, but lots of value already to start putting some allocations in.

BT has two options,buy out smaller players and expand,or be bought out ,probably by Deutsche Telecom.I expect the 200 European telcos to become 30,probably 3 or 4 big players and then challenger players bigger than now.The only real thing standing in the way is politics.National Telcos are strategic assets and governments might not like them being owned by other countries big telco.Interesting to see how it plays out,but one thing im pretty certain of is the bigger ones that own the networks are vastly undervalued for where we are in the cycle.

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Don Coglione
1 hour ago, DurhamBorn said:

BT has two options,buy out smaller players and expand,or be bought out ,probably by Deutsche Telecom.I expect the 200 European telcos to become 30,probably 3 or 4 big players and then challenger players bigger than now.The only real thing standing in the way is politics.National Telcos are strategic assets and governments might not like them being owned by other countries big telco.Interesting to see how it plays out,but one thing im pretty certain of is the bigger ones that own the networks are vastly undervalued for where we are in the cycle.

How do you value a network stuffed full of Huawei hardware?!

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On 11/07/2020 at 12:15, Harley said:

I think his (and others) comment about USD being like gold when on the gold standard is interesting.  It's suggested the Great Depression was caused in part by a lack of gold and that today the world has a lack of USD.  The curse of being the global reserve currency.  Maybe this means they either need to print or "get off the pot"!  Printing presumably(?) would lower DXY (no free lunch forever!) but the degree of the domestic inflationary effects are unclear given the US is a bit of a closed economy. 

Just read Hendry's 'paper': - Joe Rogan for Fed Chair, The Dawn of Chaos. Have you read it Harley?

Unfortunately, i wasn't impressed, It must have taken all of 30-minutes to think-up, the guy is interesting/entertaining - but give me Lyn Alden any day (notice she is getting more high profile these days)... oh, and not forgetting our own generous blog host of course (all hail the munificent DB)!  

I'm left thinking is Hendry just another one of those (bored ex hedgies) guys living on a Carribean Island that we tune in to listen to - oh, the irony!!... what me jealous?? you bet!! But i'm mostly attempting to show my frustration that these people don't say more of value, and actually am deeply suspicious that they keep their best info. to themselves... Could do so much more i think.

Btw, I did notice Hendry's comment in the interview about being tired of being told how to live by experts. That reminded me of the Michael Gove similar comment that he got ridiculed for, yet he was specifically referring to the subjective sciences such as economics, but of course the media willfully chose not to understand - thus somewhat proving we live in one big echo chamber, soon to come crumbling down i think. Hendry's paper sub-title of 'Dawn of Chaos' quote i also found apt - i think it refers to Ayn Rand/Atlas Shrugged? Her book concerns the 'true experts' and 'doers' exiting the world scene because they realise that despite doing all the work/responsibilites, they don't get rewarded/recognised. So they 'shrug-off', leaving the rest of us to get on with it with dramatic results... this chimes with my thinking of how appalling our current leaders are, not to mention our hollowed out institutions are today... anyway i will stop now as i'm beginning to ramble.   

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Been looking at a set of US O&E energy company accounts (FY19 and Q120) and imagine the situation is industry wide (a la BP).  Significant write downs in fixed asset values, including goodwill (like all of it!) forced upon them by accounting standards.  Gotta be a nice tail wind for the survivors when oil prices recover further.

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