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

[sancho panza]

6 hours ago, Castlevania said:

Banking book accounting. You don’t mark to market. So generally speaking they will only write down the value of the loan once the borrower has failed to make a payment.

Roger that CV,what I find fascinating is that thanks to the IRB approach to risk weighting,the big banks can categorize loan risk on the basis of their own data meaning that it's entirely possible that the risk of numerous loans could be entirely mispriced and not enough capital held in reserve.

The end result being that if/when the laons start going sour,they all go sour at once asin classic Fisher debt deflation.Asset prices get hit such that enough people decide to give up the ghost,which means the banks have to restrict credit creation which impacts asset prices more.

Effectively,as long as payments are made,everythings fine,but if/when a trickle of loans turn sour,it could become a flood very quickly given how little capital msot banks have.

This is why I think the epicentre of the next banking crisis will be in CRE as govts will do whatever it takes to keep people in their homes.

 

[sancho panza]

26 minutes ago, Majorpain said:

Just spotted this, good timing!  I can see how you think the majority of US Market is of dubious value, intangibles are worth little in an insolvency situation, especially goodwill. 

That could be heavily skewed by the big faang boys ,but even so,it's huge,wouldn't fancy selling intangibles into a broken market place.

[Castlevania]

7 minutes ago, sancho panza said:

Roger that CV,what I find fascinating is that thanks to the IRB approach to risk weighting,the big banks can categorize loan risk on the basis of their own data meaning that it's entirely possible that the risk of numerous loans could be entirely mispriced and not enough capital held in reserve.

The end result being that if/when the laons start going sour,they all go sour at once asin classic Fisher debt deflation.Asset prices get hit such that enough people decide to give up the ghost,which means the banks have to restrict credit creation which impacts asset prices more.

Effectively,as long as payments are made,everythings fine,but if/when a trickle of loans turn sour,it could become a flood very quickly given how little capital msot banks have.

This is why I think the epicentre of the next banking crisis will be in CRE as govts will do whatever it takes to keep people in their homes.

 

It’ll definitely be in the lending books.

[Majorpain]

25 minutes ago, sancho panza said:

That could be heavily skewed by the big faang boys ,but even so,it's huge,wouldn't fancy selling intangibles into a broken market place.

Probably true, but it doesn't change the fact that if you buy a tracker it contains a lot of hot air!  

I wonder if Warren Buffet is so keen on them these days??!! 

[ONC]

I was just investigating the “Scottish investment trust”. It has been going since 1887.

I was just looking over their current holdings list,

https://thescottish.co.uk/wp-content/uploads/2021/05/List-of-Investments-30-April-2021.pdf
 

It seems remarkably similar to the sectors/shares discussed here. Heavy on gold mining, big oil, telecoms etc.  Some shares I had not thought about before, that I will look into.

Maybe they have the same ‘Roadmap” that we do???
 

 

[Starsend]

8 hours ago, sancho panza said:

Any particularly?I'll have a butchers'.Dyodd natch

I'm just buying across the sector as I think the whole sector is cheap, not doing much in the way of individual research to be truthful. Some of them have some pretty good exposure to gas which is mostly what I'm after long termish.

But so far bought Peyto, Tourmaline, Birchcliffe and ARC Resources. Tempted by Suncor as well although obviously a lot bigger.

I also bought some stinking dirty coal today, ARCH Resources (nearly confused it with ARC!) as I think they could easily double in no time when the hysteria dies down a bit and the world gets back to normal.

[Starsend]

8 hours ago, Talking Monkey said:

I'm gonna read that it sounds interesting

I'm reading it right now, fecking big book but a good read so far.

[leonardratso]

did yous all get your 2xtga per 10AAL?

fell a good 16% yesterday, but up 30% today, dirty SA coalers, ive bought some more, ill have a look at arch, need all the bad or bad for you companies - just to stick 2 fingers up at the woke'd ESG arses.

[Harley]

2 hours ago, Majorpain said:

Just spotted this, good timing!  I can see how you think the majority of US Market is of dubious value, intangibles are worth little in an insolvency situation, especially goodwill. 

Good one.  They cursorily mention goodwill though.  That's the biggy.

[jamtomorrow]

Sh*t on it

 

[Hancock]

1 hour ago, jamtomorrow said:

Sh*t on it

 

RR must be going into finance.

[Bobthebuilder]

13 hours ago, ONC said:

I was just investigating the “Scottish investment trust”. It has been going since 1887.

I was just looking over their current holdings list,

https://thescottish.co.uk/wp-content/uploads/2021/05/List-of-Investments-30-April-2021.pdf
 

It seems remarkably similar to the sectors/shares discussed here. Heavy on gold mining, big oil, telecoms etc.  Some shares I had not thought about before, that I will look into.

Maybe they have the same ‘Roadmap” that we do???
 

 

The charges on that over 5 years are a bit eye watering, mind. £5000 investment with £552 in charges over the 5.

[ONC]

Bobthebuilder. I did not see that, Those charges are steep!! I was not thinking to buy the fund. Just really looking for ideas.

[Bobthebuilder]

28 minutes ago, ONC said:

Bobthebuilder. I did not see that, Those charges are steep!! I was not thinking to buy the fund. Just really looking for ideas.

It is really interesting that a fund as old as that is positioned similar to us on here.

Talking about funds, my holding of the  Guinness energy fund is now up a higher percentage wise than my Shell holding, nice one @Cattle Prod cheers.

[Lightscribe]

25 minutes ago, Bobthebuilder said:

It is really interesting that a fund as old as that is positioned similar to us on here.

Talking about funds, my holding of the  Guinness energy fund is now up a higher percentage wise than my Shell holding, nice one @Cattle Prod cheers.

Yup I’ll chime in there, thanks CP. That’s really hit the ground running and is leading in my portfolio in that sector.

I suspect because it contains a broad range of the sector as well as the smaller holdings in other countries that don’t give a shit about the narrative. I suspect some may have sneaked past media backlash while big oil has been in the firing line.

[NogintheNog]

1 hour ago, Bobthebuilder said:

15 hours ago, ONC said:

I was just investigating the “Scottish investment trust”. It has been going since 1887.

I was just looking over their current holdings list,

https://thescottish.co.uk/wp-content/uploads/2021/05/List-of-Investments-30-April-2021.pdf
 

It seems remarkably similar to the sectors/shares discussed here. Heavy on gold mining, big oil, telecoms etc.  Some shares I had not thought about before, that I will look into.

Maybe they have the same ‘Roadmap” that we do???
 

 

Expand  Expand  

The charges on that over 5 years are a bit eye watering, mind. £5000 investment with £552 in charges over the 5.

I think it is important to remember that some of that cost is the charges on your holdings in say a SIPP by your holding company, say HL.
The ongoing charge on that fund is actually 1.26% pa, which is higher than some others but not out of the way considering the diversity of the holdings and the fact I can't even buy some of them on my platform!
That diversity also gives you some protection.

If two years ago you'd have plugged £5000 into the SCIN and £5000 into RDS-B, the SCIN would be worth 3.3% more + the dividends, whilst RDS-B would be worth 48% less + the dividends.
If there is gonna be a BK, I think these trusts will suffer again, but not as much as some individual stocks.

Declaration: I do own some SCIN, but I own a lot more RDS-B!

[DurhamBorn]

I always tend to use individual shares,but for some areas i also used funds.Mainly Asian Income over the years and i tend to use investment trusts.I think around 1% is fair enough considering a lot of the stocks are hard to buy for hairy monkeys like us.I find with the £200 fee max from HL for my SIPP and my trading fees most years when i buy or sell little is around 6%,about 1/20 of what id pay an IFA a year who would pretty much stick me in a 60/40 fund,a bond fund,a US equity fund and a European equity fund.When i used an IFA to do by final salary pension transfer and had to act dumb to get it done,i got a good chance to look at what they do.To be fair the mix they came up with was broad and in a long dis-inflation fair enough,but what people miss is they were taking around 26% to 33% of the growth in fees.Given the flip to reflation and the bad allocation they are all going to have without knowing until its too late those fees are going to hurt.

 

[feed]

 

 

Our European business is leading the charge in its commitment to a fully electric future. But we’ve also been vocal about the scale of the electrification challenge, as well as the critical need for partnership to deliver on the promise of a greener future. Put simply, electrification is a journey that we all need to go on, and there needs to be joint equity amongst all key stakeholders. That’s why, when we talk about partnership, we’re not only talking about other OEMs, but an array of different stakeholders (governments, policymakers, and energy providers), all of whom are vital in ensuring that the transition to electric can take place. 

A critical part of the electric transition is, of course, energy provision and infrastructure. I recently sat down with Centrica CEO, Chris O'Shea, to discuss the collaboration between our two firms, what electrification means for his company, and the collaboration that's needed to get Europe ready to go electric

Internal vid, so can’t share it, but really about a partnership in building a shared EV infrastructure network and a pay as you go model.
 

So it's another question with the energy companies, partnerships with the autos are happening.  

 

 

[Loki]

6 minutes ago, feed said:

 

 

Our European business is leading the charge in its commitment to a fully electric future. But we’ve also been vocal about the scale of the electrification challenge, as well as the critical need for partnership to deliver on the promise of a greener future. Put simply, electrification is a journey that we all need to go on, and there needs to be joint equity amongst all key stakeholders. That’s why, when we talk about partnership, we’re not only talking about other OEMs, but an array of different stakeholders (governments, policymakers, and energy providers), all of whom are vital in ensuring that the transition to electric can take place. 

A critical part of the electric transition is, of course, energy provision and infrastructure. I recently sat down with Centrica CEO, Chris O'Shea, to discuss the collaboration between our two firms, what electrification means for his company, and the collaboration that's needed to get Europe ready to go electric

Internal vid, so can’t share it, but really about a partnership in building a shared EV infrastructure network and a pay as you go model.
 

So it's another question with the energy companies, partnerships with the autos are happening.  

 

 

Thanks for that, hopefully good news for us Scottish share holders

[leonardratso]

11 minutes ago, Loki said:

Thanks for that, hopefully good news for us Scottish share holders

aye, ford and centrica can both go in the toilet together.

[feed]

Well, mr market likes the electrification news.

   

 

Obvious self interest here, as i've 25 years worth of pension 

 

 

 

[DurhamBorn]

@feed you have ,without care covered the thread with that banned name.It has been my worst buy for at least 10 years in £ loss terms,and yet you happily shove it into our faces 

Mind you maybe there is hope,maybe its a sleeping giant,maybe now its balance sheet is nearly clean there is great value.Should i pull the trigger on some more?,i have none in my SIPP,and then it might even show as a + 

The bull case is as the above says and they are surely a sitting duck for a takeover,though the nuclear side puts everyone off bidding i think.Though surely Shell or BP must run the rule over them every so often.

See what you have done now,the thread might pile in 

[leonardratso]

hehehe, i had a small tranche in t212 that made a small amount of profit, but it never seemed to launch, i got shot of it this morning with no regrets. My larger tranch has never been green, just need it to go so 1 time and i will get shot of that one as well, with no regrets, even the dividend is somewhat shite in normal times.

 

[feed]

Oddly as someone mentioned her yesterday, she pops up in the FT today.  

Should We Stay or Should We Go, by Lionel Shriver,

https://www.ft.com/content/edd69a65-6ea9-4bc5-aea6-4dc91cd7dd02

The possible futures become increasingly wild. In one, a drug is discovered that reverses ageing, and the couple live a life of near-endless utopian happiness, funded by “modern monetary theory”: “Lo, it was more than possible for the government to print an infinite amount of money and then give the money to its citizenry to buy things.” In other chapters, things go less well. In one, they are frozen, and wake with “freezer burn” to find that humanity has evolved to have wings and lives in a vast hive. In another, Covid-19 kicks off a long period of stagflation that is immune to stimulus — “governors stopped bothering to number the buying binges after QE12

 

[Green Devil]

On 08/06/2021 at 10:50, DurhamBorn said:

BAT and BT doing nicely today,doubled BT bottom buy today, and Brazilian telcos still catching a bid 

 

Not advice etc,but iv been buying some Ingredion Inc with a few potash profits.They have been slowly growing their plant protein side for meat alternatives etc.As the roadmap moves along likely meat alternatives will grow hugely,government will push the health and environment side,but really its because meat is going to get expensive and hit lower earners.

This is a cross market buy from work on the lags of inflation,not inflation itself.Im looking more mid roadmap now as the primary areas are/have already delivered big profits,or decent.

Id rather buy it in a BK of course ,but see a chance this area becomes a hot one later in the cycle,and these are a quality company.DYOR etc,not advice.

What do you think of the US tech plays? Ie T or VZ? They seem to offer and decent div yield and arent really sky high like the hot tech stuff.