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

[DurhamBorn]

18 minutes ago, DoINeedOne said:

Royal Mail up again today pretty much near break even on this one doubt its going stay there

£9 hopefully by 2027

[DurhamBorn]

23 minutes ago, Yellow_Reduced_Sticker said:

SERIOUS question @DurhamBorn, do you think that, Go Ahead Group, Stagecoach, national express could really go BUST?

 

(NOT asking for trading advice just ya view point, THANKS mate)

 

I've followed the above companies for 25 years, it would be a SAD day if they did, I'm in my mid-fifties and have NEVER seen these sort of share price COLLAPSE's... anyway the only 1 I'm heavy in at the mo is Stagecoach...CHEERS!

 

AND now for some some YRS dry humor...as we enter another ROLLER-COASTER Trading day!

 

 

 

Don't be daft, I bought last October which for some odd reason (for me ) turns out to be the TOP...in house prices!

 

 

Yeah...Also a Convicted CRIMINAL!

Really WONDERFUL people in power...Yes you really could NOT make it up!

https://www.independent.co.uk/news/world/europe/christine-lagarde-convicted-imf-head-found-guilty-of-negligence-in-fraud-trial-a7484586.html

 

Anything can go bust,and for any reason.Transports are key to the country though and also get around 75% of their income from contracts.The question is around if they can reduce services as they are contracted to provide them.They can cancel lots of capital spending as well.They can also access the government scheme for loans if needed.If they survive they should prosper as car use falls during the cycle.As always its crucial to have a broad spread,for instance Royal Mail is up 30%+ from the lows .Brutal time to invest,but hopefully the cycle unfolds with most companies making it,some probably wont.

[M S E Refugee]

8 minutes ago, DurhamBorn said:

£9 hopefully by 2027

I bought 91 shares yesterday for 87p each through my work scheme unfortunately we can only save £23.07 a week but we get salary sacrifice on our scheme.

[TheCountOfNowhere]

6 minutes ago, DurhamBorn said:

Anything can go bust,and for any reason.Transports are key to the country though and also get around 75% of their income from contracts.The question is around if they can reduce services as they are contracted to provide them.They can cancel lots of capital spending as well.They can also access the government scheme for loans if needed.If they survive they should prosper as car use falls during the cycle.As always its crucial to have a broad spread,for instance Royal Mail is up 30%+ from the lows .Brutal time to invest,but hopefully the cycle unfolds with most companies making it,some probably wont.

I wont be seeing a return on the reflation stock for well, 50 years.

[sancho panza]

1 hour ago, Harley said:

So is now a good time to buy loads of stock about to issue a div, if they exist?

as per @Cattle Prod previous posts

'best cure for cheap oil is cheap oil' etc

https://www.barrons.com/articles/european-oil-stocks-pay-amazing-dividends-and-they-may-even-be-safe-51584545867

After a brutal selloff for oil and gas stocks, large European oil companies now offer investors some remarkable dividends.

Royal Dutch Shell’s stock, which has fallen by 50% in a month, was yielding 16% on Wednesday. BP had a dividend yield of 14%. Investors who trust those payouts can afford to invest in the stocks even if they stay depressed for the next couple of years.

The big question, of course, is whether the companies can keep paying those dividends at a time when oil prices have already dropped into the $20s and could stay at depressed levels for months.

The market seems to be saying they can’t. Futures markets now imply cuts to dividends for all the integrated European oil majors, according to Goldman Sachs analyst Michele DellaVigna. In aggregate, those cuts could be as large as 35%. The largest dividend cuts implied by market prices are for Repsol (ticker: REP.Spain), ENI (E), Total (TOT), and Shell (RDS.A).

But DellaVigna argues that investors are too pessimistic. The largest global oil majors have consistently held on to their dividends even during times of economic stress. The Big 5 majors—Shell, BP (BP), Total, Exxon Mobil (XOM), and Chevron (CVX)—haven’t cut their payouts in more than 30 years, even during the 2014-16 washout, when oil went from $110 to $26. (BP cut its dividend in 2010 after the Macondo disaster, not a change in oil prices.) That consistency is just one reason that investors ought to bet on those dividends again, he argues.

The European oil majors have also lowered their break-even prices and have flexibility to reduce both their capital and operating budgets. OPEC members may have lower break-evens for new wells, but their fiscal break-evens—the oil price they need to fund their budget—are around $80 on average, DellaVigna estimates. Saudi Arabia can afford low prices for a while, but eventually it will likely have to slow production to give prices a boost.

The oil price that European oil majors need to cover their capital budgets and dividends has fallen to around $50 today from over $100 at the start of 2016, DellaVigna estimates. By 2021, the average break-even price will be below $50, he writes. For U.S. majors, some of which have considerable shale acreage that’s more expensive to drill, break-evens to cover capital expenditures and dividends are over $60.

While Repsol and ENI have cut in the past, DellaVigna expects those companies to keep their dividends this time, and even expects Repsol to raise its dividend for the next two years.

48 minutes ago, DoINeedOne said:

Royal Mail up again today pretty much near break even on this one doubt its going stay there

AMazing how these market moves hide some intriguing internal moves.As per Tech bubble,quite a lot of shares actually went up while the market tanked 70% eg BHP/BLT

44 minutes ago, Cattle Prod said:

1% rise in unemployment results in 40,000 deaths in the USA, apparently. The old gits who have decided to shut down the world to protect themselves would do well to remember that.

As I've said before,the solution here is possibly worse than the disease.Politicians tend to focus on certain statistics and the narrative around them.Very few look holistically at a certain health problem eg the increase in mental health issues down the line from isolating lonely people.The economic dislocation from this may well mean that NHS funding suffers two years hence possibly damaging the health of a lot more people but without the headlines.

 

[DurhamBorn]

@sancho panza lots of pain of course and some stocks hit hard like the transports,but others like Solvay SA im up 25% in a week.They will be big winners  in the next cycle and expect a 5x on them from bottom.Telefonica are up roughly 20% as well,Vod im down around 22%.Royal Mail up 30% from bottom.CBs havent right sized their printing yet though and if they dont move quickly falls will turn back down.

Whats certain though is inflation is going up after this settles.Big oil might cut payouts but if they do i would bet they signal its for 6 months,Shell has been buying back a lot of shares the last couple of days.They can borrow at 2% to save 15% dividend payout,right move as their assets will easily outpace interest rate increases in the cycle

[TheCountOfNowhere]

1 hour ago, DoINeedOne said:

Royal Mail up again today pretty much near break even on this one doubt its going stay there

 

You were right :-( 

 

Market Summary > Royal Mail PLC

LON: RMG

Follow

 

157.35 GBX −3.45 (2.15%)

[Harley]

6 minutes ago, DurhamBorn said:

Whats certain though is inflation is going up after this settles.

Not just money printing but the fall in GBP against food exporting countries to us (e.g. EUR) and commodities (USD)?

[TheCountOfNowhere]

2 minutes ago, Harley said:

Not just money printing but the fall in GBP against food exporting countries to us (e.g. EUR) and commodities (USD)?

It's criminal, from the unelected banksters again.

[DurhamBorn]

Just now, Harley said:

Not just money printing but the fall in GBP against food exporting countries to us (e.g. EUR) and commodities (USD)?

Exactly,lots of inflation coming due to this massive deflation.People will of missed it but bonds are selling off as well as shares,Vanguards 60/40 fund is down 20%.Yes you could argue its outperformed the share indexes,but with bonds at near zero they will miss all of any share rally probably as well.

[TheCountOfNowhere]

Ftse 100 back at July 1997.

So if you piled in then you are still only getting you initial investment back + the dividends

How would a savings account have fared compared to dividends ?

Best to buy at the bottom.

[headrow]

I see New River Reit came out today and suspended the dividend payments , using the 17m to provide a cash buffer.

I expect all these real estate investment companies to do the same. I hold quite a few NRR and am quite happy with what they have reported today , going to double up when we get another brutal down day.

Sharecast News) - NewRiver updated the market on the impact of the Covid-19 coronavirus pandemic on its business on Thursday, saying its focus was on managing cash resources "very carefully" and maintaining liquidity.
The FTSE 250 real estate investment trust said it had ?72m of unrestricted cash reserves and ?45m of undrawn revolving credit facilities, giving available liquidity of ?117m.

It said it benefitted from a wholly unsecured balance sheet, with no bank refinancing events due before August 2023, and the company's ?300m corporate bond not due for repayment until 2028.

The board explained that, consistent with its focus on cash preservation and liquidity, it had decided not to pay a fourth quarter dividend, preserving ?17m of cash.

It said it would update shareholders on dividends at the time of its full-year results.

The firm said it was also taking a "prudent approach" to preserving cash flow and reducing operational costs.

Those measures included the suspension of all non-essential capital expenditure projects, which would improve cash flow over the next 12 months by ?24m, and the suspension of business rates and marketing in its shopping centres and its pubs, which would improve cash flow by a further ?4m.

"NewRiver remains a financially sound business with significant covenant headroom and a capital structure that is well placed to absorb a prolonged period of uncertainty," the board said in its statement.

"NewRiver's retail portfolio of shopping centres and retail parks represents more than 70% of our total portfolio valuation and net property income.

"These assets are typically anchored by major food and grocery brands and serve the everyday shopping needs of their local communities."

The company noted that it still had no department store exposure and "very limited" fashion and casual dining exposure.

"Our 723 wet led pubs are typically community based, local pubs providing an important social purpose with little or no dependency on food."

NewRiver's board said it would return to a consistent programme of dividend payments as quickly as possible, but that could only be done on the return to normalised trading conditions.

"The board considers this to be the most prudent course of action until the impact of Covid-19 becomes clearer."

[DoINeedOne]

11 minutes ago, TheCountOfNowhere said:

Ftse 100 back at July 1997.

So if you piled in then you are still only getting you initial investment back + the dividends

How would a savings account have fared compared to dividends ?

Best to buy at the bottom.

Well gold you would be up around 500% 

[Bricormortis]

https://thelibertarianrepublic.com/gold-dealers-out-of-stock-price-set-to-soar/

" When people sell American stocks they are effectively buying dollars."

Value of the dollar being bid up as people sell Dollar denominated assets.

[headrow]

Loads of profit warnings given this morning , i expect 2 quarters of this. Looks like a drop of at least 20% every time a company reports. It's quite noticeable too ,  that the shares that rallied the most when Boris got elected in December are the ones getting battered now. I was worried about missing the bottom , this is no a longer a worry to me , i think we will be bouncing around down there for at least 2 probably 3 quarters.

[Castlevania]

Have SSE now offloaded the retail arm? I just had a thought that if the bat flu persists any energy suppliers will possibly end up with more bad debts and a decreased scope of pursuing them.

[Talking Monkey]

1 hour ago, DurhamBorn said:

Exactly,lots of inflation coming due to this massive deflation.People will of missed it but bonds are selling off as well as shares,Vanguards 60/40 fund is down 20%.Yes you could argue its outperformed the share indexes,but with bonds at near zero they will miss all of any share rally probably as well.

I was surprised how TLT fell substantially through the equity falls I thought that would be a safe haven turned out not to be, very interesting watching it all

[Yellow_Reduced_Sticker]

41 minutes ago, TheCountOfNowhere said:

Ftse 100 back at July 1997.

So if you piled in then you are still only getting you initial investment back + the dividends

How would a savings account have fared compared to dividends ?

Best to buy at the bottom.

I've been BOTTOM fishing stocks since the start of this collaspe, thinking of emailing mystic meg she SURE must have a better idea than me when the bottoms in!

BTW, Guys today bought more BP at £2.30 ....so ya know what that means!

 

[sancho panza]

1 hour ago, DurhamBorn said:

@sancho panza lots of pain of course and some stocks hit hard like the transports,but others like Solvay SA im up 25% in a week.They will be big winners  in the next cycle and expect a 5x on them from bottom.Telefonica are up roughly 20% as well,Vod im down around 22%.Royal Mail up 30% from bottom.CBs havent right sized their printing yet though and if they dont move quickly falls will turn back down.

Whats certain though is inflation is going up after this settles.Big oil might cut payouts but if they do i would bet they signal its for 6 months,Shell has been buying back a lot of shares the last couple of days.They can borrow at 2% to save 15% dividend payout,right move as their assets will easily outpace interest rate increases in the cycle

Every day I come on here lately I come to find inspiration and by something other than BP/XOM/EQNR/RB plus assorted Goldies.Unfortunately,I look at the charts,consider my thesis and jsut end up with even more big oil.Reality is that even with a divi slash,we'll have plent yof income to pour into other viable sectors.

I can well believe Shell would do that,why not?Makes perfect sense if you believe the thesis of tight oil/higher prices-and I do.We've set a limit of cash we're going to keep back jsut in case but up to that it's oil/gold and divis into transports/telecoms/potash/copper.

Interesting to see FCX down by 50% on what we sold at 2 weeks back.I'm hoping for s teeper drop in copper so we cna get some Fags cheap.

[sancho panza]

11 minutes ago, Yellow_Reduced_Sticker said:

I've been BOTTOM fishing stocks since the start of this collaspe, thinking of emailing mystic meg she SURE must have a better idea than me when the bottoms in!

BTW, Guys today bought more BP at £2.30 ....so ya know what that means!

 

our £9 RDSB ladder got bought yesterday,£2.30 on BP today.Once BP gets back to £3 -if it does then we'll be moving our final tranches onto the table.

@DurhamBorn @Cattle ProdI've decided to stop buying US stocks with cable at £1-18 if I can find UK alternative.Have you got a view on where it ceases to be viable?Obviously depends how deeply the stock is depreciated but say when I can buy BP Shell in sterling makes little sense to buy EQNR/XOM with cable at $1.18.Obviously means I'll end up overweight BP/SHell.

[headrow]

16 minutes ago, Yellow_Reduced_Sticker said:

I've been BOTTOM fishing stocks since the start of this collaspe, thinking of emailing mystic meg she SURE must have a better idea than me when the bottoms in!

BTW, Guys today bought more BP at £2.30 ....so ya know what that means!

 

Go Ahead has even managed to find a few buyers today. Sorely tempted at these levels.

[BearyBear]

Another carnage day on the horizon? USD index climbing up and up, that's not a good sign. Looks like we have a global shortage of dollars and everything that can be sold is getting sold quickly.

[DurhamBorn]

26 minutes ago, sancho panza said:

our £9 RDSB ladder got bought yesterday,£2.30 on BP today.Once BP gets back to £3 -if it does then we'll be moving our final tranches onto the table.

@DurhamBorn @Cattle ProdI've decided to stop buying US stocks with cable at £1-18 if I can find UK alternative.Have you got a view on where it ceases to be viable?Obviously depends how deeply the stock is depreciated but say when I can buy BP Shell in sterling makes little sense to buy EQNR/XOM with cable at $1.18.Obviously means I'll end up overweight BP/SHell.

I bought very little in the US,ive 6% in XOM that i have in Shell so very low exposure.I had bought a few other US stocks but sold them all on an average 10% bounce.My portfolio is now structured tobacco top,then oil,then telcos,then energy,then everything else.I have been selling some BAT though when it bounces above £28 and re-deploying into oilies mostly.Only decent US holdings are in potash,but if/when they run i doubt a 30% recovery in sterling will make much difference.They go to nothing or 1000% up for me.

[leonardratso]

bitcoins caught a bid

[DurhamBorn]

4 minutes ago, BearyBear said:

Another carnage day on the horizon? USD index climbing up and up, that's not a good sign. Looks like we have a global shortage of dollars and everything that can be sold is getting sold quickly.

Massive shortage,if the Fed dont QE $3 trillion,it will be $5,then $20 within a few weeks.Powell is asleep at the wheel.Dollar is screaming at him,its schoolboy stuff to be honest.They are using the 08 playbook instead of the macro picture.If he doesnt act soon it will be 80% private sector unemployment.The $ is telling them this is systemic.

He is like a farmer whos barn is on fire.He puts a bucket of water on,when it needs 5 buckets,goes to bed and lets the embers spread the fire again and again until there is no barn.$3 trillion needed and increasing fast.