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

[Castlevania]

38 minutes ago, DoINeedOne said:

BT has scrapped its dividend for the next two years as it copes with the fallout from the coronavirus lockdown and will instead increase its full fibre broadband rollout.

I do wonder if in a few years BT will still be talking about rolling out fibre seems like they have been talking about it for years already whilst i understand its not a simple task, also all these dividend cuts as others have said a lot people living or hoping on there dividend income 

My dividend income has been decimated. The only companies that I own that are still paying seem to be oil and gas; tobacco; precious metal miners and the edges of finance (spread betters and insolvency practioners).

[TheCountOfNowhere]

3 minutes ago, Castlevania said:

My dividend income has been decimated. The only companies that I own that are still paying seem to be oil and gas; tobacco; precious metal miners and the edges of finance (spread betters and insolvency practioners).

Suddenly that 1% in the bank is looking good. 

[Harley]

@Nicolas Turgeon I did look at BIT at the time.  Stopped when I saw an old article about it's parent company having issues with the SEC in the US.  Personally, I might possibly consider such a thing for say trading but IMO it does seem different from actually owning bitcoin (e.g. getting more outside the "system").  I'd also have to study the prospectus to understand how it works in detail as ETFs can be more complicated and risky than first seems (having once actually read a Gold ETF prospectus!).  Caveat Empor!

PS: On your exchange hacking comment, I'm still learning but understand rule #1 is to use a hardware wallet rather than leave your coins on the exchange.

[Harley]

7 minutes ago, Castlevania said:

insolvency practioners

I was looking at these in the past and nearly bit but held off as I was sticking to the big cap stocks.  Maybe time to look again.  Care to share any names, held or not (no need to disclose thanks as I'll do me DD)

[DoINeedOne]

I sold ***The One That Should Not Be Named*** just before the corona luckily 

[Don Coglione]

12 minutes ago, DurhamBorn said:

@TheCountOfNowhere you know not to mention the name on here,unless it gets back over a squid minimum.Im tempted to sell it and buy back just so i dont have to look at the -5130 red.If it was the old days and i had the share certificate id frame it in the house.Please dont mention it again.

My red number is a lot bigger than that!

[Harley]

3 hours ago, TheNickos said:

BT dividend scrapped till 2021. 

Time to put my income portfolio on ice.  Too late to stem the losses on the 2019 purchases.  Retrench (i.e. no more purchases) except for those with a good estimated total return (i.e. in the right sectors).  Relatively few buying opportunities for me atm though if I want a balanced portfolio.  

[TheCountOfNowhere]

21 minutes ago, DurhamBorn said:

@TheCountOfNowhere you know not to mention the name on here,unless it gets back over a squid minimum.Im tempted to sell it and buy back just so i dont have to look at the -5130 red.If it was the old days and i had the share certificate id frame it in the house.Please dont mention it again.

I never signed up to that.  I had no idea who anyone meant 

BT's been just as bad for me a the big C.

If the V shaped recovery doesn't start soon then it's going to be a big L 

[Harley]

Given this messy end of cycle stuff, I'm looking for non-investment things to do with my cash to diversify a bit.  Currently buying (investing in) stuff which will make my life cheaper in the longer run.  I had also looked at my pension forecast and although I had missing years, the lady I spoke to said there was little point paying for more.  But then I thought, suppose they change the rules and your contribution history does matter more in some new way (e.g. UBI)?  OK, may not and who knows about the future state pension but relatively cheap insurance (especially versus bank bail-ins and/or a wealth tax, etc).  Any other diversification ideas?

[Castlevania]

21 minutes ago, Harley said:

I was looking at these in the past and nearly bit but held off as I was sticking to the big cap stocks.  Maybe time to look again.  Care to share any names, held or not (no need to disclose thanks as I'll do me DD)

I own Begbies Traynor. They’ve been on a run of late and are starting to look expensive, although they should be very busy over the next few years.

[Harley]

So BT, Telefonica, etc now think it's a good idea to pay down debt, even at the expense of cutting divs!  And there I was, operational cash flow and the debt to capital ratio as centre stage of my stock picking criteria!  But now everyone wants to do it.  I'll need new criteria for the next phase soon!    

[DurhamBorn]

Just now, Harley said:

So BT, Telefonica, etc now think it's a good idea to pay down debt, even at the expense of cutting divs!  And there I was, operational cash flow and the debt to capital ratio as centre stage of my stock picking criteria!  But now everyone wants to do it.  I'll need new criteria for the next phase soon!    

The divi cuts were certain Harley,but i think they will do a tobacco going forward.I expect a total return from here over the cycle of at least 13% a year.More likely 17%+.BTs divi cut is more political,they want a good deal from the regulator and will get one.Government is desperate for investment,but its hard from a political side when BT is handing out big divis.I think thats why a total scrap for a year rather than a cut.BT could be trading on 1x cash flow here in 2028.1x,with by then a need for about half for investment/debt.They might have £4 billion a year for shareholders at the end of the cycle.

These divi cuts across the market will probably force a lot of the smaller people to sell for income,distribution cycle in action.

The next victims in a couple of years will be pensions in draw down with 60% to 80% bond allocations.As they start to fall in value the pain will be huge.Falling values,high fees and draw downs of 4% to 5% a year.By 2028/30 they could be pretty much empty.

 

[Loki]

1 hour ago, DoINeedOne said:

 

 

 

taking bets on the people queuing up for PUFA laden fast food also being the ones clamouring for a vaccine for the killer virus of doom

50 minutes ago, DurhamBorn said:

@TheCountOfNowhere you know not to mention the name on here,unless it gets back over a squid minimum.Im tempted to sell it and buy back just so i dont have to look at the -5130 red.If it was the old days and i had the share certificate id frame it in the house.Please dont mention it again.

MACBETH!

[DurhamBorn]

1 minute ago, Loki said:

taking bets on the people queuing up for PUFA laden fast food also being the ones clamouring for a vaccine for the killer virus of doom

MACBETH!

THE SCOTTISH PLAY if you dont mind.

[DurhamBorn]

31 minutes ago, Harley said:

Given this messy end of cycle stuff, I'm looking for non-investment things to do with my cash to diversify a bit.  Currently buying (investing in) stuff which will make my life cheaper in the longer run.  I had also looked at my pension forecast and although I had missing years, the lady I spoke to said there was little point paying for more.  But then I thought, suppose they change the rules and your contribution history does matter more in some new way (e.g. UBI)?  OK, may not and who knows about the future state pension but relatively cheap insurance (especially versus bank bail-ins and/or a wealth tax, etc).  Any other diversification ideas?

I claim free years every year for baby sitting my grand children "specified adult childcare credit",im only 2 years short of full pension,but il keep claiming years even after that in case they increase them to 40 for pension or some other fiddle.

[DoINeedOne]

So wondering about fibre in the UK and if there was any sites that monitor any progress and came across this one https://labs.thinkbroadband.com/local/uk

[Transistor Man]

29 minutes ago, DoINeedOne said:

So wondering about fibre in the UK and if there was any sites that monitor any progress and came across this one https://labs.thinkbroadband.com/local/uk

I guess that’s Full Fibre availability? 

I wonder what the fraction of premises with a full fibre connection is. Must be very low.

[Majorpain]

6 minutes ago, Transistor Man said:

I guess that’s Full Fibre availability? 

I wonder what the fraction of premises with a full fibre connection is. Must be very low.

We had a right drama at work, in the end we decided to go with microwave as it was available then and waiting for fiber was going to take longer than waiting for Godot.  That was 7 years ago and its still not been rolled out!  

[JMD]

12 hours ago, The Idiocrat said:

HL allow you to hold it in their SIPP, but not ISA.

thanks Idiocrat, I will ask Interactive Investor if they have plans to introduce the xbt bitcoin etf to their own sipp. The fees are high, but offset by no capitol gains if I can hold in my sipp.

[DoINeedOne]

Bought BT @ 103 and TEF @ 4.19 today 

[DoINeedOne]

53 minutes ago, Transistor Man said:

I guess that’s Full Fibre availability? 

I wonder what the fraction of premises with a full fibre connection is. Must be very low.

Im actually shocked how low it is even checking other articles https://www.bbc.co.uk/news/technology-49728302 

UK's full-fibre broadband coverage rises to 8%, says Ofcom

September 2019

 

What is a full-fibre connection?

To understand the advantages of full fibre, it is worth knowing that there are three main types of broadband connections.

ADSL (asymmetric digital subscriber line) involves a situation where both the link between the telephone exchange and the street cabinet, and the onward connection to the property are achieved via copper phone cables.

Fibre to the Cabinet (FTTC) achieves higher speeds by giving the roadside cabinet its own fibre link.

And Fibre to the Premises (FTTP) addresses the final part of the connection - which is often referred to as the "last mile". Under this system, properties can be directly connected to the exchange without passing through a street cabinet, But intermediary boxes - often hidden from view - where fibre links are "split" to serve individual buildings may still be used.

Fibre transmits more bits of data per second by sending pulses of light along optical cables made of glass or plastic. While FTTC offers users average speeds of around 66 megabits per second, FTTP can offer average speeds of one gigabit per second today and potentially terabits per second in the future.

[geordie_lurch]

10 minutes ago, DoINeedOne said:

Bought BT @ 103 and TEF @ 4.19 today 

Sorry I'm fairly new to all this but been reading this thread and elsewhere for a while and wanted to ask how did you buy TEF as in my Hargreaves Lansdown is says the market isn't open until 14:30 today?

https://www.hl.co.uk/shares/shares-search-results/t/telefonica-sa-adr-each-repr-1-ord-eur1

[sancho panza]

via Daily Shot

picvture paints etc

[MrXxxx]

3 hours ago, The Idiocrat said:

Yes, a lot of oldies are goig to have problems what with this and Shell and others to come. Fuck all interest on cash in the bank and now fuck all on many blue chip shares.

I notice Telefonica have also reported today but have maintained dividend. There is also something from their CEO's statement (it's in Spanish) on reducing debt and free cashflow. I don't hold but am probably going to invest soon (price went up 3% first thing but has been creeping down and just turned negative).

 

I think at present (and maybe for the rest of the deflation cycle) when buying you have to `think like an American` and pretend the divi doesn't exist..that way you won't be relying on it.

[sancho panza]

Here comes the next sub prime crisis.

https://wolfstreet.com/2020/05/05/subprime-auto-loans-already-exploded-in-pre-covid-19-good-times-now-come-30-plus-million-unemployed-and-even-prime-loans-will-sour/

So the credit-upheaval caused by the biggest and most sudden unemployment crisis in our lifetime is not yet included in the New York Fed’s delinquency data.

In mid-March, the world changed for subprime lenders. Delinquencies were already exploding in the Good Times, and now they’re in utter turmoil.

In addition, it is likely that prime loans are becoming delinquent as well, as many of these people too have lost their jobs – this includes dentists and other professionals with high incomes and big debts and lots of expenses and no savings, who’d suddenly had to close their operations, and their cash flow disappeared. If they fall behind on their debts, they’ll be subprime in a hurry.

In good times, subprime auto-loans are an immensely profitable business, with very high interest rates – often in the double digits – in a near-zero interest-rate environment.

But the normally liquid used-vehicle market isn’t that liquid anymore, as auction volume has plunged, and there is a flood of used-vehicle supply on the horizon from rental car companies trying to unload a big part of their now useless fleets, or creditors of rental-car companies taking possession of their collateral – the vehicles – and unloading them at the auctions, into very low demand.

This is a form of forced selling, and the whole industry is now afraid of it, and what it might do to wholesale prices. It will make it much harder for subprime auto lenders to dispose of their repos, and the losses will be greater, and there will be many more repos they’ll have to dispose of after all the deferrals run out and people cannot make their payments, and there won’t be enough new subprime lending business to cover up those losses.