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

[Festival]

On 11/05/2020 at 11:51, Festival said:

Thanks inLikeFlynn - glad to know i'm not alone in splitting the SIPP after £85k and separating the providers of SIPPs and ISAs.

Notwithstanding splitting and staying within limits something I saw on AJ Bell worried me a bit. It says that FSCS does not cover shares and equities in a SIPP as they are not authorised by the FCA. Most funds and collectives however are authorised and those that are authorised by FCA are covered by FSCS. I intend to ask more about this when I arrange the transfer so hopefully will be able to clarify what this means in a week or two. I don't know if anyone has co,me across this restriction before and knows what investment categories are and arent covered by FSCS?

Festival

 

I looked into this further. It appears that most non SIPP pensions count as long term insurance contracts and are 100% protected by FSCS. A SIPP however typically doesn't count as a long term insurance contract and the FSCS protection is capped at £85,000. 

However the FSCS protection is only for FCA regulated assets and doesn't include equities or funds (like most from ishares or Blackrock) that are not domiciled in the UK. It does include many funds domiciled in the UK but these tend to be the more expensive funds. The fund Factsheet tends to indicate whether its an FCA regulated asset or not. Part of the charges of these funds is for insurance to FCA that then puts up the cost of owning them to the end user. 

None of this filled me with any great confidence that money would be returned in a default event unless you split between SIPP providers, keep under £85k and also invest exclusively in FCA regulated funds.

Seems like to remove the risk its take those steps and/or look again at hedging the portfolio better. I take some comfort  that the platforms segregate client funds and don't invest in assets and the bigger ones tend to be well established and safer. 

Lets hope we don't get and ETF or two defaulting and taking down brokers if the crash comes. The recent case of the oil etf and the losses that interactive brokers took doesn't fill me with much confidence.

 

 

[DurhamBorn]

2 hours ago, sancho panza said:

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?

I really like Telefonica,i know they have high debts,but great assets and well placed,Telia also owns a lot of the internet backbone cables and although maybe not as cheap as some others probably strong.

Noticed some of my small gas plays have more than doubled now Southwestern Energy doing very well.I stopped buying the ladders in that and that was a big mistake,did the same In Range Resources as well.Should of had twice as much in,gas companies should do superb as the frac spread count collapses,shut ins even faster than thought,

[MrXxxx]

16 hours ago, Festival said:

FSCS protection is only for FCA regulated assets and doesn't include equities or funds (like most from ishares or Blackrock) that are not domiciled in the UK. It does include many funds domiciled in the UK but these tend to be the more expensive funds.

But they usually have `protection` by a financial body of the country they are domiciled in...some (America) more generous than others (Luxembourg/ROI).

[Festival]

50 minutes ago, MrXxxx said:

But they usually have `protection` by a financial body of the country they are domiciled in...some (America) more generous than others (Luxembourg/ROI).

Thanks Mr Xxxx I'm learning on this topic.

Do you or others know anything about the Republic of Ireland scheme? Many of the ishares etfs my wife and I hold are domiciled there. My initial thought is they are domiciled there for tax reasons and then pass on a significant proportion of the benefit of being there to investors in low ongoing costs and bid/offer spreads. Given the scale of the schemes in Ireland I wonder if in a default scenario the losses would be too big for the Bank of Ireland to cover?

[Festival]

28 minutes ago, Cattle Prod said:

I assume you mean the Central Bank of Ireland? It's essentially a branch of the European Central Bank, so that's your backstop. Made very very clear, with a gun to their head, in 2010. The Minister for Finance was going to announce a haircut to bank bondholders to the Dail (parliament), when Trichet of the ECB called him and told him there would be no cash in the ATMs on Monday if he did that. 

Mind you, they have slanted the rules toward bail ins since then.

Yes sorry CP the Central Bank of Ireland and a chequered history to it. It sounds like its capped at euro 100,000 for cash/savings and euro 20,000 if the investment firm defaults. There is a register of companies on the Central Bank of Ireland website eg BlackRock Asset Management Ireland Limited.

The protection strikes me as quite low for investments and probably most people are not aware of this - I wasn't til I started doing some digging.

 

[Bricormortis]

Source is MSN / Telegraph

The Treasury Fiscal Statisics Policy Unit is sounding rather more bearish than the OBR or BOE.

The L shaped recovery....

Full article is at the link including possible avenues for raising revenue. A certain amount of the article is fairly humdrum so I am not posting it in full.

(Extracted from the end of the MSN / Telegraph article)

"In a worst-case scenario, this could lead to a liquidity crisis and, ultimately, a sovereign debt crisis. A comparable UK scenario would be market conditions in 1976 ahead of the IMF loan when high and volatile inflation led to a loss of macro strategy credibility and a reluctance to hold UK debt." 

Under the Treasury's most pessimistic scenario, the combination of an inflation shock on top of hundreds of billions in extra debt could push the nation's interest bill to £65 billion by 2025 – more than the entire defence budget.

Timing

Treasury officials have advised the Chancellor not to wait too long to introduce any tax rises. Suggestions include announcing a medium-term plan for the public finances in the summer, alongside any further economic rescue packages for the coronavirus crisis.

This would "enhance credibility and boost investor confidence", the Treasury has argued, adding: "There may also be advantages to using current political capital."

However, the officials have warned against announcing firm longer-terms plans when the country is in the middle of dealing with the pandemic and while the full economic effects of the crisis are still uncertain.

The Treasury has also cautioned against holding an "early Budget" in order to give it time to develop any revenue-raising options that take "longer to work up", citing  reform to pensions and "residential property taxes" as examples needing longer consideration but which it says could generate billions.

 

 

 

 

 

 

 

[Majorpain]

 

1 hour ago, Cattle Prod said:

I assume you mean the Central Bank of Ireland? It's essentially a branch of the European Central Bank, so that's your backstop. Made very very clear, with a gun to their head, in 2010. The Minister for Finance was going to announce a haircut to bank bondholders to the Dail (parliament), when Trichet of the ECB called him and told him there would be no cash in the ATMs on Monday if he did that. 

Mind you, they have slanted the rules toward bail ins since then.

That is of course dependent on the ECB still being a functioning organisation by the end of the year, its a little up in the air at the minute.

After the UK had to bail Ireland out in 2008 i'm a little concerned that the paper promises will not be worth the paper their written on if things get properly nasty, they are simply not big enough economy wise to bail out the potential liability IMO.

[DurhamBorn]

6 minutes ago, Bricormortis said:

Source is MSN / Telegraph

The Treasury Fiscal Statisics Policy Unit is sounding rather more bearish than the OBR or BOE.

The L shaped recovery....

Full article is at the link including possible avenues for raising revenue. A certain amount of the article is fairly humdrum so I am not posting it in full.

(Extracted from the end of the MSN / Telegraph article)

"In a worst-case scenario, this could lead to a liquidity crisis and, ultimately, a sovereign debt crisis. A comparable UK scenario would be market conditions in 1976 ahead of the IMF loan when high and volatile inflation led to a loss of macro strategy credibility and a reluctance to hold UK debt." 

Under the Treasury's most pessimistic scenario, the combination of an inflation shock on top of hundreds of billions in extra debt could push the nation's interest bill to £65 billion by 2025 – more than the entire defence budget.

Timing

Treasury officials have advised the Chancellor not to wait too long to introduce any tax rises. Suggestions include announcing a medium-term plan for the public finances in the summer, alongside any further economic rescue packages for the coronavirus crisis.

This would "enhance credibility and boost investor confidence", the Treasury has argued, adding: "There may also be advantages to using current political capital."

However, the officials have warned against announcing firm longer-terms plans when the country is in the middle of dealing with the pandemic and while the full economic effects of the crisis are still uncertain.

The Treasury has also cautioned against holding an "early Budget" in order to give it time to develop any revenue-raising options that take "longer to work up", citing  reform to pensions and "residential property taxes" as examples needing longer consideration but which it says could generate billions.

 

 

 

 

 

 

 

Pensions reform is almost certain.My guess would be that the 40% relief will go and it will be set at 20% for everybody.Im pretty certain they will merge NI and income tax.That will mean pensioners will pay NI and anyone will on income over £12.5k.It will be crucial to structure investments as best as you can to take £12.5k from pensions and other income from ISAs etc.Residential property taxes would only be at the high end i think.New bands of council tax most likely at the top.

I also think they will find savings in public sector pensions.How they do it im not sure,but they will.

The interest bill will shoot up,but so will inflation,and its a smokescreen anyway,the BOE has monetized the debt already,and they hand the coupons back the the government after costs.

 

[Majorpain]

25 minutes ago, Cattle Prod said:

The Irish economy will not be bailing out the liabilites of funds held at the IFSC, the ECB will. Ireland is not in charge of it's own affairs any more. But more likely is that the ECB will bail investors in (look up Cyprus). As has been said above, they may not last, and good riddance. I think the German constitutional court ruling will be seen in time as the line in sand for all the nonsense in Europe.

Currently yes, but the virus drama is shaking the EU and ECB to the core.  Ireland may find itself in charge of its own affairs very suddenly and very soon, in which case things are liable to get a little too interesting.

[DurhamBorn]

No need to worry during deflation,CBs and governments have open road to print and spend without limit.They have nearly 40 years of dis-inflation to print back,Fed will likely do over $10 trillion,ECB maybe $6 trillion.They are re-filling the pipes and when right-sized they will do everything they can to get velocity moving.There is lots of financial dislocation to come,but as long as the CBs keep printing systemic collapse should be off the table.We probably get that at the end of the next cycle when they will have a free-falling economy and 15%+ inflation.

[Majorpain]

1 hour ago, Cattle Prod said:

Well if that's the case, where does the financial buck stop? Cayman, Luxembourg etc etc can't backstop their financial sector liabilities either. The UK can, but only with printed money. If it gets interesting in Ireland, it gets interesting everywhere. Including the price of gold!

That's something i hadn't thought of, its a difficult area but i think the key metric in the current deflationary scenario is probably external debt that cant be inflated away without turning into Zimbabwe.

https://en.wikipedia.org/wiki/List_of_countries_by_external_debt

Luxembourg  has $7m (yes million) per capita and 6307% of GDP.  An awful lot of that will be in Euro's which in the breakup scenario will be fun.

Ireland by comparison actually comes off rather well, they did massively deleverage after 2008.

If it goes wrong I guess its going to be a lesson in being careful which country you keep your money!

*edit*

https://en.wikipedia.org/wiki/Net_international_investment_position

There is also the NIIP which gives an indication of a countries total assets, Ireland looks a lot less well off by this metric!  Other favorites are in the bottom of barrel as well.

[Majorpain]

41 minutes ago, DurhamBorn said:

No need to worry during deflation,CBs and governments have open road to print and spend without limit.They have nearly 40 years of dis-inflation to print back,Fed will likely do over $10 trillion,ECB maybe $6 trillion.They are re-filling the pipes and when right-sized they will do everything they can to get velocity moving.There is lots of financial dislocation to come,but as long as the CBs keep printing systemic collapse should be off the table.We probably get that at the end of the next cycle when they will have a free-falling economy and 15%+ inflation.

Everyone else has got on board, but the political turmoil of the Euro north bailing out the Euro south is not filling me with confidence at the minute. Im not sure how much of this is political posturing at home and how much they are serious! Lagarde can make all the right noises but if Spain and Italy dont get fully supported by the rest and their bonds blow up its a moot point. 

[MrXxxx]

4 hours ago, Festival said:

Thanks Mr Xxxx I'm learning on this topic.

Do you or others know anything about the Republic of Ireland scheme? Many of the ishares etfs my wife and I hold are domiciled there. My initial thought is they are domiciled there for tax reasons and then pass on a significant proportion of the benefit of being there to investors in low ongoing costs and bid/offer spreads. Given the scale of the schemes in Ireland I wonder if in a default scenario the losses would be too big for the Bank of Ireland to cover?

Hi Festival,

I think you'll find what you are looking for here:

https://monevator.com/investor-compensation-scheme/

[reformed nice guy]

https://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/05/Is-the-Worst-of-the-Oil-Crisis-Behind-Us.pdf

Stumbled across the above which is bullish on oil for 2021

[Talking Monkey]

1 hour ago, DurhamBorn said:

No need to worry during deflation,CBs and governments have open road to print and spend without limit.They have nearly 40 years of dis-inflation to print back,Fed will likely do over $10 trillion,ECB maybe $6 trillion.They are re-filling the pipes and when right-sized they will do everything they can to get velocity moving.There is lots of financial dislocation to come,but as long as the CBs keep printing systemic collapse should be off the table.We probably get that at the end of the next cycle when they will have a free-falling economy and 15%+ inflation.

DB what is your view on the magnitude of the QE during the 08 recession, what they will do now will completely dwarf that, did they get the magnitude right then for that situation

[janch]

Norway withdrawing big-time from its Sovereign Wealth Fund:

https://ca.finance.yahoo.com/news/world-biggest-wealth-fund-faces-080732585.html

 

Interesting it's selling bonds:

Bond Sales

The fund is likely to focus on its bond portfolio to generate the cash the government needs, both in the form of outright sales and by retaining cash as some bonds mature. (It needs to replenish its holding of stocks after its equity portfolio fell below a required 70% target of the total portfolio.)

 

Presumably Norway won't need to raise interest rates and inflate like the rest of us.  What might happen to their currency and how will this affect eg Equinor/Norsk Hydro etc?

[sancho panza]

On 12/05/2020 at 05:56, 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.

 

This is what I mena about Armstong.I struggle with rigid timeframes that don't differ over centuries because they tkae no account of the changing longevitiy of politcal careers as I mentioned earlier.

But the folliwng is what Armstong does best.Ignore his timing,which may or not be right but listen to the themes.I think he's right on the money here.good logic and very apt historical context .

 

 

'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 .'

[sancho panza]

22 hours ago, DurhamBorn said:

I really like Telefonica,i know they have high debts,but great assets and well placed,Telia also owns a lot of the internet backbone cables and although maybe not as cheap as some others probably strong.

Noticed some of my small gas plays have more than doubled now Southwestern Energy doing very well.I stopped buying the ladders in that and that was a big mistake,did the same In Range Resources as well.Should of had twice as much in,gas companies should do superb as the frac spread count collapses,shut ins even faster than thought,

 

I left the gas plays alone at the bottom.Didn't have the stomach or the knowledge.

6 hours ago, Festival said:

Thanks Mr Xxxx I'm learning on this topic.

Do you or others know anything about the Republic of Ireland scheme? Many of the ishares etfs my wife and I hold are domiciled there. My initial thought is they are domiciled there for tax reasons and then pass on a significant proportion of the benefit of being there to investors in low ongoing costs and bid/offer spreads. Given the scale of the schemes in Ireland I wonder if in a default scenario the losses would be too big for the Bank of Ireland to cover?

None of the benefits of domiciling in Ireland will be passed onto investors in their schemes.

3 hours ago, Cattle Prod said:

Well if that's the case, where does the financial buck stop? Cayman, Luxembourg etc etc can't backstop their financial sector liabilities either. The UK can, but only with printed money. If it gets interesting in Ireland, it gets interesting everywhere. Including the price of gold!

I think it was Jeff snyder had a grat macro Vocies podcast altking about onshore and offshore dollars.Wisdh I could find it.Dec last year I think.The offhsore dollar sitaution is possibly beyond the Fed's control,but I need to get back and lsiten to that podcast.

I agree witht eh contagion risk on the eurozone.there is simply no way out if the sh1t hits the fan.

The very themes that have strentghened the euro thus far will serve to weaken it at the moment it needs them the msot.

1 hour ago, Majorpain said:

Everyone else has got on board, but the political turmoil of the Euro north bailing out the Euro south is not filling me with confidence at the minute. Im not sure how much of this is political posturing at home and how much they are serious! Lagarde can make all the right noises but if Spain and Italy dont get fully supported by the rest and their bonds blow up its a moot point. 

It's a moot point I agree.Italy's corona bail out is soemthing like 4% of GDP iirc.

They're in deep trouble.

[JMD]

Re Bitcoin.                                                                                                                                                                                                    Some discussions here last week regarding bitcoin investment, etc. At the time I referenced another posters Raoul Pal article where Pal mentioned his liquid wealth as being invested between bitcoin/gold/cash/bonds. I misinterpreted this as meaning equal divisions - ie of 25% each. However, after having now completed watching the Pomp/Pal podcast that I posted here on Monday, I note that Pal clarifies his actual positions as being mostly in bonds, and less than 10% bitcoin, less than 10% gold, with some cash. Some 'under-reporting' going on in original Pal article methinks, never let facts get in the way of a good story perhaps?! Anyway didn't want anyone to be mislead... not that anyone here I think was going to load up on bitcoin, not 25% anyway.                                                                                                                                                                                                                                                                                                                                      Btw some interesting discussion toward end of the Pal interview, last 30mins I think, regarding Blockchain tokens and how they will potentially revolutionise investing. I was aware of the coming 'internet of things' where our fridges will have own ip's, enabling them to self-order, etc. But I was unaware of blockchain tokens which may offer us a whole new mindboggling level of investing granularity!!

[sancho panza]

2 minutes ago, Cattle Prod said:

EIA has reported a crude draw this week, so as I suggested, no tank top fills, and severe production shut ins. If demand is down 20% in the US, and they still need a little out of storage, it means production and imports are down around 4 mbpd (4% of world production). Pretty impressive how quickly price signal has moved supply and demand into balance, shows a relatively free market, I suppose. It is an estimate, usually pretty accurate, but I'll watch for end of month actual numbers.

The May contract may well get hammered again, but whatever. Physical appears to have quickly come into balance. Question now is for how long will wells remain shut, and how much the lack of drilling will be unable to offset production declines.

For some colour on how such a rapid change affects real people, our beloved Occidental has instigated a dutch auction/hunger games plan for voluntary redundancy. Make an offer, try and lowball your mates. It'd causing quite a stir even in this ruthless industry!

Why would anyone go long May delivery given what happened in april unless they wanted the stuff?

Fascianting psot on the balancing.I see WTI at $25,XOM at $42..................I may get my Jan 21 $50 calls after all.

[sancho panza]

Hodges.Smartphone sales declining.Broad based drop in demand for new ones.Whooda thunk it?

https://www.icis.com/chemicals-and-the-economy/2020/05/smartphone-sales-head-into-decline-as-affordability-becomes-key/

The smartphone sales decline accelerated in Q1, as Strategy Analytics report:

“Global smartphone shipments fell 17% to reach 275m in Q1. This is the smartphone industry’s worst quarterly performance of all time.

On an annualised basis, as the chart shows, global volume was down 12% to 1.36bn from the Q3 2017 peak. And, of course, Q2 will likely be worse, much worse, with the lockdowns in place around the world.

In terms of the major brands, Samsung and Huawei under-performed. Their sales were  down 19% and 18%, whilst Apple’s decline was limited to 9%.  Xiaomi was the only major brand to avoid a decline as it expanded into India, but even it only managed to hold its volume.

Major changes are also underway in demand patterns as a result of the virus:

• Business and leisure travel is likely to suffer a major hit for some time, reducing roaming revenue for telecom operators
• Sports subscriptions will also be of less interest, due to the reduction in events to watch
• Businesses will use video much more, reducing the need for cellphones – fewer salespeople will be driving 50k miles/year to visit customers

Some suggest that the arrival of 5G might boost demand again. But, in reality, 5G is a product in search of a market. The lockdowns have shown that current speeds are more than adequate, and the current infrastructure has proved very robust in terms of stability and capacity. The areas where it might be needed, such as autonomous cars, are many years in the future.

Affordability is also rising up the agenda, and may prove the most important of the paradigm shifts now underway.

One potential eye-opener is that Apple’s launch of the iPhone SE, means it is now competing in the mass market, for phones costing $300-$400, instead of relentlessly moving upmarket at $1000+.

And then there is the steady growth in the used smartphone market, which is unaffected by the slowdown in new sales,  as I noted in March:

“Used smartphones are now becoming a viable market in their own right for the first time. 207m were sold last year, up 18% from 2018, and IDC see the market growing to over 300m phones by 2023.”

Last week, in the midst of the pandemic, saw the launch of a new online platform focused on the sale of used phones.  Valued at $1.8bn, its focus is on meeting:

“An uptick in demand for used smartphones that offer considerable savings compared with new models.”

Markets such as India are already operating on the same basis as the used car market around the world, with each phone owned by two or three people before it is scrapped.

As durability increases, it would be no surprise if cash-strapped consumers start to operate on the same basis with smartphones.

[JMD]

1 hour ago, sancho panza said:

This is what I mena about Armstong.I struggle with rigid timeframes that don't differ over centuries because they tkae no account of the changing longevitiy of politcal careers as I mentioned earlier.

But the folliwng is what Armstong does best.Ignore his timing,which may or not be right but listen to the themes.I think he's right on the money here.good logic and very apt historical context .

 

 

'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 .'

Armstrong is interesting - though his publications are expensive, who buys/affords them I wonder?                                 And the topic you quote is so interesting and at same time pretty scary... ie how formerly collective societies, move toward feudalism... Fast forward to today - and it's happening around us - now its called the 'Identity politcs' phenomena.      Where for example even our current health epidemic has been hijacked by some types wanting to highlight the different health outcomes (statistically minimal, and almost certainly cased by underlying health problems) by black and Indian people. Ultimately such talk is just so divisive and destructive.

[Don Coglione]

29 minutes ago, Cattle Prod said:

EIA has reported a crude draw this week, so as I suggested, no tank top fills, and severe production shut ins. If demand is down 20% in the US, and they still need a little out of storage, it means production and imports are down around 4 mbpd (4% of world production). Pretty impressive how quickly price signal has moved supply and demand into balance, shows a relatively free market, I suppose. It is an estimate, usually pretty accurate, but I'll watch for end of month actual numbers.

The May contract may well get hammered again, but whatever. Physical appears to have quickly come into balance. Question now is for how long will wells remain shut, and how much the lack of drilling will be unable to offset production declines.

For some colour on how such a rapid change affects real people, our beloved Occidental has instigated a dutch auction/hunger games plan for voluntary redundancy. Make an offer, try and lowball your mates. It'd causing quite a stir even in this ruthless industry!

Please keep posting, Cattle Prod, your insider insights are fascinating.

Travelling twenty-odd years ago, I shared a dorm with a geologist for an oil company. Genuinely, one of the most interesting people I have ever met and the knowledge he shared has stayed with me ever since.

[Transistor Man]

35 minutes ago, sancho panza said:

The smartphone sales decline accelerated in Q1, as Strategy Analytics report:

“Global smartphone shipments fell 17% to reach 275m in Q1. This is the smartphone industry’s worst quarterly performance of all time..

.

It’s been a very good last 10 years in microelectronics. 

Amazon, Alibaba, Facebook, Google all designing their own custom chips for machine learning. Never thought I’d see that.

Since 2012, Apple have set an incredible pace: a new A series processor every year, fabricated on an improved process. It’s driven the whole industry. + All the sensors, LTE modems, RF chipsets. Incredible rate of progress. Driven by people ditching 1 year old models, and paying a huge amount for a new one.

Many could see the fall off in the smartphone sales coming.

Next, looks like: Medical, AI, smart cars, 5G, IOT.

[The Idiocrat]

1 hour ago, Transistor Man said:

It’s been a very good last 10 years in microelectronics. 

Amazon, Alibaba, Facebook, Google all designing their own custom chips for machine learning. Never thought I’d see that.

Since 2012, Apple have set an incredible pace: a new A series processor every year, fabricated on an improved process. It’s driven the whole industry. + All the sensors, LTE modems, RF chipsets. Incredible rate of progress. Driven by people ditching 1 year old models, and paying a huge amount for a new one.

Many could see the fall off in the smartphone sales coming.

Next, looks like: Medical, AI, smart cars, 5G, IOT.

Fully agree. Thing is, once you hit peak functionality, all smartphones are the same. Substantial improvements are very difficult with mature technology and become very incremental and hard to differentiate/justify. This is why phones became fashion items, and Apple did this intentionally. Thing is, with Covid, people can't meet to show off their phones, so I think that's going to have a big impact on sales during lockdown.

BTW, I currently work in connected car using IoT and AI ("telematics" if you're old skool). A long way to go on that front and a lot of stuff is hard to cost-justify. Again. a lot of the business models for connected car were predicting car-sharing and ride-sharing, especially on the commute to work and "multi-modal mobility" (using different forms of transport over a journey, with charging and even insurance varying over it), and Covid has put a stop to that almost overnight. Connected car business models are going to have to change, although the "bubble" of (private) car compared to public transport might do so on the positive side.