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

[DoINeedOne]

6 minutes ago, Democorruptcy said:

Re differing opinions about what sectors are good or bad in a reflation, could it partly depend on how old school the views are? Traditionally good or bad sectors could change with the times. For example telcos, in the past people might cut down on calls when they paid per call. Now people pay a monthly amount for inclusive calls, texts, data on their mobiles. They won't stop using their mobiles/broadband so will just pay the bit extra per month. It's partly different now because of the social media addiction factor. Walking about now a mobile phone seems to be an extension of a lot of people's arm. Mobile phones have tobacco type addiction pricing built in?

Disclosure: I own some BT.

I agree with you on this i just can't see people not using their phones anymore the addiction is real

 

[DurhamBorn]

12 minutes ago, Democorruptcy said:

Re differing opinions about what sectors are good or bad in a reflation, could it partly depend on how old school the views are? Traditionally good or bad sectors could change with the times. For example telcos, in the past people might cut down on calls when they paid per call. Now people pay a monthly amount for inclusive calls, texts, data on their mobiles. They won't stop using their mobiles/broadband so will just pay the bit extra per month. It's partly different now because of the social media addiction factor. Walking about now a mobile phone seems to be an extension of a lot of people's arm. Mobile phones have tobacco type addiction pricing built in?

Disclosure: I own some BT.

Exactly.When the bell goes at work at the end of the shift,almost everyone waiting to clock out is on their phone.They would give up their car before their phone.Telcos are seen as bad during inflation due to their big debt loads as interest rates push up the costs.However when iv gone through the debt profiles of BT and Vod they seem very well structured and at very low rates.Its not certain,but i would expect as the investment stage ends,they should see free cash grow much faster than any debt payments and might be in the situation where they are only rolling over half the debt and paying some off.On top i think people dont understand the drivers of value in the industry.People think one person one phone,but the next cycle will see much more connected.A lot of cloud applications will also need to be sat on the networks and that will mean big money for the network owners.

I see the telco sector in the same way as big tobacco back in the early 90s,hugely undervalued.If a big tech company decided to take out a telco the prices would likely double over a few months,and that isnt out of the question,nor are big mergers where both sets of shareholders reap the gain in divi increases.

@DoINeedOne that photo also shows why the big gambling stocks are cash cows long term.The market needs and is consolidating around a few big players,but they should be able to return massive amounts of cash to shareholders.

[Castlevania]

3 hours ago, CVG said:

Neil Woodford's flagship fund to be shut down

https://www.bbc.co.uk/news/business-50052945

Neil Woodford isn’t happy about it. The end of the gravy train. 

[DurhamBorn]

9 minutes ago, sam1994 said:

Just got a letter from RM

International surcharge goes from 3% to 6.5% in November. Fortunately just locked in a 3 year contract with them. I can send up to 5KG anywhere in the world tracker, signed and insured for £200 for £8

 

Lots more to come.Crucial thing for RM is that they can increase prices faster than wages and fuel costs.Thats why they need to face the unions down now.What i would do is take on the usual temps for xmas,then sack 10% of the posties and replace with them.Id sack them in January.Id consider making it 5% if the unions accept the changes needed.If not replace the workforce.They can always go self employed with Hermes.

[Democorruptcy]

On 10/10/2019 at 18:52, DurhamBorn said:

Exactly.Card Factory is a fantastic business.The one near me always has people in,steady stream.Their new range priced at the higher end at £1.69 etc is way superior to anywhere else for twice the price.Everyone goes there for balloons etc as well for kids birthdays.They are about to upgrade their website to multi channel,so im guessing they are about to launch click and collect.I would expect that will do very well once people know about it for occasions buying /kids birthday/hen night/key birthdays etc.Market has kicked them down due to profits flat lining even though they are expanding shops,but id say holding steady in a brutal market is a good performance.They have signed a deal to supply half of Aldi's stores now (400+) after a trial in 100.They need to keep the debt down though as its a bit too high for a low asset business,but free cash should remain robust.Key danger to them is probably the other discounters increasing their ranges,but its unlikely anyone will get close to them in price/quality/range.I would expect theor EPOS data is giving them a lot of info now as well.Increases in NMW will hit them though,they might have to increase prices at somepoint,though id expect they could move things up 10% without much trouble.

I noticed as well as Aldi they are also in Matalan, don't know if that's new or not. I'm undecided about having spots in various other outlets. Yes they might get a few sales but re cards they are bought for a specific event, it's not impulse spending. It must mean less footfall in their own shops to cover their rents. Plus they must be giving Aldi, Matalan, etc. a cut from the sale. It would make sense if they were reducing the number of their own shops and saving costs. 

[DurhamBorn]

5 minutes ago, Democorruptcy said:

I noticed as well as Aldi they are also in Matalan, don't know if that's new or not. I'm undecided about having spots in various other outlets. Yes they might get a few sales but re cards they are bought for a specific event, it's not impulse spending. It must mean less footfall in their own shops to cover their rents. Plus they must be giving Aldi, Matalan, etc. a cut from the sale. It would make sense if they were reducing the number of their own shops and saving costs. 

I think they only put them where they dont lose sales themselves and monitor it very closely.I also think the ranges in Aldi are everyday ranges rather than the full range.The interesting part will be once they go click and collect with the new website.A lot of people get party things there and that might see a decent uptick in sales.I think the shop estate will remain crucial,but the deal in Australia is interesting.They booted out their own supplier after a trial with Card factory as the sales in those stores went up.They will also have a good deal with Aldi i think as footfall went up slightly in the stores with them in during the trial,so Card factory cards were actually pulling people into Aldi.

They need to start to cut the debt down though,and likely will once they stop rolling out new stores.

[Democorruptcy]

3 minutes ago, DurhamBorn said:

I think they only put them where they dont lose sales themselves and monitor it very closely.I also think the ranges in Aldi are everyday ranges rather than the full range.The interesting part will be once they go click and collect with the new website.A lot of people get party things there and that might see a decent uptick in sales.I think the shop estate will remain crucial,but the deal in Australia is interesting.They booted out their own supplier after a trial with Card factory as the sales in those stores went up.They will also have a good deal with Aldi i think as footfall went up slightly in the stores with them in during the trial,so Card factory cards were actually pulling people into Aldi.

They need to start to cut the debt down though,and likely will once they stop rolling out new stores.

I noticed they were in Matalan in Northwich which is just over the road from Aldi.  Those are close to a "new" shopping centre called Barons Quay. I say "new" because a lot of the units are still empty after 3 years. Card Factory is one that's moved in recently. With a limited range in Matalan and Aldi, if people make a card purchase there, they might not go into Card Factory's own shop and perhaps make a purchase of something non card related. It depends which way you look at it, they might get a sale in Aldi or Matalan instead of no sale at all.

I'm not averse to Card Factory and they are still on the list of possible buys. 

[DurhamBorn]

3 minutes ago, Democorruptcy said:

I noticed they were in Matalan in Northwich which is just over the road from Aldi.  Those are close to a "new" shopping centre called Barons Quay. I say "new" because a lot of the units are still empty after 3 years. Card Factory is one that's moved in recently. With a limited range in Matalan and Aldi, if people make a card purchase there, they might not go into Card Factory's own shop and perhaps make a purchase of something non card related. It depends which way you look at it, they might get a sale in Aldi or Matalan instead of no sale at all.

I'm not averse to Card Factory and they are still on the list of possible buys. 

They could be looking at if in a location like that they can close the store and use Matalan instead.I think Matalan would be able to hold a bigger range.Card Factory are lucky in that their business lends itself to going into other stores.It could be they slowly cull some stores depending on how things pan out.Maybe getting inside Tesco Xtras or something maybe.

[kibuc]

Wesdome with a monstrous Q3 update. Almost 29k ounces produced in Q3 at 23.4g/t grade from RR. This is certifiably insane.

There's still one more quarter to go and they have already touched the lower end of their yearly guidance. Today they raised their full-year guidance from 72k-80k to 88k-93k and even that sound quite conservative (as is always the case with WDO).

There's good, there's super-duper great and then there's that. They are in a league of their own at the moment.

[kibuc]

Meanwhile, Guyana won't be releasing production numbers as usual and will conflate it with financials on the 31st of Oct. I'd like to be wrong, but I've already made my mind clear on why that might be.

[kibuc]

We didn't get to enjoy Great Panther's solid Q3 for too long, as they provided update today on an operational issue they hinted at in their Q3 report.

The issues is complex,  one of the pit had to be closed for an undetermined period of time and it impacts production guidance, as well as resource&reserve estimates. Total gold production guidance for 2019 got lowered by 13%.

They are taking quite a beating, 11% down at the open. My guts say massively oversold but what do I know.

[janch]

2 hours ago, DurhamBorn said:

Lots more to come.Crucial thing for RM is that they can increase prices faster than wages and fuel costs.Thats why they need to face the unions down now.What i would do is take on the usual temps for xmas,then sack 10% of the posties and replace with them.Id sack them in January.Id consider making it 5% if the unions accept the changes needed.If not replace the workforce.They can always go self employed with Hermes.

Not sure if it's in all the stores but my local Tescos is getting rid of a lot of their permanent employees and will be taking on Xmas temps.  It'll be interesting to see what happens after Christmas and if they get rid of the temps and reduce the workforce.

[Loki]

Gold just fell off a cliff

[Democorruptcy]

2 hours ago, DurhamBorn said:

They could be looking at if in a location like that they can close the store and use Matalan instead.I think Matalan would be able to hold a bigger range.Card Factory are lucky in that their business lends itself to going into other stores.It could be they slowly cull some stores depending on how things pan out.Maybe getting inside Tesco Xtras or something maybe.

Card Factory only opened their store there in May this year. Matalan is now a 15 store trial, so maybe CF opened there before they knew they had Matalan. They have over a 1000 stores and aiming for 1200. They will be in 440 Aldi stores from November with a 70 card range all selling at 99p. 

Quote

 

These developments were shared as the UK’s largest specialist card retailer revealed its interim results (covering the six months to 31 July) which show how, bucking the general retail trend, its like-for-like store sales were up 1.2% while overall turnover increased 5.5% to £195.6 million. However pre-tax profit took a bit of a battering, (down 14.4%) coming in at £24.3 million.

https://www.pgbuzz.net/card-factory-to-supply-400-aldi-stores-with-cards-matalan-trial-extended-to-15-stores/

 

RMG will be glad they are expanding so much, more cards in the post 

[Majorpain]

8 hours ago, CVG said:

Neil Woodford's flagship fund to be shut down

https://www.bbc.co.uk/news/business-50052945

We are about to see if there are any skeletons in the closet, how much can the administrators claw back against what its worth on the books?  There are a lot of AIM shares mixed in there, its not a good market for trying to get rid of high volumes of shares....

[Democorruptcy]

Royal Mail staff voted overwhelmingly in favour of going on their first strike in a decade.

Over 97% of votes by members of the Communication Workers Union backed a strike. The turnout was 76% (around 110,000 UK postal workers).

The result was the largest yes vote for national industrial action since the passing of the Trade union Act 2016.

Workers were unhappy with the firm regarding issues such as job security and their terms and conditions of employment.

https://www.hl.co.uk/shares/shares-search-results/r/royal-mail-plc-ordinary-gbp0.01

[MrXxxx]

6 hours ago, DurhamBorn said:

Lots more to come.Crucial thing for RM is that they can increase prices faster than wages and fuel costs.Thats why they need to face the unions down now.What i would do is take on the usual temps for xmas,then sack 10% of the posties and replace with them.Id sack them in January.Id consider making it 5% if the unions accept the changes needed.If not replace the workforce.They can always go self employed with Hermes.

Good luck with that approach...for a start the majority of permanent s have been there for at least two years and so have full employment protection. The only way to get rid of staff would be to offer enhanced voluntary redundancy, and with the RM pension being so good the offer would have to be substantial!...oh, and that's even before considering `games` you would have with the unions. 

[Yellow_Reduced_Sticker]

11 hours ago, DurhamBorn said:

Telcos are seen as bad during inflation due to their big debt loads as interest rates push up the costs.However when iv gone through the debt profiles of BT and Vod they seem very well structured and at very low rates.Its not certain,but i would expect as the investment stage ends,they should see free cash grow much faster than any debt payments and might be in the situation where they are only rolling over half the debt and paying some off.On top i think people dont understand the drivers of value in the industry.People think one person one phone,but the next cycle will see much more connected.A lot of cloud applications will also need to be sat on the networks and that will mean big money for the network owners.

I see the telco sector in the same way as big tobacco back in the early 90s,hugely undervalued.If a big tech company decided to take out a telco the prices would likely double over a few months,and that isnt out of the question,nor are big mergers where both sets of shareholders reap the gain in divi increases.

 

I've been reseaching away looking for a broadband deal for me new gaf, anyway got a deal with plusnet you get £70 cash back Unlimited Fibre broadband 36Mb 18 mth contract works out at £19.10 p/m AND that deal expires mid-night tonight, how odd for a tightWad like myselvf to bag that deal at the last minute!

anyway the point of this post is, i did NOT know the amount of internet providers that BT own, in addition if there is no line contection, all the internet providers (phone line based internet ) have to USE openreach to get them to conect a line, most internet providers charge £60 for this, Plusnet charged me £49.99

Now i only hold VOD, no BT yet, so BT is looking VERY interesting...

My question is: the moolah that Openreach makes, will that be reflected in BT's share price?

Because i found this info on Openreach:

"Openreach is a functional division of telecommunications company BT plc, that maintains the telephone cables, ducts, cabinets and exchanges that connect nearly all homes and businesses in the United Kingdom to the national broadband and telephone network"

BTW, I Cleaned up at TESCO this evening 4 packets of tesco finest pork sausages reduced to 65p LOVELY!

 

[leonardratso]

open breach. Ive been in and out of BT.a more times than i can remember, they always seem to falter @ £1.80 as far as i can remember, but i cant be arsed to go thru my history, its too long. Im pretty sure ive never lost any money on BT.a. its been down but i always got shot at more than i paid and bagged the divi usually on the way  thru as well. Suppose its like CNA, ubiquitous but invisible.

[DurhamBorn]

5 hours ago, MrXxxx said:

Good luck with that approach...for a start the majority of permanent s have been there for at least two years and so have full employment protection. The only way to get rid of staff would be to offer enhanced voluntary redundancy, and with the RM pension being so good the offer would have to be substantial!...oh, and that's even before considering `games` you would have with the unions. 

2 years is easy,just a straightforward redundancy package,13 weeks and 2 weeks for each year worked.Id also kick in the capability  route for jobs and sack a load that way.Ignore the union,just make sure no overtime when they return to work,they will soon be back when the mortgage cant be paid.Any company can have a redundancy anytime they want.Iv known many blue chip companies have a redundancy yet have temps employed.

[MrXxxx]

6 hours ago, DurhamBorn said:

2 years is easy,just a straightforward redundancy package,13 weeks and 2 weeks for each year worked.Id also kick in the capability  route for jobs and sack a load that way.Ignore the union,just make sure no overtime when they return to work,they will soon be back when the mortgage cant be paid.Any company can have a redundancy anytime they want.Iv known many blue chip companies have a redundancy yet have temps employed.

Compulsory redundancy=job role no longer required, to then employ someone doing the same job would equate to constructive dismissal claims. As an employer you need to show a `reasonable time` has passed for these circumstances to change...I would suggest this to be at least six months.

Capability?...you would need to show documented evidence that you have given the employee ample opportunity to improve I.e. support/training, without this once again as an employer without doing this you are leaving yourself open to claims for unfair dismissal.

Businesses can terminate an employee (either fault or no fault) but they have to `navigate through a minefield` that is employment law correctly. As a result, to make sure and save time/expense they usually opt for either voluntary redundancy/severence, where the employee terminates their own contract and so has no counterclaim or Gross misconduct (immediate termination), but you try getting the latter to `stick` for more than the odd occasion!

[kibuc]

First Majestic provided its Q3 production results, steady as she goes in most areas, although a 14% jump in silver grades has to be noted. If I were holding it, I'd be optimistic ahead of the financials.

[Moominpapa]

I have had my eye on WNRG for a while. I will probably start laddering in around the 29ish mark, which is a 27% reduction from the highs.

SSGA SPDR ETFS EUROPE II PLC MSCI WORLD ENERGY UCITS USD (WNRG)

[DurhamBorn]

15 hours ago, Yellow_Reduced_Sticker said:

I've been reseaching away looking for a broadband deal for me new gaf, anyway got a deal with plusnet you get £70 cash back Unlimited Fibre broadband 36Mb 18 mth contract works out at £19.10 p/m AND that deal expires mid-night tonight, how odd for a tightWad like myselvf to bag that deal at the last minute!

anyway the point of this post is, i did NOT know the amount of internet providers that BT own, in addition if there is no line contection, all the internet providers (phone line based internet ) have to USE openreach to get them to conect a line, most internet providers charge £60 for this, Plusnet charged me £49.99

Now i only hold VOD, no BT yet, so BT is looking VERY interesting...

My question is: the moolah that Openreach makes, will that be reflected in BT's share price?

Because i found this info on Openreach:

"Openreach is a functional division of telecommunications company BT plc, that maintains the telephone cables, ducts, cabinets and exchanges that connect nearly all homes and businesses in the United Kingdom to the national broadband and telephone network"

BTW, I Cleaned up at TESCO this evening 4 packets of tesco finest pork sausages reduced to 65p LOVELY!

 

Yes BT get the profits from Openreach,but there arent really any profits at the moment.The key is that the government allow better returns to roll out fiber as i think they will,inflation+ a few % would be very good.Im not getting down there much at the moment due to working,but as soon as i leave/get finished il be back.Still getting quite a bit though.

[janch]

My brother-in-law is a postie with RM coming up to retirement on a FT permanent contract and has worked there for years.  His son also works as a postie with RM but through an agency and PT.  No idea on the difference in terms and conditions or pay rates etc but I can see why the company would prefer to hire through an agency to prevent the employment shenanigans as outlined by @MrXxxx .  The son (my nephew) is also more flexible in his work pattern too.