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

[DoINeedOne]

@Harley what is it your screening ratios etc... I have an account with SharePad which has lots of options including sectors etc... you can build custom filters and screens

I could recreate what you're screening and see if it works well, if so you know that Sharepad may be a better option for you

 

[JMD]

2 hours ago, Gin said:

I would rather be in the UK , than a foreigner in an Asian Country or the Carribbean .

Most foreigners  especially if white , come up regularly in conversations by the local population . Everyone and his brother have a story to tell about "those foreigners"

Foreigners as in any country , get blamed for all sorts of ills and jealousy can boil over into violence toward them , if local order breaks down for whatever reason , such as a pandemic or a currency run etc .

Much better a devil I know than one I do not. I would much rather be in a system (even a corrupt one) that I was born into than one where I do not know the, often nuanced order of things .

Depressingly true. I was listening to some Brett Weinstein recently (if you don't know him Google 'Evergreen College' - the escapade sums up the madness infecting the USA, coming here soon i think).

Anyway Weistein is an evolutionary biologist and is as liberal as you get (though ironically because of his experiences he is now part of the Dark Web), but he says many interesting things, one was about 'scapegoating' and its place historically - i.e. its not as simple as 'evil elites' reaching for the nearest political lever - it is more to do with dark societal/evolutionary reasons. 

...not completely off-topic i think, more i hope a warning about human nature when economies-beliefs-expectations-hopes-promises-etc-etc-etc are shattered or turn sour. (What is identity politics if not a modern form of Balkanisation?)

[Junction25]

Hello everyone 

Am a newbie to this site 

Started reading the comments about March  when we went into lockdown 

started buying Shell oil and my average price is £11.60 (only 5k)

I am interested in your thoughts around Silver 

is it short term investment? Or long term investment?

why do you guys think Silver going to go up in value ? 
 

I appreciate any help and advise - sorry if am asking stupid questions - I genuinely want to learn about investing other then stocks and shares 

[JMD]

15 hours ago, Errol said:

Bundesbank vault:

 

Fake, hmm?... didn't a competitor on the Great British Bake Off make a cake the other night that looked suspiciously similar?

[Harley]

1 hour ago, DoINeedOne said:

@Harley what is it your screening ratios etc... I have an account with SharePad which has lots of options including sectors etc... you can build custom filters and screens

I could recreate what you're screening and see if it works well, if so you know that Sharepad may be a better option for you

 

Ta for the feedback.  I think it was them I tried once but found it too much information (very extensive!) and a bit too expensive for the required global exchanges.

My filters:

. Each (national and international) exchange in which I can trade on-line

. A chosen industry (subsectors?) such as "Timber & Forestry Products", alas each data provider categorises things differently

. Current Ratio over 1

I then copy the results into Excel and convert the market cap figures into GBP.  I then manually collect certain additional data for the top 10 and use it to score them (as shown in my spreadsheet).  I have to manually collect this data as they are not included in the screen results unless they are used as part of the screen (and some are not available like that anyway).  I can't work around this and put them in the screen with very low and very high limits as the screen will ignore any company with a "-" in one of them.  Sometimes the "-" and ignoring the company is fine, sometimes not.  For example, fine for Total Debt to Equity as this is because the company has negative equity (so I will add that to the above list and test some more)!  Not fine though for the 5 Year Average Dividend Yield where a "-" seems to mean they have not paid out for 5 complete years.  That should not be reason to exclude them, just maybe to subsequently score them low.

In addition to the manual work, some of which TBF is unavoidable, Investing.com is a fail (unlike FT.com and maybe yours) in that I cannot run one screen across all chosen exchanges for an industry and just take the top 10 by market cap in a common currency (e.g. USD).  Investing.com holds company data in their local currencies and only allows one search at a time per country/exchange per industry. 

[Hardhat]

28 minutes ago, Junction25 said:

I am interested in your thoughts around Silver 

is it short term investment? Or long term investment?

why do you guys think Silver going to go up in value ? 

Silver is a long term hold for me ... I took some profit in the recent rally but would add to the positions again in a bust.

I hold FRES and physical at the moment, but will also look to buy back into HOC when the price is right.

Silver has a mix of uses in industry, but the main thesis is that it will be an asset that will outpace inflation, which most of us on this thread believe is coming in the next decade.

[Harley]

41 minutes ago, JMD said:

Fake, hmm?... didn't a competitor on the Great British Bake Off make a cake the other night that looked suspiciously similar?

And the court of the Bundesbank said "let them eat cake"!  I hope not, number 5179 is mine!

PS:  I built some similar steel cupboards a few months back and the shelves are even bowing under the weight of my tins of baked beans!

[DoINeedOne]

40 minutes ago, Harley said:

Ta for the feedback.  I think it was them I tried once but found it too much information (very extensive!) and a bit too expensive for the required global exchanges.

My filters:

. Each (national and international) exchange in which I can trade on-line

. A chosen industry (subsectors?) such as "Timber & Forestry Products", alas each data provider categorises things differently

. Current Ratio over 1

I then copy the results into Excel and convert the market cap figures into GBP.  I then manually collect certain additional data for the top 10 and use it to score them (as shown in my spreadsheet).  I have to manually collect this data as they are not included in the screen results unless they are used as part of the screen (and some are not available like that anyway).  I can't work around this and put them in the screen with very low and very high limits as the screen will ignore any company with a "-" in one of them.  Sometimes the "-" and ignoring the company is fine, sometimes not.  For example, fine for Total Debt to Equity as this is because the company has negative equity (so I will add that to the above list and test some more)!  Not fine though for the 5 Year Average Dividend Yield where a "-" seems to mean they have not paid out for 5 complete years.  That should not be reason to exclude them, just maybe to subsequently score them low.

In addition to the manual work, some of which TBF is unavoidable, Investing.com is a fail (unlike FT.com and maybe yours) in that I cannot run one screen across all chosen exchanges for an industry and just take the top 10 by market cap in a common currency (e.g. USD).  Investing.com holds company data in their local currencies and only allows one search at a time per country/exchange per industry. 

Just checked again no i can't run across all exchanges and they don't seem to have access to Canada

 

 

 

Shame really because you can get things like market cap in the currency of your choice and lots of options and  filters and to create customs ratios 

 

 

[DurhamBorn]

3 hours ago, Boon said:

Card Factory are an interesting case. On one hand their competitive offering is really good, lowest cost producer has meant they have muscled out people like Clintons.

On the other hand their online offering sucked and I don't think they read the trends correctly for the personalised gifts. I don't understand why they haven't been pushing Moonpig hard, looking at those accounts that is a lucrative business with no shop overheads to pay.

I can forsee them going into administration though, a CVA would actually be quite handy for them. If footfall is permanently down surely some leases are not going to be worth as much and it would be good to renegotiate.

Average lease is 2.5 years,they have very short lease lengths.They will go much harder at personalised gifts i expect once the new click and collect system is in that they are working on now.I noticed they are now doing click and collect on balloons from the website and click and collect on personalised will be a very nice add.They have always closed the odd shop from the tail.The key to them is they might be able to cut rents and hold input costs while putting up prices.They are bust or a 4 bagger i think.They need to use all free cash for the moment to pay debt down though.They have done well to hold it steady first half,but xmas is key to them and they need to execute well.I expect they will sign lots of new deals with big retailers as well,and a big US or Canada deal isnt out of the question,those markets are ripe for a discounter to upset.

[DurhamBorn]

2 hours ago, Junction25 said:

Hello everyone 

Am a newbie to this site 

Started reading the comments about March  when we went into lockdown 

started buying Shell oil and my average price is £11.60 (only 5k)

I am interested in your thoughts around Silver 

is it short term investment? Or long term investment?

why do you guys think Silver going to go up in value ? 
 

I appreciate any help and advise - sorry if am asking stupid questions - I genuinely want to learn about investing other then stocks and shares 

Lots of reasons,but silver will likely prove to be the best inflation hedge in the cycle,and because of that,it has a good chance it might go parabolic later in the decade.As always with investing the key is it might,not it will.CBs need to debase FIAT by huge amounts to keep western governments solvent and re-tool their economies.For me it would be very short term if it went to $100 this year,but long term likely towards 2028/30.

The no1 thing i always think from experience is to let cycles play out.Daily,weekly,even yearly price moves are rounding errors usually over a cycle.Its better to lose 20% by being slightly early than be in the wrong assets for a whole cycle,and thats exactly where most people are sat now.

[Talking Monkey]

4 hours ago, Gin said:

I would rather be in the UK , than a foreigner in an Asian Country or the Carribbean .

Most foreigners  especially if white , come up regularly in conversations by the local population . Everyone and his brother have a story to tell about "those foreigners"

Foreigners as in any country , get blamed for all sorts of ills and jealousy can boil over into violence toward them , if local order breaks down for whatever reason , such as a pandemic or a currency run etc .

Much better a devil I know than one I do not. I would much rather be in a system (even a corrupt one) that I was born into than one where I do not know the, often nuanced order of things .

Absolutely spot on. There is the view which I agree with that the west will see huge declines in living standards over the next decade for the middle and working classes, yet Asia for example will power ahead. I think that the declines will be global rather than predominantly confined to the West, maybe not as bad in the developing world but still material.

In the UK whatever our particular brand of corruption it pales in comparison to the developed world. The nuanced order of things takes years to fully grasp, but even then you are still an outsider. Maybe I am taking too pessimistic a view but the declines anticipated in this thread mean I would rather stick with the devil I know. If there is large scale collapse then a market town is probably the best place to be rather than a city, or remote/off grid. Hopefully we don't get a collapse at the end of the decade, instead we get a real shitty depression. I doubt we get off with anything less severe than a depression.

[wherebee]

13 hours ago, wherebee said:

So I set an order last night and went to sleep.  Got 13,000 extra BP at around 17.5 (I have to get ADRs as am in Oz and broker covers US mkts more).  That's brought my average price down a lot.  Living in Asia, I just do not believe the story of 'end of oil' that is being pushed, not least because China is beating the war drums and modern warfare needs a LOT of energy.

well, jumped in again at 17.15

It's either the best investment I have made after my GDXJ trebled, or I'm going to lose it all as BP goes under.

[Harley]

1 hour ago, DoINeedOne said:

Just checked again no i can't run across all exchanges and they don't seem to have access to Canada

 

 

 

Shame really because you can get things like market cap in the currency of your choice and lots of options and  filters and to create customs ratios 

 

 

Thanks for that (sorry, I forgot to say I would be interested in the results!).  Nice choice there.  I reckon there's always a fair bit of manual work to do.  Fair enough really.  I can see why they charge a bit (they do, right?) to provide all those options!

[Popuplights]

31 minutes ago, wherebee said:

well, jumped in again at 17.15

Hello mate, excuse my ignorance. 17.15 what? 

[leonardratso]

1 minute ago, Popuplights said:

Hello mate, excuse my ignorance. 17.15 what? 

must be adr us$

[janch]

17 hours ago, DurhamBorn said:

nteresting,but i was watching the Card Factory results,and they mentioned they had trialled putting up their 59p cards to 69p without any loss in sales.Thats a 17% increase.They were going to expand that to other price points.A classic case of elasticity of demand.Some areas will see consumers swallow prices increases without much loss in demand (that then temps companies,then the industry to keep pushing) where other areas simply wont be able to push through increases.Inflation is in the system now and will show itself over time.Its been brutal getting to this cycle turn,but i think its upon us now.

 

In town today Clintons cards was closed and boarded up (have they gone bust yet?) but there was a queue in Card Factory a few doors down waiting to pay.  Although the share price has gone down a lot (since I bought some) I can see them doing well if they've seen off the likes of Clinton cards.  Cards in places like Smiths and Clintons are a total rip-off.  Putting up the price of a card by 10p is neither here nor there when you compare with the competition.

[JMD]

20 hours ago, Cattle Prod said:

- I don't think refineries can be easily re-tasked for light crude, they simply don't want to make a long term investment based on a shale supply source. And you don't get diesel from it, USA will need to import heavy crude for diesel and lubricants for the forseeable. Canada has it though, so don't need the ME for that

- He seems to making the implicit assumption, like most analysts, that there is no problem with light sweet crude supply.

- He's wrong about Mexico, they are not not exporting because of their economic success (??) it's because their production is collapsing and they need it all (Export Land Model).

- I agree I don't think the peace deal is about securing crude supply, it's Trumps ego.

Short answer: My view is that the USA doesn't need ME crude for themselves, at the moment, per se. They can pay for it from anywhere, they are not the marginal buyer. But if it is not secured for the rest of the world, it will damage the USA badly and the petrodollar system. So yes, of course they need the ME to keep exporting the stuff.

 

thanks CP, Peter Zeihan was speaking a lot about oil in that radio interview, but really he is more of a generalist and tends(likes) to make broad(brash) statements. If i were being uncharitable, i'd say he has his eye firmly on selling his books and promoting his tours/talks to his American audience.  

I note that you mention in another post that India has very little oil to speak of, that's interesting because Zeihan predicts that Japan (a country also without fossil resource) will begin pushing back soon against Chinese south-pacific expansionism, and will even go so far as Japan attempting to cut-off China's access to ME oil by using its large navy. I wonder if it would make sense for India and Japan to team up strategically, it would after all help India to secure its own oil supply?

It's just that i find myself thinking more and more about the increasing risks of investing in SE Asia. On the other hand, perhaps 'hot wars' are a thing of the past. Perhaps any conflict, if it did come, would be very localised and also very short duration, after all the USSR/Nato countries never went to war. But i do wonder if S. Korean telecoms, Vietnamese manufacturing, Taiwanese semi-conductors are worth investing in?

I know others on here do invest, so i guess they have thought things through and consider all-out conflict a very small risk?

[DoINeedOne]

58 minutes ago, Harley said:

Thanks for that (sorry, I forgot to say I would be interested in the results!).  Nice choice there.  I reckon there's always a fair bit of manual work to do.  Fair enough really.  I can see why they charge a bit (they do, right?) to provide all those options!

On Sharepad i think its £300 a year for everything the results where mixed as Canada was not included but Weyerhaeuser on a few sites doesn't show under forestry or timber categories but under financial REIT  and seems like some where missing maybe as another category

Also tired looking at the screener on SimplyWall.st has options to scan everywhere and industry sectors but only set filters in regards to ratios (Shown Below) etc... The main issue is like you said different sites categorise things differently 

 

[DurhamBorn]

18 minutes ago, JMD said:

thanks CP, Peter Zeihan was speaking a lot about oil in that radio interview, but really he is more of a generalist and tends(likes) to make broad(brash) statements. If i were being uncharitable, i'd say he has his eye firmly on selling his books and promoting his tours/talks to his American audience.  

I note that you mention in another post that India has very little oil to speak of, that's interesting because Zeihan predicts that Japan (a country also without fossil resource) will begin pushing back soon against Chinese south-pacific expansionism, and will even go so far as Japan attempting to cut-off China's access to ME oil by using its large navy. I wonder if it would make sense for India and Japan to team up strategically, it would after all help India to secure its own oil supply?

It's just that i find myself thinking more and more about the increasing risks of investing in SE Asia. On the other hand, perhaps 'hot wars' are a thing of the past. Perhaps any conflict, if it did come, would be very localised and also very short duration, after all the USSR/Nato countries never went to war. But i do wonder if S. Korean telecoms, Vietnamese manufacturing, Taiwanese semi-conductors are worth investing in?

I know others on here do invest, so i guess they have thought things through and consider all-out conflict a very small risk?

India will be getting a lot of oil from BP,and gas.Thats why BP have got a big joint venture going with Reliance Industries the largest company in India.They are expanding hugely their join petrol station venture etc and also deep water gas.

[DurhamBorn]

Noticed in SSEs report today they are looking to take on a new partner/sell an equity stake in the massive Dogger Bank windfarm.I think that one will be crucial for hydrogen production on the Humber and Teesside so it will be interesting to see who takes that equity stake.

[janch]

6 hours ago, Barnsey said:

Henry Pryor is now suggesting his estate agent contacts are seeing quite the cooling off in sales this month along with increased inventory.

I've been following residential property prices for many years in a few places along the M4 so in the south of England and also in Cardiff.  In the SE prices have been sinking over the past year I would say, just small amounts on the asking price (well large to any sane person in the real world eg £10/20/30K) and it's quite noticeable if you keep looking for a few months and keep track of reductions.  Actual sale prices could well be a lot less and I haven't really looked at them.

Bath went insane along with most of the SE and is falling a bit now but by about Swindon and anywhere further west prices have been inching up if anything over the summer.  I can't see how this can continue with the coming redundancies and tightening of credit/mortgage finance as others have mentioned.  A lot have sold recently no doubt because of the cancellation of stamp duty.  That was quite a kick to the market but the effect is bound to wear off soon.

 

[JMD]

21 hours ago, Harley said:

My "Timber & Forestry Products" list scored on select fundamentals (that matter to me!) as follows:

. Only the top 10 by GBP market cap

. One point given if above the top 10 average for each of: Current Ratio, 5 year average yield (chosen given recent turbulence), number of past 4 years with positive operating cash flow, number of past 4 years with year-on-year growing operating cash flow, number of past 4 years where the dividend is covered by operating cash flow.

. One point given if below the top 10 average for each of: the Total Debt to Equity Ratio and latest recorded percentage of total assets comprising intangible assets (intangibles and goodwill).

Clearly other factors to look at in choosing the "best" but just some thoughts on process and outcome.

Some interesting insights:

. The sector is very solvent, as measured by the Current Ratio

. Pretty much a Canadian/US thing.  Was expecting more Scandinavians

. Weyerhaeuser is the elephant in the room (same cap as the other nine combined) but that div coverage

. Wide variation in debt levels but not crazy (like some) on average

. Overall good income earners (yield and coverage)

. Not a particularly high growth sector

. Some not so impressive asset bases (highish intangibles)

Now off to look at some charts!

Harley, i think those metrics combined provide a very good indication of the financial health of a company. Must say I'm amazed at how quickly you competed that table! (and there was me posting recently that work-place productivity was dead!! (well sort-off)).

The only comment i'd have is what are your thoughts on evaluating the 'fair value' of a company? Is it worth doing, or is this mostly crystal-ball staring, i.e. discounted future cash flows, and other highly suspect imponderables? Personally, I plan to buy my watch-list after a BK event, so for me my 'fair-value' price would be the company stock price at its lowest point in March 2020.   

[JREWING]

Who's shorting the Oilies.

There's some buying opportunity there.

Will we see sub 9 at close..

Is this the oily meltup before the big uplift...

Definitely a bear few days.

Only sector wide.

 

 IN

Royal Dutch Shell PLC

Shell slims down to shape up for the energy transition

Job cuts are part of effort to rewrite script during the pandemic for a lower-carbon future



Shell is expected to make bigger moves in chemicals and lower-carbon areas. Chief executive Ben van Beurden said: ‘It is not enough, though. It all needs to accelerate’ © Bloomberg

   

October 1, 2020 4:00 am by Anjli Raval , Senior Energy Correspondent

A year ago Royal Dutch Shell had a convincing strategy to thrive through the energy transition. 

The first energy major to outline emissions-cutting targets, it planned to slowly increase spending on low-carbon technologies while sustaining its legacy oil and gas businesses as it promised $125bn in investor payouts in coming years. 

Since then the Anglo-Dutch group has been forced into previously unthinkable moves, suspending share buybacks, slashing spending and cutting its dividend for the first time since the second world war as the pandemic hit earnings. Its shares have more than halved — and rivals have caught up on climate messaging.

“All Shell is thinking about is how do we maintain our position as a market leader in every sense — from climate action to staying competitive in the oil and gas space,” one company insider said. “The fear is that we go from being a leader to a laggard.”

Shell, which is pursuing a net-zero emissions goal as pressure to tackle climate change and scrutiny of its capital allocation plans mount, is scrambling to come up with an updated plan. In the meantime, it is cutting costs and streamlining.

Until now Shell has tried to have its cake and eat it too

Andrew Grant, Carbon Tracker

On Wednesday it offered a glimpse into Project Reshape, its organisational restructuring in which up to 9,000 jobs will be cut from its 83,000-strong workforce to save $2.5bn a year. 

“Our traditional business will be more focused,” said Ben van Beurden, chief executive. “We have to be a simpler, more streamlined, more competitive..

Shell has said greater efficiencies and simpler methods of working have enabled it to cut expenses in its US shale business by 40 per cent this year. It is now seeking to replicate this across other parts of the company. 

While oil will remain a crucial cash generator and the company plans to expand its gas business, Shell will use this cash to make bigger moves in chemicals and lower-carbon areas. It is involved in power trading, biofuels and solar development, and is a leader in the emerging hydrogen sector. 

“It is not enough, though. It all needs to accelerate,” said Mr van Beurden. “Our low-carbon investments will increase significantly over time.”

Shell also said it would put at least five out of its 15 refineries up for sale.

“Everyone knows that if you’re in the upstream [oil exploration and production] business, that’s where the cuts are going to come,” another Shell insider said. “It’s only the new energies guys that are seeing cash going their way.”

Investors have demanded greater clarity. After the two-thirds cut to Shell’s dividend in April, executives were unable to explain how capital allocation plans would change and what this meant for its energy transition plans. It faced similar criticism after its announcement in July of lower longer-term energy price assumptions and nearly $17bn in impairments. 

The economics of the energy business has changed. On top of this, there is more and more pressure from governments, shareholders and civil society

Ben Caldecott, director of the Oxford Sustainable Finance Programme

European oil executives say that if their renewable investments are low compared with their fossil fuel operations they will not get the recognition from environmentalists and ethical investors they believe they deserve. Slumps in their companies’ share prices make it clear they will not be rewarded for intention alone.

But if they invest heavily, they will suffer financially as it will take years to scale up these businesses. 

 

Energy analysts have said BP’s move to reduce its oil and gas production by 40 per cent by 2030 would put greater pressure on Shell to follow suit, something Mr van Beurden is loath to do. His “single biggest” regret, he told the FT last year, would be abandoning the oil business prematurely.

Two-thirds of Shell’s free cash flow has traditionally been tied to its oil business and Mr van Beurden on Thursday said oil and gas would still be among the products Shell sells in 2050.

“Until now Shell has tried to have its cake and eat it too. They tried to implement emissions targets but grow fossil fuel production,” said Andrew Grant at Carbon Tracker. “With a new net-zero announcement, how is this possible?”

Shell executives have signalled that declining production is inevitable if the Paris climate goals are to be met. But they say a firm target is meaningless if sales of fossil fuel products — including those made with third-party crude — grow. 

“The climate doesn’t care where in the value chain, and from whose point of sale, those emissions came,” De la Rey Venter, head of integrated gas ventures, told the FT’s Commodities Global Summit this week. “We need to go on a journey with customers to help them decarbonise.”

[RickyBacker]

6 hours ago, Cattle Prod said:

Ref SaxoBank being majority shareholded by the Chinese, I just had the following pop up after logging in...

I haven't touched the settings, just logged in. Slightly alarming...need to keep switching my trades to IB, if I haven't already signed my rights away by pressing close!

I can't read all of it... but that's Japanese not Chinese. 
Basically, Japanese is a mixture of inherited Chinese characters (Kanji) and Japanese characters (Kana). The Kanji has references to Tokyo and Osaka, but I can't read enough to fully understand it.

[Sasquatch]

2 hours ago, Talking Monkey said:

Absolutely spot on. There is the view which I agree with that the west will see huge declines in living standards over the next decade for the middle and working classes, yet Asia for example will power ahead. I think that the declines will be global rather than predominantly confined to the West, maybe not as bad in the developing world but still material.

In the UK whatever our particular brand of corruption it pales in comparison to the developed world. The nuanced order of things takes years to fully grasp, but even then you are still an outsider. Maybe I am taking too pessimistic a view but the declines anticipated in this thread mean I would rather stick with the devil I know. If there is large scale collapse then a market town is probably the best place to be rather than a city, or remote/off grid. Hopefully we don't get a collapse at the end of the decade, instead we get a real shitty depression. I doubt we get off with anything less severe than a depression.

Definitely market town for us. Perhaps 2,000 to 5,000 people. Hopefully on the edge in a quiet spot. Ideally within walking distance (say 1 mile max), a decent general shop/small supermarket, dentist, doctor, post office, baker/greengrocer/butcher, pub. Anything beyond this would be a bonus. Access to a traditional garage as well would be useful for car repairs.

We have 2 or 3 places in mind. Will be waiting for the right property to appear on the market.