Credit deflation and the reflation cycle to come (part 3)

[Democorruptcy]

3 minutes ago, DurhamBorn said:

I got a bit lucky on the sector because i had holdings,but bought a lot of Go Ahead and National Express near the covid bottom,then changed my mind when they bounced and sold them for a small profit overall,Stagecoach i just left and kept what i had.Its a lesson for any new investors etc though why you need to be diverse in your investments not everything in one small area.You can call the cycle to perfection and cross market that to almost perfection and still lose due to unknowns,like polos destroying your capital at the stroke of a pen.

If you hadn't have been diversified you might have been paying more attention and sold quicker. The lesson there is go all in but make sure you pick the best one and time it right!

What do you make of the VOD news about the convertible bond and buybacks from 17th? I'd sold all my VOD earlier on but bought some again this week, have I gone in too early! That's aside from the war, when they are so reliant on business in the EU.

[snaga]

21 minutes ago, Ma2 said:

In a nod to Russia, Ukraine is reportedly no longer insisting on NATO membership

https://www.fxstreet.com/news/breaking-in-a-nod-to-russia-ukraine-is-reportedly-no-longer-insisting-on-nato-membership-afp-202203081719

Think this might have  has eased things a little..?

too late, why would Putin take their word for it now?

[DurhamBorn]

2 minutes ago, Democorruptcy said:

If you hadn't have been diversified you might have been paying more attention and sold quicker. The lesson there is go all in but make sure you pick the best one and time it right!

What do you make of the VOD news about the convertible bond and buybacks from 17th? I'd sold all my VOD earlier on but bought some again this week, have I gone in too early! That's aside from the war, when they are so reliant on business in the EU.

They have the cash to buy them so they dont dilute the shares.They make most in Germany.They have too much debt of course like most telcos.They are all increasing prices nicely.Key is to watch for return on capital employed,it should start to increase from here on in,thats the key number.

The only thing id go all in on is that black haired weather woman or Eva Green .

[Democorruptcy]

10 minutes ago, DurhamBorn said:

They have the cash to buy them so they dont dilute the shares.They make most in Germany.They have too much debt of course like most telcos.They are all increasing prices nicely.Key is to watch for return on capital employed,it should start to increase from here on in,thats the key number.

The only thing id go all in on is that black haired weather woman or Eva Green .

Forget the shares, who is this black haired weather woman?

[JimmyTheBruce]

I can confirm you can buy Poly on Freetrade as of 10 minutes ago.  I'm waiting to see a big spike after I ploughed £50 in.

[sancho panza]

3 hours ago, jamtomorrow said:

Long run, it'll all look like a macro bump in the road *if* global markets in energy and commodities continue to function, because (as already mentioned) markets will eventually re-route round the blockades by displacement of supply and demand. Massive short-term pain and dislocation of course, but there's no reason why the invisible hand won't do its thing in the long run.

 

Interesting question for us here is that "if" - will global markets continue to function? I'm not so sure, signs of unravelling abound. LME nickel another straw in the wind yesterday. Trust seems to be evaporating, and anything involving a counterparty in a different jurisdiction is suddenly beset with difficulty.

That's the key point.We've already discussed how generally short sighted/totally misguided our Westminster overlords have been during covid and here we are again with a fresh chance for them to display their short termism and flirt with the law of unintended consequences.

This is from Wolf but exemplifies the notion that our sanctions will give us a short term buzz but actually reinforce the long term downtrend in the dollar hegemony

via Mish

https://mishtalk.com/economics/us-sanction-policy-drives-china-into-russias-loving-arms

10 hours ago, Cattle Prod said:

Yeah it's still the 6th biggest silver miners in the world, with the silver price taking off. It's just being priced like we can't have any. Either

a)because we can't, because of sanctions on its Russian business. But what about the rest of it? It's worth a multiple of the mcap. A split is fine with me

b) Because moex is closed, LSE is being difficult, and the market makers can't or won't make a market. At least for us plebs. In this case, it's temporary, even if it takes years.

So all right for a punt, I like something like this in my portfolio to scratch my itch and keep me away from my sensible investments.

I was talking with my Mum yesterday about our psotioning and she made the excellent point that any shutting down of Russian gold and silver production would be extrememly bullish for our other PM miner positions.Ideally we want them all rising steeply,but if the likes of Yamana rise even more steeply because Poly has been shut out of world markets then net net,we're not too badly off.

Must say,last few days,I've been reading all these downdates about markets and thanks to the hive mind on here-Oil/Gold/Telecoms/Potash- we're actually moving up not down.

As Denninger used to say back in 08-'Props.'

2 hours ago, MrXxxx said:

https://www.reuters.com/markets/europe/oil-markets-fret-over-supply-shock-some-buyers-shun-russia-2022-03-08/

Oil sanctions, so what does this mean for the respective countries economies?...well for the US it will mean a drop in exports, although this will be counter balanced by imports; their oil exports/imports balance, for the UK its going to mean a deeper recession/lower GDP/higher inflation as 'we' will be paying higher oil prices, and for Europe who haven't joined the ban it will be the opportunity to pick up cheaper Russian oil so may even lessen their recession and/or create a more rapid recovery from their current position....the approach seen shows the whole sanction scenario for what it is, a farce where countries will only do the gestures that suit them, and then only when they feel they are under a 'moral' spotlight.

I think there's a huge incentive for a lot of more minor countires to bypass the blockade or buy off a third party that buys off Russia.

The US is possibly missing the fact that in ten years,their world policeman status will have been severely dented.Like a lot of the great fighters,it's easy to miss the fact you've gotten old.

[Transistor Man]

10 hours ago, Cattle Prod said:

Bought his book, haven't read it yet, he's a superb scientist. Notice how he says "I don't know" now and then, despite his stature. Run away from the ones who have all the answers, or definitive answers. It doesn't work like that, see - covid! He also has nothing to gain or lose from this, no dig in the fight. Just curious.

I went to a small presentation by Steven Koonin in 2009 at Birmingham University, Physics dept.

I remember a few things he said. 

For electricity generation, he saw coal and gas continuing to dominate. He did not see a hydrogen economy coming. No hydrogen cars. Instead, new engines with diesel/ petrol characteristics. 

 

 

 

[sancho panza]

one to log in the EU be careful what you wish for section.

 

 

Lyn alden,data source St Louis Fed

Already, Russia and China are outlining new pipelines that, if completed, would redirect gas that was once destined to Europe, towards China instead.

The Russian gas giant signed a contract to design the Soyuz Vostok pipeline across Mongolia toward China, Gazprom said in a statement. If Russia reaches a new supply agreement with China, Soyuz Vostok will carry as much as 50 billion cubic meters of natural gas per year to the Asian nation.

A new supply deal with China would also enable Gazprom to build an interconnector between its west- and eastbound pipeline systems, effectively allowing Russia to redirect gas toward China from fields that now only feed Europe. That could ease Gazprom’s reliance on the European continent, currently the single-largest buyer of Russian gas.

–Bloomberg, February 28th

That’s basically the Boolean variable. If China supports Russia in any multiple of areas to a serious degree over the long run even without direct military assistance, the West faces a serious loss of control. China could buy Russian commodities and accelerate usage of their Cross-Broder Interbank Payment System (CIPS), which goes around dollar/SWIFT payment channels. China’s new central bank digital currency can also go around SWIFT. This event may accelerate China’s ability to buy commodities directly with yuan, as China likely has stronger negotiating power with Russia now.

[marceau]

21 minutes ago, sancho panza said:

one to log in the EU be careful what you wish for section.

All this disruption, bloodshed and risk over Ukraine of all places. Our leaders have lost their minds.

[DurhamBorn]

47 minutes ago, Democorruptcy said:

Forget the shares, who is this black haired weather woman?

Lucy 

 

[AWW]

22 minutes ago, marceau said:

All this disruption, bloodshed and risk over Ukraine of all places. Our leaders have lost their minds.

This. Like Covid, it's out of all proportion. Either that, or I misunderstand what's at risk here.

[Democorruptcy]

IMB:

Tobacco giant Imperial Brands has suspended all operations in Russia following the country's invasion of neighbouring Ukraine.
Imperial Brands said on Wednesday that it was halting production at its factory in Volgograd, as well as ceasing all sales and marketing activity in the country, amid "a highly challenging environment" in Russia as a result of international sanctions and consequential severe disruption.

"We will be supporting our Russian employees, who continue to be paid while operations are paused," said Imperial. "We have already suspended our operations in Ukraine in order to prioritise the safety and wellbeing of our 600 employees in that country."

Imperial Brands added that both Russia and Ukraine were "relatively small markets" in the broader context of the group, representing around 2% of net revenues and 0.5% of adjusted operating profits in 2021.

[Axeman123]

31 minutes ago, marceau said:

All this disruption, bloodshed and risk over Ukraine of all places. Our leaders have lost their minds.

I don't think the country matters, except as a pretext for a testing of dominance between a rising power and a declining one.

Some in the US seemed to think it would be a chance to put Russia back in it's box, others a chance to bleed them with an insurgency. Both sides seem to have deployed their full spectrum warfare, and Russia seems to have the upper hand.

Santioning foreign reserves seems like a desperate act, and a one time measure better held as a threat than actually implemented. Mutually Assured Destruction.

[MrXxxx]

2 hours ago, DurhamBorn said:

14% loss on Stagecoach then nominal.Shame the way things played out on them,the cross market macro call was right (transport costs due to oil prices would rocket and their 3 year fuel hedges while fare increase would see big free cash win) but the nature of the first phase of the distribution cycle couldnt of been worse for them.Of course the nature of that also got a treble from Royal Mail etc.Only a small holding,but once again a company that should throw off cash in the cycle going off market.Losing more and more.

 

Oh well, there is still GOG...and as a current shareholder I would like to encourage you all to invest in it so that the share price rockets; except @Yellow_Reduced_Stickerof course, its low enough already, I don't want it going any lower! :-)))

[MrXxxx]

1 hour ago, snaga said:

too late, why would Putin take their word for it now?

Because looking at the behaviour regarding sanctions Ukraine have realised that a) membership is not all its 'cracked up to be', and B) the cost of potentially joining the club this time was high and if they do it could be even worse....Putin [despite the media rhetoric portraying his progress otherwise] has 'played a blinder'.

[Democorruptcy]

POLY news:

Quote

 

Operations

Polymetal operations in Russia and Kazakhstan continue undisrupted. In 2021, Kazakhstan operations generated 43% of the Group's Adjusted EBITDA and 48% of its net earnings. Kazakhstan operations represent 40% (12 Moz) of Polymetal's gold equivalent reserves. Group's scope of operational activities and production guidance remain stable.  The Company is reviewing non-essential capital projects in order to preserve liquidity and minimize risk. The management specifically notes that POX-2, Urals Flotation, Kutyn, and Prognoz projects are not subject to review and their execution will continue as previously planned. 

Sale of bullion/concentrate

Sales of bullion and concentrate from Kazakhstan continue as usual. In Russia, Polymetal sells silver concentrate from Dukat (sold mainly to Kazakhstan as well as East Asia) and refractory gold concentrate from Mayskoye and Nezhda (sold to China and Kazakhstan). The Company received assurances from off-takers that all existing contracts continue in good standing.  Sales of bullion in Russia have been impacted by sanctions imposed by the US, EU and UK. The Company fully adjusted sales to comply with all relevant sanctions. Domestic physical demand for gold in Russia has been supported by the decision of the Russian Central Bank to resume gold purchases in the domestic market. According to CBR statement, the purchases will be conducted at LBMA price of the day of the purchase. The Company is also working on expanding the number of counterparties for export bullion sales.

Inventories & supplies

Polymetal routinely carries at least three months' worth of consumption in stockpiles of critical materials, consumables and spare parts. Insurance stock levels further increased since the start of the COVID-19 pandemic in 2020.  This extra inventory will provide a safety buffer in case of unforeseen supply chain disruptions. The Company initiated a review of logistics and procurement with an aim to increase the supply chain resilience and potentially shift critical supplies to domestic or Chinese-manufactured consumables and equipment.

Liquidity & net debt

Net debt increased to US$ 1.87 billion as of 1 March (31 December 2021: US$ 1.65 billion) mainly driven by seasonal working capital increase. 96% of the total debt is denominated in US dollars. Central Bank of Russia raised its key interest rate to 20% (from 9.5%) on February 28th. The average cost of debt as of March remained low at approx. 2.9%. However, the management expects a sharp increase in interest rates for new borrowings denominated in Russian roubles and in foreign currencies to affect the Company's average cost of debt for 2022. 27% of the Group's debt matures within the next 12 months. The Group has approx. US$ 0.4 bn in cash and cash equivalents deposited with non-sanctioned financial institutions. With the significant free cash flows coming from the Company's Kazakhstan operations, Polymetal has enough buffer to continue to fulfill its obligations and capital commitments in the next 12 months even in the absence of new borrowings. In addition, the Company maintains US$ 1 billion of undrawn credit lines from non-sanctioned financial institutions. We will provide further updates on the Group's liquidity position in due course.

Dividends

The Company currently intends to pay the final dividend as proposed by the Board on March 2, 2022.  At the same time, the Board retains the discretion to re-evaluate its dividend recommendation prior to the Annual General Meeting with a view to ensuring liquidity and solvency of the business.

Capital controls

From 1 March 2022, certain foreign currency transactions involving Russian residents are restricted. Russian legal entities are prohibited to pay dividends to foreign persons, although formally these instructions apply only to dividends of joint-stock companies paid through professional participants of the securities market. It is currently unclear whether the Company will be able to remit dividends from its Russian subsidiaries to the holding company level. Russian residents are obliged to sell 80% of foreign currency received under export contracts with non-residents on the transfer of goods or services. The purchases are going to be made at the Central Bank of Russia's rate. These new regulations are currently not expected to have a material impact on the Company other than the impact on intragroup dividends described above.

Board

Six independent Board members, including the Chairman and the Senior Independent Director, resigned from the Board effective 7 March. Polymetal Board commenced a search for new independent directors and intends to maintain full compliance with the UK Governance Code.

The Group complies rigorously with all relevant legislation and is implementing comprehensive measures to observe all applicable international sanctions. The scope and impact of any new potential sanctions (and any countersanctions) are yet unknown.  However, they might further affect key Russian financial institutions as well as mining companies. Polymetal believes that targeted sanctions on the company remain unlikely, but are not impossible. Contingency planning has been initiated proactively to maintain business continuity.

Further updates will be provided in due course.

 

 

[Harley]

2 hours ago, Democorruptcy said:

The talking heads on Bloomberg did a breaking news on it yesterday and they said we were joinIng the US embargo but unlike them, not doing it straight away, we were going to stagger it over months. I wondered if it was to give BP more time to sell their Rosneft and the price moved up immediately.

Ta.  Apologies to all for being a bit blunt but there's too much yap out there atm and this has been a safe place.  Careless talk costs lives and all that.  TBH, anything can happen, twists and turns, just how they like it.  It'll churn you up and spit you out.  The big money is usually one step ahead.

[marceau]

34 minutes ago, AWW said:

This. Like Covid, it's out of all proportion. Either that, or I misunderstand what's at risk here.

Indeed. There is literally nothing that the UK could get out of Ukraine that it wasn't already getting. The place is of no strategic interest to us whatsoever.

We're engaged in the most stupid, cruel and destructive imperial follies without even having an empire.

[MrXxxx]

7 minutes ago, Harley said:

Apologies to all for being a bit blunt

Sorry, I thought you were joking?!...I must be too 'thick skinned'? :-)))

[Harley]

3 hours ago, Plan-b said:

That's correct not at the moment, but its a long time until the end of the year. 

Indeed, either way.  If it's going to get worse though that'll be a relatively minor event.  Boris saying they're rushing a law through to take assets.  OK, maybe in the context of oligarchs but the wording was different, that was not explicitly stated, and we all know about how they introduce stuff.  It was said in the joint conference with Trudeau - Boris getting briefed on the Canadian experience by a fellow WEF young leader?  Absolutely, "may", "could", "should" but maybe worth opening a personal Overton Window's if the emotions, etc can take it!  Lots more could happen.  I've been saying they'll be coming for the financials next....

PS:  I'm not selling fear, I certainly don't buy(!), but I am selling hedges!

[Harley]

2 hours ago, Ma2 said:

In a nod to Russia, Ukraine is reportedly no longer insisting on NATO membership

https://www.fxstreet.com/news/breaking-in-a-nod-to-russia-ukraine-is-reportedly-no-longer-insisting-on-nato-membership-afp-202203081719

Think this might have  has eased things a little..?

Old news (at least 2 days!). 

[Democorruptcy]

7 minutes ago, Cattle Prod said:

Not for me. Not in a million years did I think our governments would adopt Chinese lockdown policies. I don't think many other people did if you think back to that time without hindsight. I still can't quite believe it happened, and my outlook has forever been changed by it. Not the virus, but the governments reaction to it, and the peoples support of it. I have no place in such as society.

They will do anything for money.

[Harley]

3 hours ago, JimmyTheBruce said:

I take it the war has finished?  Green everywhere this morning.

My screens have lit up, like a 30 deviation event!  Lot's of asset managers (don't tell @DurhamBorn!), not that all look ready for a robust turn.  At the same time I've taken hits on what had been performing well (resources, PMs, etc) but gained on asset managers, etc.  Weird, TBH as expected at this cycle turn.  I must finish that Jim Rogers interview but I'm with him on one last hurrah some time and then "splat"!  Play the puck, I'm positioning for both.

[Harley]

2 hours ago, Democorruptcy said:

Forget the shares, who is this black haired weather woman?

The only thing on TV that's not fake!

[Majorpain]

LME went all in yesterday to stop a collapse, cancelling trades between parties to keep everyone liquid and in the game.  Needless to say its not gone down well with the "winning" traders!

Interesting the JPM bailed out Tsingshan last night.