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

[DurhamBorn]

30 minutes ago, jamtomorrow said:

I've been keeping an eye on hydrogen-based reduction for iron/steel manufacture. Volvo are giving it a try out in production: https://www.bloomberg.com/news/articles/2021-10-17/volvo-s-dump-truck-takes-shape-from-world-s-first-green-steel

The kicker is it costs 20% to 30% more than coked iron to produce. That probably looked like a deal-breaker back in pre-shortage times, but now looks increasingly like a side-issue when suddenly all you care about is securing any steel at all.

I wonder where in the UK is going to have the best supply of blue-green hydrogen when this takes off.

Teesside and the Humber i expect.

[steppensheep]

48 minutes ago, Cattle Prod said:

There's an awful lot of chatter about the market pricing in rate hikes, and that the Fed is going to have to ramp up it's hike schedule etc...I'll just leave this here:

Im having to try and reconcile two contradictory opinions in my head, but I think it shows no one in the finance world understood the new paradigm after 2007/2008 (with the possible exception of @DurhamBorn) but if you imagine finding a best fit for all the projections after about 2014, the markets actually suggested a smoother/better interest rate level than the fed.

 

(Alnd to add to my own contrarian disagreement with myself, I'd say that they have actually been correct to suggest higher rates were needed for the preceding period as well))

[CVG]

BT up 6% today to 147, apparently after hitting cost savings target 18 months early.

[Hancock]

1 hour ago, Cattle Prod said:

There's an awful lot of chatter about the market pricing in rate hikes, and that the Fed is going to have to ramp up it's hike schedule etc...I'll just leave this here:

So if the FED does and  "the market" isn't expecting it ....

[Talking Monkey]

15 hours ago, Loki said:

No idea I just YOLO'd in, sorry,  it's worked OK for my SIPP so far though if that helps.  (ARCH, Peabody, Thungela)

I'm crying with laughter at the 'I just YOLO' d in' comment. It's more or less what I did on the oilies. 

[Majorpain]

2 hours ago, jamtomorrow said:

I've been keeping an eye on hydrogen-based reduction for iron/steel manufacture. Volvo are giving it a try out in production: https://www.bloomberg.com/news/articles/2021-10-17/volvo-s-dump-truck-takes-shape-from-world-s-first-green-steel

The kicker is it costs 20% to 30% more than coked iron to produce. That probably looked like a deal-breaker back in pre-shortage times, but now looks increasingly like a side-issue when suddenly all you care about is securing any steel at all.

I wonder where in the UK is going to have the best supply of blue-green hydrogen when this takes off.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1008813/advanced-modular-reactors-demo-call-for-evidence.pdf

Two parts to it I think, you need a big enough base load capacity that any spare wind power can be used in electrolysis cheaply at night, and what looks at the minute like its going to be High-temp helium cooled reactors that produce super high temperature outputs to help crack water into hydrogen/oxygen.

UK is reasonably well positioned for Nuclear Hydrogen generation, it has years of operation of Magnox/AGR which were gas cooled for higher temperature operation rather than PWR's that the majority of the world uses.  

[AWW]

Anyone taking Petrofac up on their open offer? I'm leaning towards doing so - a nice discount on an already battered share.

[Axeman123]

15 minutes ago, Majorpain said:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1008813/advanced-modular-reactors-demo-call-for-evidence.pdf

Two parts to it I think, you need a big enough base load capacity that any spare wind power can be used in electrolysis cheaply at night, and what looks at the minute like its going to be High-temp helium cooled reactors that produce super high temperature outputs to help crack water into hydrogen/oxygen.

UK is reasonably well positioned for Nuclear Hydrogen generation, it has years of operation of Magnox/AGR which were gas cooled for higher temperature operation rather than PWR's that the majority of the world uses.  

Wow, the specialist knowledge base on here is phenomenal. To think what thread this forum is named after...

[planit]

13 minutes ago, AWW said:

Anyone taking Petrofac up on their open offer? I'm leaning towards doing so - a nice discount on an already battered share.

I am taking up all of mine, it's a no-brainer at the moment as you can sell your existing shares at 130p and buy the replacements for 115p in 10 days if you like.

My current feeling is we are experiencing a period where there are a lot of sells for the above reason. There seems to be a current floor on the price of 128p, I assume this is either institutions willing to pick up shares at this amount or some kind of agreement to do with the placement to keep a gap between the current price and 115p.

Once the sellers have been worked through the price will then go to a more 'normalised' level (could be up or down). Most selling will have taken place by the end of this week although there will be some shareholders who sell down after they obtain the new shares. 

 

I managed to buy extra shares on the day of the announcement (which was the offer deadline) for 129 and have received the offer on these shares (as well as my existing holding) which I have fully opted into.

I am hoping the shares will re-rate up to about 145 in 3 weeks. 

 

Outlook:

There is a huge backlog in O&G investment so every company will be busy over the next 5 years. The current oil price is probably making everyone panic and try to get their projects moving forwards so they don't end up at the back of the queue [perhaps @Cattle Prod has some view on this]. On top of that PFC could announce the middle east markets are open for bidding (after being kicked out for the bribery).

I feel the company also feel confident on the outlook as they have raised much more money than I was expecting meaning they want extra working capital. The share options were also structured so the directors (and ex CEO) could fill their pockets at 115p so they obviously feel it is a no brainer at that price (at least 30% discount then?).

 

On the downside the debt announcement yesterday mentioned 10% as the interest rate which is very high and highlights the negative credit rating on this company. This share is very volatile and the whole think could go pop. I am the last person anyone should listen to as my portfolio is nearly as unstable as @nirvana's

 

Hindsight: I should have sold at 175p and then bought back at 125 on day of offer. 

 

[Hancock]

Coal loses almost 1/3rd of its value in a morning.

[geordie_lurch]

23 minutes ago, planit said:

Hindsight: I should have sold at 175p and then bought back at 125 on day of offer. 

Yeah I should have at least top sliced when I was up over 80% the other week after their short lived good news I'm not sure I will take up their offer as I have a stop lost above the offer price for my existing holding just in case anything else pops up from them but it's probably better than leaving the cash sat in my SSISA

[HousePriceMania]

1 hour ago, AWW said:

Anyone taking Petrofac up on their open offer? I'm leaning towards doing so - a nice discount on an already battered share.

I took it up this morning.

My reasoning being, what the **** else am I going to do with my rapidly devaluing currency.

 

[Harley]

1 hour ago, AWW said:

Anyone taking Petrofac up on their open offer? I'm leaning towards doing so - a nice discount on an already battered share.

I eventually passed this morning.  I'll probably regret it but I see no upside atm.  High debt, etc.  I used the old "would I buy it now?" logic.  Better for me to use the money elsewhere.  I previously did TUI which was a bit meh.

PS:  I did get some capital back from RIO or someone which was very nice of them!

[Hancock]

7 minutes ago, Harley said:

I eventually passed this morning.  I'll probably regret it but I see no upside atm.  High debt, etc.  I used the old "would I buy it now?" logic.  Better for me to use the money elsewhere.

I work as a welding inspector, and on one of Petrofac's site where they were building a gas plant, the "new pipeline welds" i was to be inspecting already had a road built over them, so obviously access to inspect them was a little bit of a problem.

I then found defects on other pipe and they didnt want the inspector bothering them with such issues, so I was put in a container for 6 months with an internet connection, and wasn't to inspect anymore welds ... during this 6 month period they found an Indian company to come over and do the inspection instead of me.

Obviously they never found any defects!

Needless to say i'd never buy Petrofac.

[HousePriceMania]

Italy 2 year bond...

 

[MrXxxx]

4 hours ago, jamtomorrow said:

(It's the Dacia Sandero, in case you were wondering)

https://www.telegraph.co.uk/business/2021/10/31/britains-cheapest-car-now-costs-1900-used-does-new/

So the chip must account for about 50% of this cars value then! :-)

[Axeman123]

5 minutes ago, HousePriceMania said:

Italy 2 year bond...

 

This feels ominous.

[Loki]

14 minutes ago, Hancock said:

I work as a welding inspector, and on one of Petrofac's site where they were building a gas plant, the "new pipeline welds" i was to be inspecting already had a road built over them, so obviously access to inspect them was a little bit of a problem.

I then found defects on other pipe and they didnt want the inspector bothering them with such issues, so I was put in a container for 6 months with an internet connection, and wasn't to inspect anymore welds ... during this 6 month period they found an Indian company to come over and do the inspection instead of me.

Obviously they never found any defects!

Needless to say i'd never buy Petrofac.

Honestly where else on the net could you get info like this? 

[Hancock]

1 minute ago, Loki said:

Honestly where else on the net could you get info like this? 

6 months (on a rotation) of getting paid £500 a day to play online poker ... was magic!

[HousePriceMania]

25 minutes ago, Axeman123 said:

This feels ominous.

it does seem a little bit....sharp

[Loki]

1 minute ago, HousePriceMania said:

it does seem a little bit....sharp

Ees no problem.

[Majorpain]

1 hour ago, Hancock said:

Coal loses almost 1/3rd of its value in a morning.

COP21 has already achieved something by bashing coal, well done Boris for making it cheaper!

[Hancock]

12 minutes ago, Majorpain said:

COP21 has already achieved something by bashing coal, well done Boris for making it cheaper!

You'll upset Greta.

Anyway does anyone have the correct SEDOL for Telefonica Brasil ... i've got a choice of 3 on AJBell.

[RWJ]

5 hours ago, DurhamBorn said:

Too be honest understanding Brasil divis is one of the worlds mysteries.They seem to have two parts.One part is the normal divi that has no withholding tax then another they seem to work out monthly called interest on capital that is taxed.

I think on the 2nd it adds up until it goes ex div,but im not 100% on how it works.The only real way is to hold over a 12 month period and see what arrives.My TEF Brasil div iv only had one and it was 80% of what i had worked out.Not sure if that was tax on the monthly interest on capital or the way it adds up.Id love to actually know how it works if anyone feels like contacting their stock exchange or some way.

Not sure if folks are aware but there's a draft proposal to introduce a Brazil WHT (15%) on divs from Jan 2022.  As far as I know it hasn't been confirmed yet.

https://www.taxathand.com/article/18851/Brazil/2021/Draft-tax-reform-bill-introduces-dividend-WHT-and-reduced-corporate-tax-rate 

[jamtomorrow]

45 minutes ago, MrXxxx said:

So the chip must account for about 50% of this cars value then! :-)

Tempting to speculate whether it would be possible to build a car without chips and still meet regs (especially: emissions).

Mechanical carburettors and vacuum dizzies were wonderfully elegant in their day, but I can't imagine you'd get very far on modern regs without a lambda sensor and the ability to fine-tune fuel and ignition to every possible set of operating conditions.

And I can't see them relaxing regs (or, for that matter, digging up all that old magic).