Credit deflation and the reflation cycle to come.

[Festival]

3 hours ago, DurhamBorn said:

Sure is,the UK is probably one of the best set going forward for energy,and dont forget water.SSE have finished the high throughput cables now they need to feed all the offshore wind farms .Fracking will deliver massive amounts of gas once it gets going.The UK has potential to really lead on energy and our big utility companies are ahead of things.Distributed energy is the future.Wind in the UK will play a big part as will solar.The rest of the world solar will lead mostly.

Big push on offshore wind in the FT today - do you think it’s enough though to meet our own energy needs DB? - the article was talking about the capacity being here by 2030 - we don’t want any more Hinkley Point deals IMO 

[Festival]

2 hours ago, Shatner's Bassoon said:

Found this article quite thought provoking re. positioning for Brexit. 

https://simplelivingsomerset.wordpress.com/2018/06/28/battening-hatches-opportunities-brexit/

"If Brexit is an economic success and I adopted a brace for impact position, then I look a bit stupid, but I get to live in a country that is doing well, though I’ve lost money on my ISA I have gained it in the future income stream of my pension...If Brexit leads to a 10 year recession, that’s at least a third of my life blighted by that from now on"

Interesting article I think Brexit is impossible to call too many options still in play and too much political risk to have an investment strategy specifically for. I hedge persistent GBP weakness through overseas property, foreign currency, some us govt bonds and some gold but my circumstances are different to many in that 80 percent of my costs are in EU but 50 percent plus of income is in GBP. The gap between the two gives me the cause for concern. Others will have more of a GBP cost base and so their risks and opportunities will be different I expect.

[DurhamBorn]

41 minutes ago, Festival said:

Big push on offshore wind in the FT today - do you think it’s enough though to meet our own energy needs DB? - the article was talking about the capacity being here by 2030 - we don’t want any more Hinkley Point deals IMO 

With fracking yes i do.Centrica have pretty much quietly moved the business into distributed energy and they just need to flog off their 20% stake in the nuclear business to clean the balance sheet of debt.Power will be coming from wind and solar right across the country.Highly likely lots of small gas plants fed from fracking will provide the emergency/float alongside nuclear.Scotland is pretty much made for producing power from wind.I think jumping ahead a full cycle and cars will be being charged during the night from wind power.Prices will move up and down all the time depending on the load and the companies in the middle of the turbines/solar and customer will make a killing.

Transport,energy and telcos are probably going to be the big winners in the next long term cycle (and mining/industrial,but with ups and downs) .A bigger part of the GDP pile is going their way.Ironic that they are mostly the lowest rated sectors in the market right now.

[sancho panza]

On 22/07/2018 at 13:38, Festival said:

Hi all

 

First if all thanks to the regular contributors like them I’m over from TOS. The quality of ideas and debate is excellent here and very thought provoking.

I have one question today regarding sterling. I’m increasingly of the view that a currency collapse is close at hand for the £. Whether it’s the relative decline in North Sea oil exports, the effect of a yield inversion and deflationary event on bank profits, the coming Brexit dislocation or the failure to raise interest rates I’m seeing no good outcomes for the £ within the next year. The £ lost 65 percent of its value against the DM between 1967 and 1977 so there is some precedent for a collapse the kind of which we haven’t seen for decades. There seems to be strong resistance just above £:$ 1.40 but not much by way of support below that I can see. Parity would be psychological support as would be the 1985 bottom at £:$ 1.05.

i have two questions - firstly is anybody concerned about the probability of a currency crisis? Secondly how would you hedge against it investment wise. I’ve been thinking the best bet is to go overweight TLT, gold and FTSE companies with  large overseas earnings recognising that some of these companies eg Victrex have already gone up a considerable amount. Currently I have a GBP cash holding but I’m getting nervous that this won’t provide the protection I have thought it would. Ie so despite a deflationary event GBP cash won’t help much to get through it. 

 

 

 

 

I've been waiting for a currency crisis since about 2003/4 when I thought the hosuing market was blowing hard.As ever these tbings take time to build steam-look at Japan and al the punters awaiting their Minsky moment with the BoJ sat on 40% or so of JGB issuance iirc..

A lot of foreigners hold sterling assets,and I think sterling will have some safe haven status as a reult.

As per your replies I think equities with a broad world income.Telecoms,Pharma,energy,utilities

[DurhamBorn]

17 minutes ago, sancho panza said:

I've been waiting for a curency crisis since about 2003/4 when I thought the hosuing market was blowing hard.As ever these tbings take time to build steam-look at Japan and al the ounters awaiting their Minsky moment with the BoJ sat on 40% or so of JGB issuance iirc..

A lot of foreigners hold sterling assets,and I think sterling will have some safe haven status as a reult.

As per your replies I think equities with a broad world income.Telecoms,Pharma,energy,utilities

I think thats right and the beauty is i think that sort of portfolio leaning towards those sectors will do very well,both income and capital growth.The markets are missing just how much small increases in prices feed direct to free cash flow for those types of business.The fact the market has them on single digit free cash ratios (and id add transports to the list) is nuts,but its due to dis-inflation having convinced everyone high capital assets are bad,lots of goodwill is good.

[DurhamBorn]

On 21/07/2018 at 08:53, Yellow_Reduced_Sticker said:

More BAD News For Property ...HOORAY!

Buy one get one FREE ...anyone?

https://moneyweek.com/londons-luxury-new-build-property-are-in-big-trouble?

I had to report on yellow sticker trip today YRS.Tesco was superb.Bananas 12p a pack,several bought and banana loafs will use some tomorrow home made.16 packs of sausage for BBQs etc (extra long ones),£4 down to £1,got 3 packs of those,broke them down into 4s,25p a meal.Cod loins x 2 £5 down to £1.25,6 packs of those.Fantastic.Vine tomatoes 9p,bag of mixed lettuce 9p,blueberries 9p a pack,2 packs,strawberries 25p,Extra special cottage pies £5 for £1.25,two of those,Extra special lasagne £5 for £1.25,4 chicken breasts £4 down to £1,Rhubarb pie £1.40 for 29p two of them,and even fresh custard £1.29 for 27p x 2 to go with them,froze those.Free range chicken £12.40 for £2.20,apples £1.60 for 40p,organic oranges £1.75 for 40p,pears £1.50 for 33p.

I even managed to get 3 pizzas £4 each for £1 for a woman who is in there regular but doesnt like to shove everyone out the way.,she was so pleased im sure i caught that look in her eye,but i banished such thoughts quickly,dont want to risk my FIRE and nicely structured life,it has tended to be my one weakness in the past 

[kibuc]

I'm starting to notice a pattern in my nearby Sainsbury's. Weekends are a waste of time, but there seems to be an increase in expiring items on Mondays and Fridays. Today I had my biggest haul to date, coming in half an hour before closing and finding 2 whole chickens, 4x4 loin steaks and 10x smoked macarel expiring today. Some of it didn't even have a single sticker on it, clearly missed by the staff, and the rest was down 50%. Took it to the nice lady doing rounds with the sticker gun and she reduced the whole lot by 75%. Apparently that's the lowest the system allows her to go, and all the calculations are automated based on the expiry date and hours to closing - down 33% with one day to go, 50% on the next day around noon, then 67% and finally 75% in the last hour or so . It's a shame, I was hoping to catch some juicy 95% reductions at 9:55pm

[Funn3r]

Largeish Co-op near me, not been able to spot a pattern. I usually go Saturday mornings and lots of things 80 or 90% off. Been in occasionally at other random times and still lots of things orange-stickered. Smaller Co-op five miles away I am usually in there weekday evenings and yes always at least a few things stickered. tl;dr Co-op just about anytime FTW. Sadly my tiny flat won't take another three freezers off Gumtree like the professionals use.

[leonardratso]

1 hour ago, DurhamBorn said:

I had to report on yellow sticker trip today YRS.Tesco was superb.Bananas 12p a pack,several bought and banana loafs will use some tomorrow home made.16 packs of sausage for BBQs etc (extra long ones),£4 down to £1,got 3 packs of those,broke them down into 4s,25p a meal.Cod loins x 2 £5 down to £1.25,6 packs of those.Fantastic.Vine tomatoes 9p,bag of mixed lettuce 9p,blueberries 9p a pack,2 packs,strawberries 25p,Extra special cottage pies £5 for £1.25,two of those,Extra special lasagne £5 for £1.25,4 chicken breasts £4 down to £1,Rhubarb pie £1.40 for 29p two of them,and even fresh custard £1.29 for 27p x 2 to go with them,froze those.Free range chicken £12.40 for £2.20,apples £1.60 for 40p,organic oranges £1.75 for 40p,pears £1.50 for 33p.

I even managed to get 3 pizzas £4 each for £1 for a woman who is in there regular but doesnt like to shove everyone out the way.,she was so pleased im sure i caught that look in her eye,but i banished such thoughts quickly,dont want to risk my FIRE and nicely structured life,it has tended to be my one weakness in the past 

again with the big spending and grand romantic gestures, you'll come a cropper.

[Castlevania]

3 hours ago, DurhamBorn said:

With fracking yes i do.Centrica have pretty much quietly moved the business into distributed energy and they just need to flog off their 20% stake in the nuclear business to clean the balance sheet of debt.Power will be coming from wind and solar right across the country.Highly likely lots of small gas plants fed from fracking will provide the emergency/float alongside nuclear.Scotland is pretty much made for producing power from wind.I think jumping ahead a full cycle and cars will be being charged during the night from wind power.Prices will move up and down all the time depending on the load and the companies in the middle of the turbines/solar and customer will make a killing.

Transport,energy and telcos are probably going to be the big winners in the next long term cycle (and mining/industrial,but with ups and downs) .A bigger part of the GDP pile is going their way.Ironic that they are mostly the lowest rated sectors in the market right now.

Do you think we’ll go down the fracking route? I reckon we’ll need a good downturn to win the argument.

[macca]

12 minutes ago, Castlevania said:

Do you think we’ll go down the fracking route? I reckon we’ll need a good downturn to win the argument.

CONservative green policies, Fracking, 3rd runway at Heathrow and a dodgy Chinese run nuclear power station.. That clearly don’t give 2 shits about the planet.. 

Brown envelopes all round.. 

[Castlevania]

Quick question with regards to Steptoe? Should I be worried about him getting into power. And if he did whilst I think it would be good for me, should I be offshoring some savings?

[SpectrumFX]

1 hour ago, Castlevania said:

Quick question with regards to Steptoe? Should I be worried about him getting into power. And if he did whilst I think it would be good for me, should I be offshoring some savings?

If he gets in, I imagine that he'll be after your savings whether they're offshored or not.

 

[Stuffed]

7 hours ago, Castlevania said:

Quick question with regards to Steptoe? Should I be worried about him getting into power. And if he did whilst I think it would be good for me, should I be offshoring some savings?

There’s a recent discussion here on different investment ideas:

http://moneyforums.citywire.co.uk/yaf_postst5942_Porfolio-For-an-Extreme-Left-Wing-Government.aspx

[Thorn]

IBTL is being a wee bast@rd at the moment.

[Band]

6 hours ago, SpectrumFX said:

If he gets in, I imagine that he'll be after your savings whether they're offshored or not.

 

At the moment the problem with the economy is those with assets are getting a free handout at the expense of manual labour in its varying forms. If Steptoe were to resolve this issue it will help fix the economy.

It will be his spending that may bring down the currency imho. But this thread is predicting this to happen no mayter who is in power.

[DurhamBorn]

9 hours ago, Funn3r said:

Largeish Co-op near me, not been able to spot a pattern. I usually go Saturday mornings and lots of things 80 or 90% off. Been in occasionally at other random times and still lots of things orange-stickered. Smaller Co-op five miles away I am usually in there weekday evenings and yes always at least a few things stickered. tl;dr Co-op just about anytime FTW. Sadly my tiny flat won't take another three freezers off Gumtree like the professionals use.

Iv got a little book with all the times in.Iv got Morrisons,Asda,Iceland,Aldi,Lidl,Sainsbury,M&S simply food and Tesco within half a mile so no diesel cost going to them all,though i mostly just do Tesco now and a quick look in Sainsbury over the road.They should never of built the Tesco and Sainsbury,incredible for a town of 12k we have every food retailer nearly,but im not complaining.I like those mid sized Co-ops,but there isnt one near me.Where i used to store my stock had one near it and i used to find about 10.30am a good time to try.There was never lots,but i nearly always got a few really nice/quality items for 75% off.Im going to get another freezer off Gumtree as im sick of trying to find each spare square inch in my two now 

[DurhamBorn]

 

8 hours ago, Castlevania said:

Do you think we’ll go down the fracking route? I reckon we’ll need a good downturn to win the argument.

Yes i do and i agree i think a downturn will be when it gets going,or maybe the recovery cycle when gas prices move north at a fast rate.

[Thorn]

19 minutes ago, DurhamBorn said:

 

Yes i do and i agree i think a downturn will be when it gets going,or maybe the recovery cycle when gas prices move north at a fast rate.

I’ve read that fracking might not be that successful in Britain and Ireland because the geology is tricky.

[Festival]

12 hours ago, sancho panza said:

I've been waiting for a currency crisis since about 2003/4 when I thought the hosuing market was blowing hard.As ever these tbings take time to build steam-look at Japan and al the punters awaiting their Minsky moment with the BoJ sat on 40% or so of JGB issuance iirc..

A lot of foreigners hold sterling assets,and I think sterling will have some safe haven status as a reult.

As per your replies I think equities with a broad world income.Telecoms,Pharma,energy,utilities

The market always wins out in the end SP we just haven’t got there yet - the foreigners do hold uk assets and investments in businesses but I wonder with recent announcements on reviews of foreign stakes in businesses whether that will gradually roll back.

Will look at stocks in those sectors plenty of value there to be going at i think

[leonardratso]

drax cack today, might top up tomorrow if they stay down.

still expect  to make annual target.

[kibuc]

@DurhamBorn Have you heard the recent news about Sibanye selling all their future US gold production in a streaming deal with Wheaton?

https://www.ft.com/content/f368718c-88f1-11e8-b18d-0181731a0340

I'm trying to make some sense of it.

Sibanye got $500m cash, significantly reducing it's debt.

Wheaton got rights to all future gold production (and some palladium production) from Sibanye's US mines for the lifetime of those mine. They'll pay 18% spot price until the original $500m is met in delivered metal value, then 22%.

However, reportedly there's no minimum delivery requirement.

My question is: why should Sibanye bother with mining anything at all in US going forward if there's no legal requirement to do so? They have banked the money already, and every ounce they dig out will be heavily loss-making.

And even if there's some legal framework that would force Sibanye to keep up production, they could start easing it out gradually, not spend a single cent more on exploration or even maintenance, basically deprive the loss-making side of their business of any future investments.

I just cannot see how that deal works for Wheaton.

[Castlevania]

4 hours ago, DurhamBorn said:

Iv got a little book with all the times in.Iv got Morrisons,Asda,Iceland,Aldi,Lidl,Sainsbury,M&S simply food and Tesco within half a mile so no diesel cost going to them all,though i mostly just do Tesco now and a quick look in Sainsbury over the road.They should never of built the Tesco and Sainsbury,incredible for a town of 12k we have every food retailer nearly,but im not complaining.I like those mid sized Co-ops,but there isnt one near me.Where i used to store my stock had one near it and i used to find about 10.30am a good time to try.There was never lots,but i nearly always got a few really nice/quality items for 75% off.Im going to get another freezer off Gumtree as im sick of trying to find each spare square inch in my two now 

I like the Co Op too. They’ll slash prices by up to 99%. If you sign up for an NUS card (they’re desperate for money so will give to anyone) you can get a further 10% off everything.

[Bricks & Mortar]

http://www.miningweekly.com/article/sibanye-enters-into-500m-streaming-deal-with-wheaton-international-2018-07-16/rep_id:3650
 

36 minutes ago, kibuc said:

I just cannot see how that deal works for Wheaton.

Palladium is 57% of the stream value.  Sibanye keeps over 95% of this.  The mines have been working since '86 and '02 - right through a period where palladium was as low as $200 at times, and maybe averaged $600 (roughly, by my eye, from a price chart).  So, with today's price at $900 - the deal indicates Wheaton think there's enough profit in the palladium to keep Sibanye on the pick and shovel - or they bet there soon will be.

[kibuc]

Oh, so the plan would be for Wheaton to make money on gold, while hoping that palladium keeps Sibanye honest?