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Credit deflation and the reflation cycle to come.


DurhamBorn

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Gordie Lastchance
On 03/09/2018 at 16:00, DurhamBorn said:

Yes a lot of them have a massive amount of leverage.The water companies being the worst examples.Its one of the reasons i like Centrica,if they can get shot of their 20% nuclear stake they should be down to about £1.3 billion of debt,thats a pretty strong position given their cash flow profile compared to most in the sector.Telcos have a lot of leverage as well,but they are mostly coming out of investment cycles and depreciation should move in the right direction going forward.They just need inflation to lead rates,negative rates are hugely bullish for them.

The much maligned Centrica in 6 months to 30/6/18 on the other hand has reduced liabilities by £1Bn, cut borrowings by £1.25Bn and increased net assets by £600M

That's a full quote from a contributor to the SSE board on ADVFN, which I thought might be of interest here. I can't vouch for its veracity, but I know Centrica pops up regularly on this thread, so I thought I'd borrow it for us.

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13 hours ago, DurhamBorn said:

Just to add today,the commercials are net long gold,silver and platinum.The first time in history.I asked my friend why he thought this had happened and he said something id never really considered.He said because they are probably going to take delivery and then turn the screw on the shorts as they try to secure supply.The commercials get supply from the miners so by going long they are simply saying we can get it cheaper from the shorts than the mines,but the shorts probably arent expecting the other side of the trade to actually take delivery.

I was thinking about this in comparison to oil. If the OPEC think the price is too low, they cut supply to push it up.  I'm assuming there isn't the same sort of cartel in PMs but the industry must have trade meetings etc. What's supply been like in recent years?

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52 minutes ago, Gordie Lastchance said:

The much maligned Centrica in 6 months to 30/6/18 on the other hand has reduced liabilities by £1Bn, cut borrowings by £1.25Bn and increased net assets by £600M

That's a full quote from a contributor to the SSE board on ADVFN, which I thought might be of interest here. I can't vouch for its veracity, but I know Centrica pops up regularly on this thread, so I thought I'd borrow it for us.

Centrica are doing a fantastic job underneath.It says to me they understand where we are in the cycle and not only that ,they fully intend to exploit the next cycle.Dis-inflation cycles are really cruel to these sort of companies.Reflation cycles very kind.They could fail of course and slowly die,but £6 a share in the next cycle at some point wouldnt shock me.SSE do have too much debt really ,though inflation should increase faster than rates and outflank the depreciation charges.Key to them is inflation running higher than rates.The cycle should be on their side,but should/will have less of + affect probably due to being more regulated.

The sector also has the added interest that big oil will need to move into it at some point.The question is will they buy decent size companies to do it,or feed capital into smaller ones.?.We have energy experts on this thread now so im sure they will keep us up to date on whats going on.Hot sector i think in the next cycle.

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2 minutes ago, Democorruptcy said:

I was thinking about this in comparison to oil. If the OPEC think the price is too low, they cut supply to push it up.  I'm assuming there isn't the same sort of cartel in PMs but the industry must have trade meetings etc. What's supply been like in recent years?

I think supply has been stable in gold and up slightly in silver.A lot of the big miners though havent been replacing reserves and that would say the gold price needs to go up to make more of the resources economic.If these commercials do take delivery it will be interesting to see how that affects things given its probably never happened before on any scale.The commercials maybe sense blood by catching the shorts out.If they know supply is tight from the mines where are these shorts going to secure the physical from to honour the contracts?.Really interesting to see how this plays out over the next year.

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14 hours ago, sancho panza said:

Thanks for posting .After my effective ban, I had a look at SMarkets and Betdaq,but they didn't cover the markets i was interested in.I'm in no way as sophisticated as some of you guys, I was merely researching and backing.

For me,it's an open goal,it's only a matter of time before a lot of the liquid money leaves BF,it just needs one of the others to get busier.I'm amazed the big players haven't moved en masse tbh,it must be costing some of them a fortune.

 

I mentioned Smarkets and Betdaq there is also Matchbook. Smarkets are sponsoring a lot of horse racing and I'm wondering if Betfair are getting worried about them. Without asking for it Betfair phoned me up and offered me a deal on my charges last month. It saved me £500 last week but no doubt somebody there will be planning to try take it back in the future.

Re big players moving to start up exchanges that come and go, don't forget there is no FSCS compensation for money held at gambling sites. People aren't betting on credit, it's from money held on deposit there. If you are laying £2k at 11 you need £20k in your account to do it.

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7 minutes ago, Democorruptcy said:

I mentioned Smarkets and Betdaq there is also Matchbook. Smarkets are sponsoring a lot of horse racing and I'm wondering if Betfair are getting worried about them. Without asking for it Betfair phoned me up and offered me a deal on my charges last month. It saved me £500 last week but no doubt somebody there will be planning to try take it back in the future.

Re big players moving to start up exchanges that come and go, don't forget there is no FSCS compensation for money held at gambling sites. People aren't betting on credit, it's from money held on deposit there. If you are laying £2k at 11 you need £20k in your account to do it.

I get you.But surely,they're not actually taking a great deal of balance sheet risk themselves as they're arbing the spreads.

https://www.investing.com/equities/paddy-power-financial-summary

Very low debts on BF.

 

Who wons SMarkets.I know Ladbrokes own Betdaq.

 

I'm amazed ladbrokes don't chuck liquidity into betdaq.....

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38 minutes ago, DurhamBorn said:

Centrica are doing a fantastic job underneath.It says to me they understand where we are in the cycle and not only that ,they fully intend to exploit the next cycle.Dis-inflation cycles are really cruel to these sort of companies.Reflation cycles very kind.They could fail of course and slowly die,but £6 a share in the next cycle at some point wouldnt shock me.SSE do have too much debt really ,though inflation should increase faster than rates and outflank the depreciation charges.Key to them is inflation running higher than rates.The cycle should be on their side,but should/will have less of + affect probably due to being more regulated.

The sector also has the added interest that big oil will need to move into it at some point.The question is will they buy decent size companies to do it,or feed capital into smaller ones.?.We have energy experts on this thread now so im sure they will keep us up to date on whats going on.Hot sector i think in the next cycle.

We're picking up scrip divi's at these prices which leverages us up to longer term share price growth.Bitter experience has taught me to build these positions over years.AS ever you learn from the past if you have any sense, and over the years,I've sold us out of good stocks way too early and way too cheap.

I'm genuinely annoyed that I'm up to my limit on Centrica.Especially given the paucity of genuine value opportunities out there.

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34 minutes ago, DurhamBorn said:

I think supply has been stable in gold and up slightly in silver.A lot of the big miners though havent been replacing reserves and that would say the gold price needs to go up to make more of the resources economic.If these commercials do take delivery it will be interesting to see how that affects things given its probably never happened before on any scale.The commercials maybe sense blood by catching the shorts out.If they know supply is tight from the mines where are these shorts going to secure the physical from to honour the contracts?.Really interesting to see how this plays out over the next year.

It'll be interesting to see how this develops.Inherently,the yellow stuff rarely stays below AISC for long,as gravity kicks in.Something has to give.

I think there's every chance of a short squeeze here and as many on here will know,they can be vicious.

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42 minutes ago, Democorruptcy said:

I was thinking about this in comparison to oil. If the OPEC think the price is too low, they cut supply to push it up.  I'm assuming there isn't the same sort of cartel in PMs but the industry must have trade meetings etc. What's supply been like in recent years?

Unlike Opec though, which is a small number of sovereign states, I imagine getting hundreds and thousands of small to medium size companies to act in a certain way for the long-term benefit of the industry would be extremely difficult, too many people involved with differing agendas, too many corrupt governments clouding the geo-political climate etc.

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12 minutes ago, sancho panza said:

I get you.But surely,they're not actually taking a great deal of balance sheet risk themselves as they're arbing the spreads.

https://www.investing.com/equities/paddy-power-financial-summary

Very low debts on BF.

 

Who wons SMarkets.I know Ladbrokes own Betdaq.

 

I'm amazed ladbrokes don't chuck liquidity into betdaq.....

The BF balance sheet is why people are more prepared to have money deposit there, rather than a smaller exchange? I remember the morning the Sporting Options website vanished and I had £1,000's in there. Funnily enough I got it back from Betfair offering commission rebates to SO customers who lost money when it folded and it runed out the segregated client money wasn't segregated!

GVC Holdings bought Ladbrokes (after Ladbrokes had bought Betdaq and Coral) look at all the brands they own now!

https://gvc-plc.com/about/business-overview/our-brands/

I've actually won more money on Betdaq than I have on Betfair but I've kept away while the dust settles on all these deals. Liquidity plunged.

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21 minutes ago, azzuri82 said:

Unlike Opec though, which is a small number of sovereign states, I imagine getting hundreds and thousands of small to medium size companies to act in a certain way for the long-term benefit of the industry would be extremely difficult, too many people involved with differing agendas, too many corrupt governments clouding the geo-political climate etc.

I wasn't really thinking about 100's of 1000's of small companies, maybe just a few big ones.

Article here suggesting just two mines produce 50% of the USA silver supply https://seekingalpha.com/article/4161729-2-mines-supply-half-u-s-silver-production-real-cost-produce-silver

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On 13/09/2018 at 09:50, DurhamBorn said:

I was waiting until they split the retail side off because its the network side i want,but iv bought today.The network side should be around 7% dividend on todays prices and then the spin off shares on top.Il probably sell the spin off shares as soon as i get them and put them back into the remaining SSE.If the spin off shares end up worth around 10% of the value today of SSE it would mean a networks side dividend of around 7.8%.I usually staircase in 4 slots,but im going to do this one in 3.

I put the kiss of death on that one! Largest faller today with another 3% off. I'm tempted to go in again, what's your next staircase price?

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1 hour ago, sancho panza said:

I get you.But surely,they're not actually taking a great deal of balance sheet risk themselves as they're arbing the spreads.

https://www.investing.com/equities/paddy-power-financial-summary

Very low debts on BF.

 

Who wons SMarkets.I know Ladbrokes own Betdaq.

 

I'm amazed ladbrokes don't chuck liquidity into betdaq.....

Ladbrokes are now owned by GVC Holdings, who over the years have bought almost everything they can.

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1 hour ago, Democorruptcy said:

I put the kiss of death on that one! Largest faller today with another 3% off. I'm tempted to go in again, what's your next staircase price?

Id probably go £10.30 and £8.90.I see the sector as undervalued by a very large margin when looking out 8 years,but a space that could remain hated for a while yet.I will be holding the sector for at least 6 years and more likely close to 8.I think we have a classic case of people confusing an end of cycle/inflection point.Its a bit like John Lewis this week in reverse.Everyone saying what a great company it was etc.They had a strong pound and a dis-inflation cycle on their side for two decades.As soon as that is removed then its obvious they arent such a great company after all,just an importer who managed higher margins on image,but has the overheads to go with it.So long was this last cycle that people have no idea that it even is a cycle.The smiling couple in the local Persimmon show home clutching their HTB forms a prime example.Its always a testing path being a contrarian,but usually a very rewarding one over the longer term.

 

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40 minutes ago, DurhamBorn said:

Id probably go £10.30 and £8.90.I see the sector as undervalued by a very large margin when looking out 8 years,but a space that could remain hated for a while yet.I will be holding the sector for at least 6 years and more likely close to 8.I think we have a classic case of people confusing an end of cycle/inflection point.Its a bit like John Lewis this week in reverse.Everyone saying what a great company it was etc.They had a strong pound and a dis-inflation cycle on their side for two decades.As soon as that is removed then its obvious they arent such a great company after all,just an importer who managed higher margins on image,but has the overheads to go with it.So long was this last cycle that people have no idea that it even is a cycle.The smiling couple in the local Persimmon show home clutching their HTB forms a prime example.Its always a testing path being a contrarian,but usually a very rewarding one over the longer term.

 

I keep thinking about all those cars that will be needing electricity instead of diesel or petrol.

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32 minutes ago, Bobthebuilder said:

I notice Natwest SVR went up .25% this week to 4.25%.

Chip, chip, chip.

Yes, got the letter yesterday; lucky we are 100% offset...Currently looking to sell to let, bad moon rising...

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Just now, Ponty Mython said:

Yes, got the letter yesterday; lucky we are 100% offset...Currently looking to sell to let, bad moon rising...

Yep, im 100% offset as well. Just means i pay the debt off faster.

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Yellow_Reduced_Sticker
On 13/09/2018 at 14:02, DurhamBorn said:

Got a lot of top quality cod off the fish counter in Tesco last night,they were reduced from £4.50 area a bag to 90p a bag,got 8 bags.Also got a large cooked chicken for 90p instead of £6 and lots of other good stuff including apples and pears.I now have to hold a few items in the freezers with a stick while i close the door they are so full,no room in any.Looks like i might have to pick up another freezer from Gumtree for £30 xD.Eyes open for a new metal detector as well.I missed out this year without one as you can find a nice amount of money doing the public parks at night the night after a music festival etc.Has to be at night as they wont let you on though.The line of the beer tent always coughs up a lot of change.

 
VERY NICE!
 
These types of posts of yours brings tears of LAUGHTER for me!xD
 
I found doing Tescos on Wednesday seems the best, only because there seems to be less roma-gipos... anyway i must be getting tight or odd or both, cos this last Wednesday I'd already got 5 packets of reduced fish diffrent in me basket, i picked up mackerel that i got b4 for 20p from 2 quid, however this time they only mark it down to 50p and i threw it back in the fridge!
 
However DB, ya don't want to be shelling out £30 on a freezer when our NGD is in the dumps, have ya tried: https://my.freecycle.org you can pick up stuff here for FREE! 
 
BUT you must be quick!
 
Heres another money making scheme that may be of interest to you or other folks following this thread ...last year i helped a friend clear out her house, i gave away some antique looking wooden table legs on freecycle.org, this guy turned up in his van, and what he does is strip them put a table top on re varnish (spraying) and flog each table for £200.00 !
 
He advertises for FREE on instagram, and does very well. He used to do all the work in his garage, but as hes got so busy hes rents a unit. Really interesting guy, he used to live near me BUT just couldn't handle some of the sh*t scum that lives here now...
 
SO lets hope that a HUGE housing CRASH happens here in the SE, within the next 4/5 years if NOT ...i'll be relocating to Durham, so DB ya'll have some competition on the YRS's!
 
RE: metal detector
 
As SP says: You don't miss a trick do you.!!!
 
Actually i may get into this!
 
Can ya spill what sort of moolah YOU can find?:Beer: ...or is it a SECRET :D

 

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i found a knackered mountain bike in the canal, new chain, new tyres, im riding it now. Its a bit old and shit, but it works ok and might get some lard off me.

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3 hours ago, Yellow_Reduced_Sticker said:
 
VERY NICE!
 
These types of posts of yours brings tears of LAUGHTER for me!xD
 
I found doing Tescos on Wednesday seems the best, only because there seems to be less roma-gipos... anyway i must be getting tight or odd or both, cos this last Wednesday I'd already got 5 packets of reduced fish diffrent in me basket, i picked up mackerel that i got b4 for 20p from 2 quid, however this time they only mark it down to 50p and i threw it back in the fridge!
 
However DB, ya don't want to be shelling out £30 on a freezer when our NGD is in the dumps, have ya tried: https://my.freecycle.org you can pick up stuff here for FREE! 
 
BUT you must be quick!
 
Heres another money making scheme that may be of interest to you or other folks following this thread ...last year i helped a friend clear out her house, i gave away some antique looking wooden table legs on freecycle.org, this guy turned up in his van, and what he does is strip them put a table top on re varnish (spraying) and flog each table for £200.00 !
 
He advertises for FREE on instagram, and does very well. He used to do all the work in his garage, but as hes got so busy hes rents a unit. Really interesting guy, he used to live near me BUT just couldn't handle some of the sh*t scum that lives here now...
 
SO lets hope that a HUGE housing CRASH happens here in the SE, within the next 4/5 years if NOT ...i'll be relocating to Durham, so DB ya'll have some competition on the YRS's!
 
RE: metal detector
 
As SP says: You don't miss a trick do you.!!!
 
Actually i may get into this!
 
Can ya spill what sort of moolah YOU can find?:Beer: ...or is it a SECRET :D

 

Love these stories! I never have much luck though with yrs but always go for the cheese if I can. I find it lasts ages after the use by date. Same with the milk in the plastic bottles. Goes for a good 10 days after date before it starts to sour.

Had an awesome summer buying clothes though, on eBay from discount sellers, you know those that sell new clothes from John Lewis, m&s etc with the labels cut so you can’t return. Guess it’s all old season stock. So, It was the peak of summer, 35C early August. I got three wool jackets £20 reduced from 200, wool coat 200 from 800 and a leather and a suede jacket each 150 reduced from 1850. Unbelievable! Best I’ve ever done. It’s risky as you need to know you’re size. Often they get narky with returns.

Bet they thought who’s this muppet buying thick wool coat in stifling 35C heat. Well who’s laughing now :D

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1 hour ago, Ashby said:

Love these stories! I never have much luck though with yrs but always go for the cheese if I can. I find it lasts ages after the use by date. Same with the milk in the plastic bottles. Goes for a good 10 days after date before it starts to sour.

What?  You just give up on milk once it goes sour? 

Although to be fair, supermarket milk doesn't seem to turn into youghurt like raw milk does when it goes off.

One of my better savings is black printer ink top up kit I bought from Wilko.  Paid couple of pounds about 8 years ago - still printing on the same cheap Canon printer.

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4 hours ago, leonardratso said:

i found a knackered mountain bike in the canal, new chain, new tyres, im riding it now. Its a bit old and shit, but it works ok and might get some lard off me.

I go through the cup recycling in McDonald’s  when I take my empty coffee cup over.. if I can find enough loyalty stickers in the bin I get a free cup of coffee next time.. in fact every time I go in.. 

Tramp life.. 😂

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10 hours ago, leonardratso said:

i found a knackered mountain bike in the canal, new chain, new tyres, im riding it now. Its a bit old and shit, but it works ok and might get some lard off me.

I can do one better than that...I found a trashed laptop that had been in there for quite a while; some weed had started rooting. Whipped out the memory, dried it, scraped off limescale, popped it in my laptop and to my amazement it worked!

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