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Credit deflation and the reflation cycle to come.


DurhamBorn

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Shatner's Bassoon
29 minutes ago, Majorpain said:

Watch out, the chart looks like the classic AIM pump and dump to me.  Excellent time to top up on the "dip" as the shareprice grinds ever lower.

Even with good companies, AIM is the wild west and ive lost a lot of money on it the past.  Dont assume its a one way bet!

Thanks for the advice. Yes, the way the share price plummeted the day before the placing RNS screamed insider trading. Still, it's a serious project so worth a speculative punt. Not huge sums, obviously.

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14 minutes ago, Shatner's Bassoon said:

Thanks for the advice. Yes, the way the share price plummeted the day before the placing RNS screamed insider trading. Still, it's a serious project so worth a speculative punt. Not huge sums, obviously. 

Thats highly likely to be the people who have subscribed to placed shares shorting the market, they know they can close using the new placed shares for some easy money!

In theory yes its insider trading, but without that money the revenue-less companies are worthless so investors just have to suck it up.  Or not play like me :)

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5 hours ago, null; said:

Virgin and Post Office are both doing 0% for 28 months. If you go direct to their websites you can do a soft search eligbility check without affecting your credit rating.

Keep an eye on both your total available credit and utilisation of that credit.

I have both Virgin and PO CCs which I used to replace my Tesco CC when the 0% interest free period ended. I think I got £6500 on the PO and £4500 on the Virgin so not really noticed much tightening myself as fairly consistent with what I have been offered in the past. 

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2 hours ago, DurhamBorn said:

Time  to ladder into RM and i bought some today as did my dad,dis-inflation is hard work for companies like them,they will increase prices soon to business etc and they will have no choice but to pay.its also a sector that will see a lot of changes going forward(more contracts for click and collect etc) and consolidation.

.......

Interesting stock.  I had a weak buy signal week ending 14 Jan 19 and confirmed week ending 21 Jan 19.  Down this week but the weekly technicals are not much of a mess so could pop back, in which case maybe a chance for a second bite for the brave?  Mind you the technicals on this company are a bit unusual when backtested, showing a few fake buy signals.  Probably needs to mature as a stock a bit more.

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Democorruptcy
2 hours ago, DurhamBorn said:

Time  to ladder into RM and i bought some today as did my dad,dis-inflation is hard work for companies like them,they will increase prices soon to business etc and they will have no choice but to pay.its also a sector that will see a lot of changes going forward(more contracts for click and collect etc) and consolidation.Im about 31% allocated now into FTSE stocks,i also added a few more BAT this last week.I sold a huge holding above £50 id owned for 20 years and and happy to get about 20% of that back at £25 or below.They arent an inflation stock,but i think they will return 7% a year over the next decade.

The PMs are moving up very nicely and many are showing really strong profits now.HMY is touching 2.00 and up 30%+ from the lows .I use the SA miners as tracking stocks (and own them) as they tend to turn first both up and down and lead the sector,due to their marginal nature.Iv sold my bottom ladder in Harmony today and used some of it for some RM and some Vod.

Hopefully the PMs can continue to run,though there is a lot of resistance to get through in the present area.

Very happy with how things are going and all pretty much as expected where people are caught looking the wrong way at a key inflection point.

I have a mate who is a postman. He said RM's problem is their competitors cherry pick the most profitable part of the process e.g. collect bulk mailshots from big firms, banks, utilities etc then leave RM to deliver the letters. This is under "Downstream Access" (DSA) and RM can only charge them 3p a letter due to competition laws, then RM have the delivery costs. He said the clue is in the name on the letters e.g. UKPost, UKMail, TNTMail, Whistl, DX, CitiPost that are all DSA companies. The real money shot for RM would be if the USO was changed from them being forced to deliver 6 days a week to just 5 days. That would represent a massive cost saving.

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3 hours ago, DurhamBorn said:

https://www.amazon.co.uk/Ferrari-G10006-Delizia-Pizza-Oven/dp/B002VA4CDI 

Buy one of these.Iv a lot of Italian friends and they told me they are as close to a clay oven as youl get.I get pizza flour from sainsbury about £1.10,but really good quality,cheese,make a paste from tomato puree water garlic and oregano and that above makes them in about 4 minutes.When i have family around il make 4 or five,garlic break,pasta bake chips etc for less than £6 or if its me and the other half a pizza for about 90p and they are superb.

 

I've got one of those. It's tremendous. I use a breadmaker to make large batches of dough, which are proved a little then frozen. Take out a couple of hours before using, shape after an hour then allow to prove further on a greased pizza tin. Add some toppings and cook for three minutes. Best pizza you'll get this side of Napoli.

The dough also makes tremendous garlic bread or focaccia.

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AAPL%20sales%20by%20region.jpg?itok=KrV7

Thats Apple's Q/Q revenue for Q4 last year, the trade war might be causing Chinese to boycot US products in favour of Chinese, but im seeing around 30% drops in China revenue with a couple of big companies now.  Not good news needless to say.

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19 minutes ago, Majorpain said:

AAPL%20sales%20by%20region.jpg?itok=KrV7

Thats Apple's Q/Q revenue for Q4 last year, the trade war might be causing Chinese to boycot US products in favour of Chinese, but im seeing around 30% drops in China revenue with a couple of big companies now.  Not good news needless to say.

That's diabolical!

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30 minutes ago, dgul said:

That's diabolical!

For Drumpf, certainly.

Hang on, Tim Cook's just said tensions between the US and China are easing. Party on!

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11 hours ago, Democorruptcy said:

I have a mate who is a postman. He said RM's problem is their competitors cherry pick the most profitable part of the process e.g. collect bulk mailshots from big firms, banks, utilities etc then leave RM to deliver the letters. This is under "Downstream Access" (DSA) and RM can only charge them 3p a letter due to competition laws, then RM have the delivery costs. He said the clue is in the name on the letters e.g. UKPost, UKMail, TNTMail, Whistl, DX, CitiPost that are all DSA companies. The real money shot for RM would be if the USO was changed from them being forced to deliver 6 days a week to just 5 days. That would represent a massive cost saving.

So in the coming cycle and with their size if RM are canny their will undercut their competition (who will be under stress), force them out of the market and then up prices afterwards...its a long game if you have money/support to last, and can you see any government allowing RM to go bankrupt?!

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Democorruptcy
14 minutes ago, MrXxx said:

So in the coming cycle and with their size if RM are canny their will undercut their competition (who will be under stress), force them out of the market and then up prices afterwards...its a long game if you have money/support to last, and can you see any government allowing RM to go bankrupt?!

What I posted was just the views of one postman but the important part was if ever there's a suggestion to cut deliveries to 5 days, get your finger poised on the go long or buy or buy more button. That makes sense because they shouldn't need as many workers. Fuel costs would be down because they could deliver two days for the costs of one.

I still don't really understand how this Downstream Access, USO and competition rules work. There's a bit about it here when RM were fined £50m in August for abusing their position.

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6 minutes ago, Democorruptcy said:

What I posted was just the views of one postman but the important part was if ever there's a suggestion to cut deliveries to 5 days, get your finger poised on the go long or buy or buy more button. That makes sense because they shouldn't need as many workers. Fuel costs would be down because they could deliver two days for the costs of one.

I still really understand how this Downstream Access, USO and competition rules work. There's a bit about it here when RM were fined £50m in August for abusing their position.

I agree with your point about the companies creaming off the profitables, but the fundamentals still remain...in the short term if RM are legally obliged to deliver the mail shots for 3p then they have nothing to lose by offering this price directly to those customers, and how will their competitors be able to compete/make a profit/cover their overheads?...they won't, they will have to run at a loss if they want to stay in the game, and without the diversification that RM has how long can they do this before they run out of credit?...

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Democorruptcy
2 minutes ago, MrXxx said:

I agree with your point about the companies creaming off the profitables, but the fundamentals still remain...in the short term if RM are legally obliged to deliver the mail shots for 3p then they have nothing to lose by offering this price directly to those customers, and how will their competitors be able to compete/make a profit/cover their overheads?...they won't, they will have to run at a loss if they want to stay in the game, and without the diversification that RM has how long can they do this before they run out of credit?...

In that article it sounds like RM were trying to stamp on the competition
 

Quote

 

Ofcom said Royal Mail increased prices for competitors that did not reach volume targets for the whole of the UK. This in effect meant any competitor employing its own delivery workers in certain parts of the country, as Whistl did, would have to pay higher prices in areas where it used Royal Mail.

Royal Mail makes £1.5bn a year from delivering so-called access mail that is collected by other companies. Ofcom said under the 2014 price changes Whistl had to pay 0.25p more per letter for Royal Mail to make the final delivery than other operators that used it for all of the UK

 

 

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11 hours ago, Majorpain said:

AAPL%20sales%20by%20region.jpg?itok=KrV7

Thats Apple's Q/Q revenue for Q4 last year, the trade war might be causing Chinese to boycot US products in favour of Chinese, but im seeing around 30% drops in China revenue with a couple of big companies now.  Not good news needless to say.

In the news today:

Apple hints at lower iPhone prices as sales fall

Apple boss Tim Cook has hinted it could lower iPhone prices in some places in an attempt to boost falling sales.

Revenue from the iPhone, responsible for most of the firm's profits, fell 15% in its latest financial quarter.

Overall the firm's revenue was down 5% from a year ago to about $84.3bn (£64.5bn).

The slowdown had been expected after the tech giant warned investors earlier this month that revenue would be about $84bn, lower than expected.

The firm had blamed the issues partly on an economic slowdown in China.

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9 hours ago, Bakez said:

Why are you guys interested in this Infrastrata PLC?

Personally, I only hold it as a short-term play, hoping for a boost when financial partner is announced (expected Feb), but there is also a group on this board that see it as a long-term investment. I think the general consensus is that the potential upside, stemming from off-take agreements, upcoming funding decision, possible future EU grants and an expected turn towards nautral gas as energy source, is not fully priced in.

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On 29/01/2019 at 10:06, Majorpain said:

Domino's missed, currently down 10% as well.

They should be toast in the next cycle, £15+ pizza's when you can pick up an equally good one in Asda for £2.50.

DPZ still hugely overpriced,irrational/solvent etc.

 

image.png.9be5ae98506a5b1847601757400655ff.png

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On 29/01/2019 at 11:36, Barnsey said:

Spot on, took a while for credit to tighten but we're finally here so clearly signalling very very late cycle. Exact same dynamic occurring over in the States, reeling in of mainstream lending whilst subprime lending goes into overdrive. Just like 2007.

Yeah,seems more than coincidental.I've known a number of people over the years relying on the 0% transfers to maintain solvency.As soon as they struggle to get them,they won't be lasting long at 10%+++

23 hours ago, Barnsey said:

This might have something to do with it, personal insolvency at 7 year high, quite significant IMO

BBC News - Insolvencies 'highest for seven years'
http://www.bbc.co.uk/news/business-47041241

 

15 hours ago, Majorpain said:

AAPL%20sales%20by%20region.jpg?itok=KrV7

Thats Apple's Q/Q revenue for Q4 last year, the trade war might be causing Chinese to boycot US products in favour of Chinese, but im seeing around 30% drops in China revenue with a couple of big companies now.  Not good news needless to say.

Impressive effort.

6 hours ago, MrXxx said:

So in the coming cycle and with their size if RM are canny their will undercut their competition (who will be under stress), force them out of the market and then up prices afterwards...its a long game if you have money/support to last, and can you see any government allowing RM to go bankrupt?!

Following from that point,another small energy minnow went under the other day.Thiunk this is it.Number of providers has gone from 11 in 2011 to 73 by mid 2017 apparently.

https://www.telegraph.co.uk/investing/bonds/bond-investors-limbo-energy-firm-goes-bust/

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Democorruptcy
2 hours ago, sancho panza said:

DPZ still hugely overpriced,irrational/solvent etc.

Article from June last year suggesting Dominos Pizza UK (DOM) was a sell at around 350 now 264

I thought the idea of share buybacks was when firms had surplus cash? They may have made other capital investments but when they buy £10's millions of shares and go £10's of millions in debt, it's looks strange to me.
 

Quote

 

With Domino's also continuing to buy back its highly-rated shares, it is unsurprising the financial position has changed dramatically with the company moving from a net cash position at the end of 2015 to £89.2m net debt at the end of 2017. 

https://www.investorschronicle.co.uk/tips-ideas/2018/06/22/losing-appetite-for-domino-s/

 

Then in October

Quote

 

Due to its "strong" balance sheet, Domino's said it approved a further GBP25 million of share buyback. The company has already completed a GBP50 million share repurchase programme.

http://www.morningstar.co.uk/uk/news/AN_1539849297947780500/top-news-dominos-pizza-shares-surge-on-share-buyback-sales-rise.aspx

 

 

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19 hours ago, Craig said:

I've got one of those. It's tremendous. I use a breadmaker to make large batches of dough, which are proved a little then frozen. Take out a couple of hours before using, shape after an hour then allow to prove further on a greased pizza tin. Add some toppings and cook for three minutes. Best pizza you'll get this side of Napoli.

The dough also makes tremendous garlic bread or focaccia.

They really are great Craig.Not often id pay £80 for something like this,but worth every penny.I actually bought a good food processor as well with the dough attachment as that makes making the dough a doddle.Takes a bit getting used to how to get the temp to work best.I turn up full until light goes off,then turn down a bit and wait.As soon as it kicks back into heating i put pizza in,as that means top rings are on as well.Fantastic pizza every time.If im doing for family il have the pizza bases rolled out ready and do each one as ones cooking.12 minutes for 3.I buy a lot of toppings from the reduced counter in Tesco,bits of cooked chicken,ham,salami etc.I find the Sainsbury pasta flour is worth paying for.Its £1.10 for a bag,but about 6 pizzas from it and much better than cheaper flour.I need to practice a bit more on other breads like you say.One of the best things i ever bought.

When you say greased pizza tin,do you mean you put the tin inside the pizza maker?,

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38 minutes ago, DurhamBorn said:

They really are great Craig.Not often id pay £80 for something like this,but worth every penny.I actually bought a good food processor as well with the dough attachment as that makes making the dough a doddle.Takes a bit getting used to how to get the temp to work best.I turn up full until light goes off,then turn down a bit and wait.As soon as it kicks back into heating i put pizza in,as that means top rings are on as well.Fantastic pizza every time.If im doing for family il have the pizza bases rolled out ready and do each one as ones cooking.12 minutes for 3.I buy a lot of toppings from the reduced counter in Tesco,bits of cooked chicken,ham,salami etc.I find the Sainsbury pasta flour is worth paying for.Its £1.10 for a bag,but about 6 pizzas from it and much better than cheaper flour.I need to practice a bit more on other breads like you say.One of the best things i ever bought.

When you say greased pizza tin,do you mean you put the tin inside the pizza maker?,

Yep, just use one of those trays with the holes in it. Found getting the pizza onto the stone too problematic, and the base had a habit of burning before the top was fully cooked. This way you can put the toppings on then transfer it easily.

The other thing I've found is that the dough just gets better and better the longer you prove it for. Usually do it in the fridge for at least 2-3 hours before shaping the bases. Gives it a much better texture and rises better.

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Shatner's Bassoon
21 hours ago, Democorruptcy said:

I have a mate who is a postman. He said RM's problem is their competitors cherry pick the most profitable part of the process e.g. collect bulk mailshots from big firms, banks, utilities etc then leave RM to deliver the letters. 

Royal Mail are blaming a larger than expected decline in letter volumes (as they also did back in October). The thing is, those letters are never coming back. I work for a large energy company and the old model of churning out paper bills and reminders and driving calls into call-centres is dying on its arse. We're competing with much nimbler, online account management only companies with much lower operational costs.

We're closing call-centres and have an aspiration to send no paper by 2021 (this won't happen, but the direction of travel is clear). We currently push around 150m letters through RM. 

Young people don't want to ring their energy supplier - it's all paperless billing, text, webchat and online account management now. Even email's out of date now. When the current crop of pensioners die off, that'll be it.

Plus GDPR means businesses are terrified of sending out junk mail.   

Am all for contrarian plays but I just can't see where the growth is coming from. 

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Bobthebuilder
29 minutes ago, Craig said:

Yep, just use one of those trays with the holes in it. Found getting the pizza onto the stone too problematic, and the base had a habit of burning before the top was fully cooked. This way you can put the toppings on then transfer it easily.

The other thing I've found is that the dough just gets better and better the longer you prove it for. Usually do it in the fridge for at least 2-3 hours before shaping the bases. Gives it a much better texture and rises better.

An old pizza shop trick is to leave the dough to prove for 24 hours in the fridge. Puffs up a treat in the pizza oven, they do this as you get a bit more out of your dough. It really does work.

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1 hour ago, Shatner's Bassoon said:

Royal Mail are blaming a larger than expected decline in letter volumes (as they also did back in October). The thing is, those letters are never coming back. I work for a large energy company and the old model of churning out paper bills and reminders and driving calls into call-centres is dying on its arse. We're competing with much nimbler, online account management only companies with much lower operational costs.

We're closing call-centres and have an aspiration to send no paper by 2021 (this won't happen, but the direction of travel is clear). We currently push around 150m letters through RM. 

Young people don't want to ring their energy supplier - it's all paperless billing, text, webchat and online account management now. Even email's out of date now. When the current crop of pensioners die off, that'll be it.

Plus GDPR means businesses are terrified of sending out junk mail.   

Am all for contrarian plays but I just can't see where the growth is coming from. 

NewDay (Amazon credit) card only do paperless billing, there is no option at all for a paper bill. Everytime I log into any of my online accounts I get a pop up asking if I want to go paperless.

So from what I see, I have to agree.

Letter volumes - decline

Parcels/packages - growth

The socialist in me thinks that postal services are a core service that is best provided by the state. Political intervention aside, I can't see a rosy future for RM. Just my opinion of course.

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