Credit deflation and the reflation cycle to come.

[MrXxx]

2 hours ago, Yellow_Reduced_Sticker said:

I pop into our local barnardos charity shop once a week, 95% of everthing is £1, anyway there was a really nice jacket on there EXPENSIVE rail section @ £12 !

Popped in last friday and feck my old boots they REDUCED it to £1 they must of just REDUCED it that morning it fits me perfectly. plus got a brand new high qulitly T-shirt £1 ...boy Does it just MAKE YA FEEL GOOD ALL OVER getting these BARGAINS!

@DurhamBorn Surely this WON'T end when the MEGA inflation comes..?

Bought/added more Endeavour Silver & Yamana Gold today (wish i sold 'em when they were up a while back- who says this game is EASY? )as they look like they have hit a support line - though now i've added these I guess they'll go through support & down further! ha-HA!

I see royal-mail is down today over 9%  -21.5p ...now £2.15 good job i only bought a small stake @ 2.77...i reckon these going to 2 quid soon...

As always if YRS has bought a stock it must be time to short the company! :-) :-) :-)

[sancho panza]

Mobile phone demand dying according to Hodges

 

https://www.icis.com/chemicals-and-the-economy/2019/05/smartphone-market-decline-begins-to-impact-global-stock-markets/

By Paul Hodges on 19th May 2019 in Consumer demand

SHARE THIS STORY

  

The bad news continues for the world’s smartphone manufacturers and their suppliers.  And President Trump’s decision to add a 25% tariff on smartphone component imports from China from June 25 is unlikely to help. Morgan Stanley estimate it will add $160 to the current US iPhone XS price of $999, whilst a state-backed Chinese consumer boycott of Apple phones may well develop in retaliation for US sanctions on Huawei.

Chances are that a perfect storm is developing around the industry as its phenomenal run since 2011comes to an end:

• Global sales fell 4% in Q1 as the chart shows, with volume of 330m the lowest since Q3 2014
• China’s market fell 3% to 88m, whilst US volume fell 18% to 36m
• Apple has been badly hit, with US sales down 19% in Q1 and China sales down 25% in the past 6 months
• Foldables have also failed to make a breakthrough, with Gartner estimating just 30m sales by 2023

This downbeat news highlights the fact that replacement cycles are no longer every year/18 months, but have already pushed out to 2.6 years.  Consumers see no need to rush to buy the latest model, given that today’s phones already cater very well for their needs.

Apple’s volumes confirm the secular nature of the downturn, as its volume continued the decline seen in 2018 as the iPhone comes to the end of its lifecycle. Its market share also fell back to 13%, allowing Huawei to take second place behind Samsung with a 17.9% share.  This decline came about despite Apple making major price cuts for the XS and XR series, as well as introducing a trade-in programme. Meanwhile, Samsung saw its profits fall 60%, the lowest since its battery problems in 2017.

The President’s tariffs are also set to impact sales, as manufacturers have to assume that today’s supply chains will need to be restructured. Manufacturing of low-end components can perhaps be easily relocated to countries such as Vietnam and other SE Asian countries.  But moving factories, like moving house, is a very disruptive process, and it is certainly not easy to find the technical skills required to make high-end components – which represent the core value proposition for consumers.

This highlights how second-order impacts are often overlooked when big announcements are made around tariffs and similar protectionist measures.  Not only do prices go up, as someone has to pay the extra costs involved. But companies along the supply chain see their margins squeezed as well – Apple suppliers Foxconn and Pegatron saw their gross margins fall to 5.5% and 2.3%, the lowest level since 2012, for example. So they will have less to spend on future innovations.

We can, of course, all hope that the current trade war proves only temporary. But President Trump’s decision to embargo Huawei from US telecom equipment markets suggests he is digging in for a long battle. Ironically, however, Huawei was one of the few winners in Q1, with its volume surging 50% despite its planned 2018 US entry being cancelled due to congressional pressure.  And other governments seem notable reluctant to follow the US lead.

The bigger risk, of course, for investors is that the profit downturn caused by protectionism cannot be “solved” by central bank stimulus. Since 2009, as the chart of the S&P 500 shows, they have rushed to support the market whenever it appeared poised for a return to more normal valuations. But it is hard to see how even their fall-back position of “helicopter money” can counter the impact of a fully-fledged trade war between the world’s 2 largest economies.

 

[sancho panza]

June 2017 Aregentina 100 year bond issued

https://notayesmanseconomics.wordpress.com/2019/05/21/argentina-looks-trapped-in-a-now-familiar-downwards-spiral/#comments

100 Year Bond

Here is Bloomberg from yesterday.

Argentine bond spreads against US Treasuries rose 19 basis points to 962, double the average for Latin America……..The country’s five-year credit default swaps also rose 1.3 percent to 1,274 basis points.

There was a bit of a rally today but in general the bonds of Argentina trade about 9.3% over their US equivalents. However bonds in Peso’s yield more highly with the 9-year being at 23%.

The 100 year bond is trading at 68.5, but I suppose you have 98 or so years left to get back to 100.

[sancho panza]

Credit Deflation cometh.....

https://wolfstreet.com/2019/05/21/jaguar-land-rover-books-biggest-ever-annual-loss-sales-collapse-in-china/

 

Jaguar Land Rover Books its Biggest-Ever Annual Loss. Sales Collapse in China

by Don Quijones • May 21, 2019 • 4 Comments • Email to a friend

China deliveries in its fiscal year: -34%. And not getting better: in April, -45%.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

Britain’s largest automaker, Jaguar Land Rover (JLR), owned by  India’s Tata Motors, plunged £3.6 billion into the red in its fiscal year 2018, ended March 31, as the financial fallout from slumping Chinese demand and sinking diesel sales in the UK and Europe took its toll. It was the company’s biggest ever annual loss. Global retail deliveries fell 5.8% to 578,900 vehicles, and global revenues fell 6.1% to £24.2 billion.

For decades, China has been a boon for global automakers. Every year since 1990, annual sales have gone up, often by double digits. Between 2005 and 2017, new vehicle sales multiplied by a factor of six, propelling China to pole position as the world’s biggest car market. But that multi-decade trend came to a shuddering halt last year as light new-vehicle sales fell 4.1%, to 23.7 million units. Since July, China has registered 10 straight months of declining registrations.

[Castlevania]

Barrick have made an offer for Acacia at a lower price than the current Acacia share price. Barrick making an offer doesn’t surprise me but I was expecting at least a small premium as opposed to a ~10% discount.

https://www.reuters.com/article/us-acacia-mining-m-a-barrick-gold/barrick-gold-bids-to-acquire-remaining-acacia-shares-idUSKCN1SS001

[dgul]

4 hours ago, Castlevania said:

Barrick have made an offer for Acacia at a lower price than the current Acacia share price. Barrick making an offer doesn’t surprise me but I was expecting at least a small premium as opposed to a ~10% discount.

https://www.reuters.com/article/us-acacia-mining-m-a-barrick-gold/barrick-gold-bids-to-acquire-remaining-acacia-shares-idUSKCN1SS001

Opening slavo.  I'd imagine lots will happen in the next 30 days or so.

[the question might be whether something else happens before this weekend, or around the 17th June]

[Durabo]

Inflation rises to 2.1% in April, above the BoE's 2% target, mainly due to rising energy costs - https://www.bbc.co.uk/news/business-48364544

[Yellow_Reduced_Sticker]

17 hours ago, DurhamBorn said:

GDX will go up 40% i think this year and downside is max 5% from here.I sold a lot of Endeavour when they ran but have been buying back.Il buy more Royal Mail tomoz if they get whacked on bad results,ladder is £2.04 last one.Lots of classic end of cycle stuff going on.Iv got about 30 stocks now with ladders going.I topped out on VOD this week so thats them full now.I think 6 of the 30 are full.Id always expected that if all ladders hit id be down around 16% before divis,but it looks like it would be 11% now,mainly due to taking some profits on some miners when they ran and selling a few bottom ladders in Standard Life,BAT and Imperial earlier when they ran up.Imperial is back being bought again though.Im very pleased to be building out this portfolio  as the stocks im buying are nearly all down 50% from highs,some 75%.I actually thought PEs of 8 were likely before a turn and many are at that now (or under).The market is selling inflation stocks hard ,but the next cycle will be kind to them.I ignore the noise and simply buy when price points are met.

Royal Mail results in pre-tax profit fell 30% from £565m to £398m - RM slashes its dividend by 40% and the shares jump to + 17p !  £2.29 ...feck i was expecting to get my order on today with HL @ £1.99 NOT only that steptoe is talking about renationalising Royal Mail what gives? ...still i'll wait for my REDUCTION on the share price... i ain't paying more that £1.99 ha-HA!

15 hours ago, MrXxx said:

As always if YRS has bought a stock it must be time to short the company! :-) :-) :-)

yep so TRUE, the only stock that i've got right is SGC i joked with @DurhamBorn that i'd get my order on at a 2p REDUCTION on his buying price, AND i got 'em...& wantda know they shoot up after a few days...BUT don't worry SGC can come right DOWN again during the coming repeat "1929 CRASH" ...HOPEFULLY end of this year?

[DurhamBorn]

4 hours ago, Yellow_Reduced_Sticker said:

Royal Mail results in pre-tax profit fell 30% from £565m to £398m - RM slashes its dividend by 40% and the shares jump to + 17p !  £2.29 ...feck i was expecting to get my order on today with HL @ £1.99 NOT only that steptoe is talking about renationalising Royal Mail what gives? ...still i'll wait for my REDUCTION on the share price... i ain't paying more that £1.99 ha-HA!

yep so TRUE, the only stock that i've got right is SGC i joked with @DurhamBorn that i'd get my order on at a 2p REDUCTION on his buying price, AND i got 'em...& wantda know they shoot up after a few days...BUT don't worry SGC can come right DOWN again during the coming repeat "1929 CRASH" ...HOPEFULLY end of this year?

Very pleased with the divi cut and investment,and in the right areas.15p base plus extra when cash flow allows is the right way to go.RM have an amazing network and probably the only one that can respond to the need for 24 hour delivery.Looking at the plan thats exactly where the cash is going.RM could and should of squeezed competitors much harder than they have in the past,but i expect they will going forward.I reckon by the end of the next cycle these will be around 800p+ a share.My last ladder didnt hit,but it might still yet.

I reckon they will be the only network who will be able to offer the 2nd later delivery and that will clean up among many e-tailers.Of course they need to execute and the unions will need to play ball.

[sancho panza]

Peak April 07 ie trending down well before Northern Rock

Peak May 2017,serious downturn in housebuilders yet to begin,but they appear to have turned and lost their Brexit safe haven status.

 

[sancho panza]

FTSE 100 loser leaderboard today dominated by Travel/Retail/Property/Building

Interesting that Easyjet peaked April 07 as well.March 15 this time on the monthlies.

[Harley]

30 minutes ago, sancho panza said:

FTSE 100 loser leaderboard today dominated by Travel/Retail/Property/Building

Probably wider.  Game on?

[Yellow_Reduced_Sticker]

16 hours ago, DurhamBorn said:

Very pleased with the divi cut and investment,and in the right areas.15p base plus extra when cash flow allows is the right way to go.RM have an amazing network and probably the only one that can respond to the need for 24 hour delivery.Looking at the plan thats exactly where the cash is going.RM could and should of squeezed competitors much harder than they have in the past,but i expect they will going forward.I reckon by the end of the next cycle these will be around 800p+ a share.My last ladder didnt hit,but it might still yet.

I reckon they will be the only network who will be able to offer the 2nd later delivery and that will clean up among many e-tailers.Of course they need to execute and the unions will need to play ball.

 @DurhamBorn Royal Mail shares down this morning -15p now £2.07 ...getting near ya buying price DB!

I'm sticking to me guns AND i ain't paying more that £1.99 ha-HA!

[DoINeedOne]

1 hour ago, Yellow_Reduced_Sticker said:

 @DurhamBorn Royal Mail shares down this morning -15p now £2.07 ...getting near ya buying price DB!

I'm sticking to me guns AND i ain't paying more that £1.99 ha-HA!

£2.01 now watching alot these stocks RMG, VOD, CNA, SGC certainly a day of red

[sancho panza]

3 hours ago, Harley said:

Probably wider.  Game on?

I suspect so.I said a few posts back that after two months of holding firm-and I mean firm-housebuilding shares have cracked.They were a lead indicator in 2007/8 in hosuing bubble 1,and I suspect will perform a similar function in HB 2.We haven't had cataclysmic drops yet.

Ftse peak was may 22 2018,Dow/Russell 200 peaked August iirc then S&P had a recent high,but internal momentum has been dying  since the middle of last year to meon the UK.Aside from some sectoral  weakness/overvaluation,the UK market isn't that over valued historically.The US is and if they catch a  cold etc.

 

Looking at the US,there does seem some long term warning signs that it's rolled over eg SMH/SOXX dropping 20% plus in a mtter of weeks.Whilst it's starting to look very oversold,it doesn't bode well for the wider market.Aslo,as per kaplan's thesis,Russell 2000 is the bellwether for US Indices,it's failure to make new highs confirms bear market from August intactr

decl short SMH/SOXX

 

 

But as Wolf Ricther says,nothing goes to hell in a straight line.I've spent two/three months in the red on housebuilder shorts,jsut laddering in,then from mid to late April they started cracking.RDW then BOV/BWY,then ovber the last few days BDEV

 

Decl-short BDEV still.

[sancho panza]

By the way @Harley  or anyone else.do you know a UK site that lists UK based ETF's in a user friendly format?

I'm using this one for the US which has been a super tool as I'm moving to trading sectors and indices that way to reduce volatility and managing dividend flows.

https://etfdb.com/compare/volume/

2 hours ago, DoINeedOne said:

£2.01 now watching alot these stocks RMG, VOD, CNA, SGC certainly a day of red

The reality may be that we're one year into a bear market,and there's already some cracking bargains.Quite who's buiyng Dunelm over VOD/CNA I'll never know.But that's what makes markets

[Majorpain]

2 hours ago, sancho panza said:

The reality may be that we're one year into a bear market,and there's already some cracking bargains.Quite who's buiyng Dunelm over VOD/CNA I'll never know.But that's what makes markets

Things are moving quite rapidly, we will be lucky if the US-China trade war doesnt end up with bullets flying.  Its a little worrying when two superpowers are starting to take chunks out of each other and the markets reaction is "meh".

[Agent ZigZag]

Im still in the mode of sell in May and go away. So no buying from me as I am going to watch the markets play out some more

[Yellow_Reduced_Sticker]

5 hours ago, DoINeedOne said:

£2.01 now watching alot these stocks RMG, VOD, CNA, SGC certainly a day of red

F**K...RM ended down today -24p ...near on 11% DOWN @ £1.97 !

if things carry-on like this maybe they'll hit £1 ha-ha!

@DurhamBorn did ya get your RM order on?

[BearyBear]

Standard Life Aberdeen -23.16% YoY
Vodafone -36.74% YoY
Metro Bank -76.76% YoY
Centrica -29.38% YoY
Royal Bank of Scotland -23.35% YoY
Purplebricks -76.43% YoY
SSE -24.14% YoY
Barclays -25.68% YoY
Sainsbury -36.76% YoY
Debenhams -100% YoY
Countrywide -90.12% YoY
Thomas Cook Group -89.84% YoY
Sports Direct -33.30% YoY
Royal Mail -61.49% YoY

[Castlevania]

2 minutes ago, BearyBear said:

Standard Life Aberdeen -23.16% YoY
Vodafone -36.74% YoY
Metro Bank -76.76% YoY
Centrica -29.38% YoY
Royal Bank of Scotland -23.35% YoY
Purplebricks -76.43% YoY
SSE -24.14% YoY
Barclays -25.68% YoY
Sainsbury -36.76% YoY
Debenhams -100% YoY
Countrywide -90.12% YoY
Thomas Cook Group -89.84% YoY
Sports Direct -33.30% YoY
Royal Mail -61.49% YoY

Hopefully that’s not your portfolio

[BearyBear]

8 minutes ago, Castlevania said:

Hopefully that’s not your portfolio

Luckily not  that's just my watchlist.

[Yellow_Reduced_Sticker]

@BearyBear YOU forgot to mention our favorite DOG yes...New Gold Inc NGD!

ONLY down  -200%! YoY - still EVERY dog has its day ...UNLESS this one kicks the bucket!

 

[BearyBear]

48 minutes ago, Yellow_Reduced_Sticker said:

@BearyBear YOU forgot to mention our favorite DOG yes...New Gold Inc NGD!

ONLY down  -200%! YoY - still EVERY dog has its day ...UNLESS this one kicks the bucket!

PMs deserve their own list, I've created that one on ProRealTime just by adding some of the companies mentioned in this thread. I do own a few from the list, small sizes though so I don't care much.

Alexco Resource Corp -24.46% YoY
Eldorado Gold Corp -42.87% YoY
Endeavour Silver -41.30% YoY
Fortuna Silver Mines -54.89% YoY
Great Panther Mining -44.31% YoY
Harmony Gold -3.43% YoY
International Tower Hill -30.90% YoY
New Gold -71.93% YoY
Sandstorm Gold +11.44% YoY
Sibanye Gold +24.63% YoY
Yamana Gold -32.05% YoY

for comparison:

si.f -11.01% YoY
gc.f -0.38% YoY

[Yellow_Reduced_Sticker]

 

@BearyBear thanks, how is New Gold -71.93% YoY ..when i look at this chart its down from $3.00 to 90 cents over a year, i'm not nit-picking -

i'm i missing somin...or is it cos i'm dyslexic & just a bit thick ... ha-ha!