Credit deflation and the reflation cycle to come.

[No Duff (troll)]

22 minutes ago, Barnsey said:

Thought I'd share this tweet:

Ties in nicely with the distinct possibility of a similar 1970's-esque high inflation period to come, but with the added bonus of QE.

https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp

A very British scandal!

[Democorruptcy]

23 hours ago, Bear Hug said:

Have a read of this: https://www.investopedia.com/terms/p/parvalue.asp

Presumably these bonds were issued at a premium to par value, so investors would have paid more than $11.5 billion (par value) to buy them and therefore effective rate Vod are borrowing at is lower than any of the coupon rates quoted above.

Thanks, I'd be interested to see something to prove your presumption that they are already premium to par so that's what Euro rate 2% means. However even if they are that can change with interest rates. Re the premise of this thread, deflation then inflation, they might have gone in too early and rates are going down before they go up? So lower rates on debt could be locked in later? Though it might be like running into front of a steamroller to pick up some pennies, in that if you don't act it might cost a lot more later.

Also these is all to fund the purchase of "Liberty Global plc's operations in Germany, the Czech Republic, Hungary and Romania or for general corporate purposes". I find it interesting that of those 4 countries only Germany is currently using the Euro. Maybe VOD don't fancy the Euro and think Germany might leave?

[Band]

1 hour ago, Barnsey said:

Thought I'd share this tweet:

Ties in nicely with the distinct possibility of a similar 1970's-esque high inflation period to come, but with the added bonus of QE.

https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp

Inflation or stagflation.

[Yellow_Reduced_Sticker]

On 01/07/2018 at 01:59, Inoperational Bumblebee said:

A couple of points, not necessarily for your benefit:

DB (or anyone else on this thread) are not providing financial advice; you should do your own research. Just as a disclaimer...

An IFA would look to provide advice that they could justify in court if it all went tits up. This does not necessarily mean it is the best advice, just that they are qualified to provide it. There's not likely to be anything out of the ordinary in it.

 

@Inoperational BumblebeeYOU got that right Its CERTAINLY NOT for my benefit!

 

I think its pretty obvious here that the majority of folks KNOW that this is NOT a tipping service OR financial advice thread in a round about way, AND we all do are own research, and make our OWN minds up.

 

RE: "An IFA would look to provide advice that they could justify in court if it all went tits up."

 

In the mid-1980's I took a personal pension out (cos i knew I'd be jumping job to job) the personal pension was with general portfolio - this was advice from a FA. The projections that this FA gave were off the CHARTS!

 

AND DO ya know...a decade or so down the line i read in the FT, general portfolio were NUMBER 1 worst performer year after year...CONSISTENTLY!

 

In late 1997 i took out "friends provident with profits fund" (the reason was carpet-bagging - to get free shares when they demutualise) this fund was invested in PROPERTY & fixed IR instruments, b4 i took it out, over the phone i had to speak to one of there FA's...

 

At the same time of investing in  "friends provident with profits fund" i invested the same cash amount in a 90 day notice acc with the West Bromwich Building Society.

 

After 9 years i went to cash in my "friends provident with profits fund" (I received my free shares) And  would YOU like to know what my investment grew to?

 

It was a F***Kin disgrace, AND the cheeky c***T on phone said when i was cashing it it that they felt sorry for me, that it hadn't grown that well, YET LOOK WHAT PROPERTY DID during those years!

 

In fact my West Bromwich Building Society 90 day notice acc performed slightly better!

 

AND i could go on and give more examples...

 

SO Inoperational Bumblebee, what to do - take the dick-head FA to court ?

 

I STAND by what I said AND this time I'll state it a bit more CLEAR, 99.9% of FA's are a bunch of F***Kin gormless dick-heads and that's putting it mildly!

 

BTW, EVERY decision I make, be it financial or personal or whatever, I am AND I'm the ONLY one that's accountable - i don't look to blame NO one!

 

RANT OVER!

[Band]

54 minutes ago, Yellow_Reduced_Sticker said:

 

@Inoperational BumblebeeYOU got that right Its CERTAINLY NOT for my benefit!

 

Would look a bit silly going to the FSA saying i took advice of a website called DOSBODS that stand for Deluded Old Scrapper Birds On Dating Sites can i have some money back please.

[leonardratso]

16 minutes ago, Banned by HPC said:

Would look a bit silly going to the FSA saying i took advice of a website called DOSBODS that stand for Deluded Old Scrapper Birds On Dating Sites can i have some money back please.

its probably no worse that those commission seeking cunts of IFA's.

[Talking Monkey]

11 hours ago, DurhamBorn said:

Same here.Im more interested in re-building a portfolio than delivers around 9% a year compounding.The PM part of my portfolio isnt in those calculations.Its a different part.Im active at the moment,but very likely il be holding what i already have for around 8 years.(apart from the PM miners,that depends on what they do)

Hi DB a portfolio that did that but excluding miners would that be a portfolio of high dividend payers like VOD and Aviva. We've discussed a lot the miners for the reflation but less so other sectors

[Inoperational Bumblebee]

3 hours ago, Democorruptcy said:

Thanks, I'd be interested to see something to prove your presumption that they are already premium to par so that's what Euro rate 2% means. However even if they are that can change with interest rates. Re the premise of this thread, deflation then inflation, they might have gone in too early and rates are going down before they go up? So lower rates on debt could be locked in later? Though it might be like running into front of a steamroller to pick up some pennies, in that if you don't act it might cost a lot more later.

Also these is all to fund the purchase of "Liberty Global plc's operations in Germany, the Czech Republic, Hungary and Romania or for general corporate purposes". I find it interesting that of those 4 countries only Germany is currently using the Euro. Maybe VOD don't fancy the Euro and think Germany might leave?

My belief is it's the effects of carry trade, taking advantage of the interest rate differentials. Please see my post here. Nobody seems to have responded!

2 hours ago, Banned by HPC said:

Would look a bit silly going to the FSA saying i took advice of a website called DOSBODS that stand for Deluded Old Scrapper Birds On Dating Sites can i have some money back please.

The point being that we are not allowed to give financial advice, as you need to be qualified or approved by the FCA to do so.

[leonardratso]

37 minutes ago, Inoperational Bumblebee said:

My belief is it's the effects of carry trade, taking advantage of the interest rate differentials. Please see my post here. Nobody seems to have responded!

The point being that we are not allowed to give financial advice, as you need to be qualified or approved by the FCA to do so.

and be a  money grabbing bullshitter as well.

[Bear Hug]

5 hours ago, Democorruptcy said:

Thanks, I'd be interested to see something to prove your presumption that they are already premium to par so that's what Euro rate 2% means.

Good point and apologies for my incorrect conclusion!  I googled away and all I got is this: http://pdf.secdatabase.com/285/0001104659-18-035523.pdf (SECURITIES AND EXCHANGE COMMISSION FORM FWP).

The above link has issue price below principal amount for all fixed-rate notes of that $11.5b.

I therefore have no idea where "effective average euro rate of 2.0%" comes from

[DurhamBorn]

4 hours ago, Talking Monkey said:

Hi DB a portfolio that did that but excluding miners would that be a portfolio of high dividend payers like VOD and Aviva. We've discussed a lot the miners for the reflation but less so other sectors

Yes.Since i started investing aged 14 my aim has always been the same.Buy undervalued blue chip shares and cash/re-invest the dividends.I sold my portfolio that had done hugely well over 25 years the last two years.Some stocks had returned close to 1000% including dividends.Many others 500%.It was actually a very strange place to be out of the market.Iv started to re-build a portfolio,but with stocks that the last cycle (since 1982) didnt help at all.It would seem strange to most people to cash the portfolio i had,and to be investing it now into areas i am,but i have 99% trust in our work,and that the disinflation cycle is/has ended.

The facts are most people do not understand inflation cycles.They havent seen one.The assets that perform are a small band,and very different to most cycles.People will say the world has moved on,things have changed etc.They havent.

 

[DurhamBorn]

7 hours ago, Barnsey said:

Thought I'd share this tweet:

Ties in nicely with the distinct possibility of a similar 1970's-esque high inflation period to come, but with the added bonus of QE.

https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp

Well quite,cycles always go this way.The political cycle always ends up in a position where inflation is needed.That is until each generation understands the pain of double digit interest rates.Full scale ahead.Debt deflation and then a full on reflation cycle with massive pain,unless you own inflation assets of course.

[DurhamBorn]

6 hours ago, Democorruptcy said:

Thanks, I'd be interested to see something to prove your presumption that they are already premium to par so that's what Euro rate 2% means. However even if they are that can change with interest rates. Re the premise of this thread, deflation then inflation, they might have gone in too early and rates are going down before they go up? So lower rates on debt could be locked in later? Though it might be like running into front of a steamroller to pick up some pennies, in that if you don't act it might cost a lot more later.

Also these is all to fund the purchase of "Liberty Global plc's operations in Germany, the Czech Republic, Hungary and Romania or for general corporate purposes". I find it interesting that of those 4 countries only Germany is currently using the Euro. Maybe VOD don't fancy the Euro and think Germany might leave?

I think thats probably right,they are front running to get things locked in.The shrewd will be locking bond holders into 10 year + debt now.If you can fix in now at 3.5%  or less for 10/12 years that should prove a very very shrewd move.I was pressing a property company CFO that has bank borrowing at 2.7% to lock it out in a corporate bond and they have at 3.5%.Shareholders will find that small decrease in earnings on the arb hard to swallow now,but they wont in a few years.

[leonardratso]

5 hours ago, DurhamBorn said:

I think thats probably right,they are front running to get things locked in.The shrewd will be locking bond holders into 10 year + debt now.If you can fix in now at 3.5%  or less for 10/12 years that should prove a very very shrewd move.I was pressing a property company CFO that has bank borrowing at 2.7% to lock it out in a corporate bond and they have at 3.5%.Shareholders will find that small decrease in earnings on the arb hard to swallow now,but they wont in a few years.

yes, even if your wrong and the rates fall(perhaps short term, probably not long), its always good to be certain at what you owe and need to pay, then at least you can plan around that and make provision. On a micro level i like to know that my bills and overhead are x and i have to cover them first before i go down to ladbrokes with y.

[Democorruptcy]

7 hours ago, Bear Hug said:

Good point and apologies for my incorrect conclusion!  I googled away and all I got is this: http://pdf.secdatabase.com/285/0001104659-18-035523.pdf (SECURITIES AND EXCHANGE COMMISSION FORM FWP).

The above link has issue price below principal amount for all fixed-rate notes of that $11.5b.

I therefore have no idea where "effective average euro rate of 2.0%" comes from

Thanks for the link.

Re your investopedia link I can see how interest rates affect bond prices but not how that would alter the underlying average rate for Vod. They issue the bond and it's sold on the market at that rate. Isn't it others that later buy/sell the bonds at + or - 100 if/when rates changes, so how would that change the issued rate for Vod? They pay the issued rate to whoever holds the bond.

This 2% Euro rate must be a currency thing. They are buying European assets and issuing USD bonds.

 

[Democorruptcy]

9 hours ago, Inoperational Bumblebee said:

My belief is it's the effects of carry trade, taking advantage of the interest rate differentials. Please see my post here. Nobody seems to have responded!

The point being that we are not allowed to give financial advice, as you need to be qualified or approved by the FCA to do so.

I think you must be right that it's a currency thing. 

[Democorruptcy]

7 hours ago, DurhamBorn said:

Yes.Since i started investing aged 14 my aim has always been the same.Buy undervalued blue chip shares and cash/re-invest the dividends.I sold my portfolio that had done hugely well over 25 years the last two years.Some stocks had returned close to 1000% including dividends.Many others 500%.It was actually a very strange place to be out of the market.Iv started to re-build a portfolio,but with stocks that the last cycle (since 1982) didnt help at all.It would seem strange to most people to cash the portfolio i had,and to be investing it now into areas i am,but i have 99% trust in our work,and that the disinflation cycle is/has ended.

The facts are most people do not understand inflation cycles.They havent seen one.The assets that perform are a small band,and very different to most cycles.People will say the world has moved on,things have changed etc.They havent.

 

One thing that puzzles me about your posts about holding your shares for so long, is didn't your charts tell you the dotcom bust and financial crisis was coming? All the shares you were holding must have plunged, though defensive stocks not as much as some others. Didn't you sell out and buy back in like you have done recently with some shares, maybe BAT was one? You used a wider macro picture for a short term trade.

[DurhamBorn]

3 minutes ago, Democorruptcy said:

One thing that puzzles me about your posts about holding your shares for so long, is didn't your charts tell you the dotcom bust and financial crisis was coming? All the shares you were holding must have plunged, though defensive stocks not as much as some others. Didn't you sell out and buy back in like you have done recently with some shares, maybe BAT was one? You used a wider macro picture for a short term trade.

No,because the dot com tech bubble wasnt a macro event itself and it was around that time i was just learning about macro strategy,most of the shares i owned before that were bought on contrarian views.I bought tobacco for instance when everyone said Clinton would destroy the industry.I didnt do any selling during the tech boom,but i was lucky in a way as it was during that time that my share saves from work were all coming off and my free share options and they had trebled (i was in pharma and it did well in the tech run),so i got a lot of capital,much more than i already had invested at the time quality "old world" shares were beaten down.My friend of course told me to ignore the market and buy the dis-inflation shares and that proved 100% correct.

The dot com boom though was the best investing event iv seen in my lifetime so far,not in the tech stocks,but in the way the market priced down quality companies to insane levels.I can remember at the time buying many defensives etc who ended up giving me a dividend yield of 20% a decade later on original buy price.

I have a feeling we might be seeing a similar chance in the PM sector now (and a few other sectors).Its pretty much ignored by everyone.Last week only 8% of retail investors were bullish on gold and the sector.It can take time,and its a sector that is very hard to ping the bottom,but with sentiment like that and the macro picture a reversal could be close.

 

 

[Yellow_Reduced_Sticker]

DB, I see ya Stagecoach & Yamana Gold  have gone UP every day since ya purchase of last week, VERY NICE... they ALWAYS go UP when I don't buy Ha ha!

 

Anyhoo ...I'll have to wait for a pull-back...though doubt it will happen as now i want to buy! ALL good fun & games in the world of investing...

 

[DurhamBorn]

53 minutes ago, Yellow_Reduced_Sticker said:

DB, I see ya Stagecoach & Yamana Gold  have gone UP every day since ya purchase of last week, VERY NICE... they ALWAYS go UP when I don't buy Ha ha!

 

Anyhoo ...I'll have to wait for a pull-back...though doubt it will happen as now i want to buy! ALL good fun & games in the world of investing...

 

As the old 18 to 30 holiday advert used to say, One swallow doesnt make a summer .

[sancho panza]

20 hours ago, Democorruptcy said:

Thanks, I'd be interested to see something to prove your presumption that they are already premium to par so that's what Euro rate 2% means. However even if they are that can change with interest rates. Re the premise of this thread, deflation then inflation, they might have gone in too early and rates are going down before they go up? So lower rates on debt could be locked in later? Though it might be like running into front of a steamroller to pick up some pennies, in that if you don't act it might cost a lot more later.

Also these is all to fund the purchase of "Liberty Global plc's operations in Germany, the Czech Republic, Hungary and Romania or for general corporate purposes". I find it interesting that of those 4 countries only Germany is currently using the Euro. Maybe VOD don't fancy the Euro and think Germany might leave?

It appears the corporate bond market functions in a similar way to the govt bond market.

Bonds get sold en masse to an investmetn bank who sell them on.

Euro rate 2% likely refers to the bid from the bank.

https://www.thirdway.org/report/the-bond-market-how-it-works-or-how-it-doesnt

'How do you buy bonds?

We’ll start with the primary market and by this we mean the offering and sale of a brand new bond. There are two ways that a company or country initially issues and sells their bonds to investors: a “bought deal” or an “auction.”

In a bought deal, an investment bank (like Goldman Sachs or Morgan Stanley) buys the entire lot of bonds at a set price. Usually, the different investment banks submit bids to the bond issuer indicating how much they would pay for all the bonds being offered. The issuer chooses the best deal for them—based on price, experience, and the ability to resell to other investors.

In a bond auction, buyers bid to purchase a portion of the bonds for sale. In a “single-price auction,” all winning bidders pay the same price for the bonds being issued. In a “multi-price auction” winning bidders may pay different prices. Bond issuers conduct auctions to access investors directly and design them to raise capital at the lowest possible rate of interest. Of course, bond issuers don’t always succeed in this endeavor—whether an auction or bought deal is the best option depends on individual circumstances.²

Demand for a bond auction is judged by what is known as the bid-to-cover ratio. The bid-to-cover ratio is the total dollar value of all bids divided by the dollar value of the bonds being auctioned. If there is $300 million worth of bids for $100 million worth of bonds, the bid-to-cover ratio is 3. A bid- to-cover ratio above 2 is considered strong demand for a bond issue. Thus, if you read a story about the latest issuance of, say, Spanish sovereign debt and demand is considered weak, it reflects a low bid-to-cover ratio.'

 

 

 

[Democorruptcy]

7 hours ago, DurhamBorn said:

No,because the dot com tech bubble wasnt a macro event itself and it was around that time i was just learning about macro strategy,most of the shares i owned before that were bought on contrarian views.I bought tobacco for instance when everyone said Clinton would destroy the industry.I didnt do any selling during the tech boom,but i was lucky in a way as it was during that time that my share saves from work were all coming off and my free share options and they had trebled (i was in pharma and it did well in the tech run),so i got a lot of capital,much more than i already had invested at the time quality "old world" shares were beaten down.My friend of course told me to ignore the market and buy the dis-inflation shares and that proved 100% correct.

The dot com boom though was the best investing event iv seen in my lifetime so far,not in the tech stocks,but in the way the market priced down quality companies to insane levels.I can remember at the time buying many defensives etc who ended up giving me a dividend yield of 20% a decade later on original buy price.

I have a feeling we might be seeing a similar chance in the PM sector now (and a few other sectors).Its pretty much ignored by everyone.Last week only 8% of retail investors were bullish on gold and the sector.It can take time,and its a sector that is very hard to ping the bottom,but with sentiment like that and the macro picture a reversal could be close.

 

The financial crisis must also have been a sell/buy opportunity.

Re PMs do you have any opinion on Sprott? Re silver my 2 were always PAAS because they have been around a long time (now tripled since 2016) and Central Fund of Canada CEF because it was backed by physical silver. Sprott bought CEF.

Their own physical silver unit trust is on a downer:

Notice it has a KID

http://www.hl.co.uk/shares/shares-search-results/s/sprott-physical-silver-trust-units

[Democorruptcy]

1 hour ago, sancho panza said:

It appears the corporate bond market functions in a similar way to the govt bond market.

Bonds get sold en masse to an investmetn bank who sell them on.

Euro rate 2% likely refers to the bid from the bank.

 

I wish I'd never started over-thinking this VOD thing!

[Democorruptcy]

10 hours ago, leonardratso said:

yes, even if your wrong and the rates fall(perhaps short term, probably not long), its always good to be certain at what you owe and need to pay, then at least you can plan around that and make provision. On a micro level i like to know that my bills and overhead are x and i have to cover them first before i go down to ladbrokes with y.

I've always been a gambler but never had a betting bank (or a staking plan). It seems like it's planning to lose and you don't trust yourself. I know in theory you are only supposed to gamble what you can afford to lose but that means you cannot go All In on one. What if one month you have a cert but your y is too small to really pile on?

[Bricks & Mortar]

30 minutes ago, Democorruptcy said:

What if one month you have a cert but your y is too small to really pile on?

Now that's real gambling.