Deflationary collapse and the Reflation Cycle to Come.

[duckwomanloulou]

King dollar?

 

Real Vision's latest 20/20 Killer Charts re the US dollar

[leonardratso]

hmm someone agrees on interest rates at least;

https://www.armstrongeconomics.com/markets-by-sector/bonds/interest-rates-will-double/

 

[Errol]

Fears of a nightmare before Christmas for UK retailers as footfall and spending dip

The decline in the number of shop visits was the worst October in four years, and the biggest fall since June 2016. The three-month average, a key measure of momentum, is also the lowest since last June

http://www.cityam.com/275587/fears-nightmare-before-christmas-uk-retailers-footfall-and

Edited November 13, 2017 by Errol

[suresh786]

whats view on the pound/dollar

[durhamborn]

2 hours ago, suresh786 said:

whats view on the pound/dollar

When i made my dollar call down from 102 to 88 late last year i had sterling making maybe $1.40 before the turn.However it might be a stronger Yen or even Euro that pushes the dollar down more.

Another day and another smashing down of large parts of the market.Dixonscarphone down below £1.50 now from highs of £5.00.Id expect profit warnings to start showing themselves soon and they should also spread into other sectors.There are going to be a lot of 70% falls in this bear i think.Leveraged will not come out the other side without massive dilution of equity.

[Democorruptcy]

11 minutes ago, durhamborn said:

Another day and another smashing down of large parts of the market.Dixonscarphone down below £1.50 now from highs of £5.00.Id expect profit warnings to start showing themselves soon and they should also spread into other sectors.There are going to be a lot of 70% falls in this bear i think.Leveraged will not come out the other side without massive dilution of equity.

Dixonscarphone are in that Next share comparator group used for bonus performance that I posted the other day.

Quote

ASOS Dunelm Marks & Spencer Supergroup
B&M European Value Retail* Halfords Morrisons Ted Baker
Burberry Home Retail Group* Mothercare Tesco
Carpetright J Sainsbury N Brown W H Smith
Debenhams JD Sports Pets at Home*
Dixons Carphone Kingfisher Poundland*
http://www.nextplc.co.uk/~/media/Files/N/Next-PLC-V2/documents/2017/Copy of WEBSITE FINAL PDF.pdf

I checked some of the others last week. Do you have an opinion on WH Smith? I was amazed how well they've done. Select 'max' on here and it looks bubbly?

https://uk.finance.yahoo.com/quote/SMWH.L?p=SMWH.L

 

[Option5]

7 minutes ago, Democorruptcy said:

Dixonscarphone are in that Next share comparator group used for bonus performance that I posted the other day.

I checked some of the others last week. Do you have an opinion on WH Smith? I was amazed how well they've done. Select 'max' on here and it looks bubbly?

https://uk.finance.yahoo.com/quote/SMWH.L?p=SMWH.L

 

Isn't the wholesale part of WH Smith the profitable bit?

[Castlevania]

39 minutes ago, Option5 said:

Isn't the wholesale part of WH Smith the profitable bit?

Shops in airports and train stations.

[Democorruptcy]

59 minutes ago, Option5 said:

Isn't the wholesale part of WH Smith the profitable bit?

I don't know about the wholesale part but I'd read what Castlevania suggests about travel locations doing well.
 

Quote

 

WH Smith said trading profit at its more than 750 outlets at travel hubs, including railway stations and motorway service areas, rose 10.3 percent to 96 million pounds and now makes up over 60 percent of its trading profit.

Trading profit at its high street outlets was flat at 62 million pounds.

The final dividend was increased by 10 percent to take the year’s total payout to 48.2p a share.

However, shares in the company were down 2.6 percent at 2016 pence at 0725 GMT, having risen more than 45 percent so far this year.

 

 

[Option5]

5 minutes ago, Democorruptcy said:

I don't know about the wholesale part but I'd read what Castlevania suggests about travel locations doing well.
 

 

Yes, I forgot that they broke off the wholesale side as a separate entity (WH Smith news?)

[Eddie_George]

3 hours ago, Option5 said:

Isn't the wholesale part of WH Smith the profitable bit?

Who buys magazines in this day and age? I can't see them lasting. The rest of their stock is way overpriced. Same goes for Boots, but at least they can milk the NHS.

[Errol]

4 minutes ago, Eddie_George said:

Who buys magazines in this day and age? I can't see them lasting. 

Not as many people, but in niche areas they will survive. Reading in physical print form is still much better than reading on a screen.

[winkie]

4 minutes ago, Eddie_George said:

Who buys magazines in this day and age? I can't see them lasting. The rest of their stock is way overpriced. Same goes for Boots, but at least they can milk the NHS.

Picked up a birthday card, nothing special.....took to the till was almost £4....told the shop assistant I was not prepared to pay that, if it were £2 fine, she agreed with me and I put it back.

[ThePrufeshanul]

15 minutes ago, Eddie_George said:

Who buys magazines in this day and age? 

My wife apparently cannot psychologically relax without the presence of a magazine. Not only does it have to be a hard copy but it also has to have the requisite glossiness.

The prices are astronomical.

[Dogtanian]

As described above wh Smith seem to be special in so far as having a bit of a monopoly in train stations and airports.  Large chocolate with your newspaper for promotional price of 50p anyone?  Or have they moved onto more pc smoothies now?

 

With regard to hard copy magazines I personally much prefer reading paper than backlit tablet screen.  Wired magazine offered me a two year sub for £28 couple of years ago after previously buying as gift for someone else years back.  Recently before I stopped the direct debit (probably shouldn't have) I realized I had been enrolled for another 2 years.  I think the cover price is circa £4 so that really is a big saving.  Less promotional type mags (thinking pc Pro) certainly don't offer such deep discounts compared with cover price.

Looked at colour e-ink screens a few years ago but don't think there was any viable options.  I love my kindle e ink screen and actually prefer reading books compared with paperback ( anecdotally I believe I'm the outlier their). However I can't understand the amount of people that "upgraded" their e-ink screens to tablets like the Kindle fire as their chosen reading device.

Still see Amazon very much entrenched in the market but very interesting reading different views.  Wonder if it could be similar to the dot com when companies like Google crashed price wise ? But later recovered stronger than ever.

 

[Will!]

On 03/11/2017 at 11:37 AM, durhamborn said:

Being able to outrun input inflation in a reflation is something very few sectors will be able to do,energy should be one area that can.

For anyone who wants a reflation energy trade with added risk, there's EDF!

[Majorpain]

http://www.zerohedge.com/news/2017-11-13/uk-litigation-cases-defaulted-consumer-debts-soar-beyond-2008-levels

One of the better articles from Zerohedge, latest rises in GDP are just consumers borrowing more money they cant afford and juicing up growth temporarily.

The real economy where people actually have to make real stuff is IMO in deep trouble at the minute.  Construction in particular is showing the strain of requiring higher prices to pay for higher costs, but clients cant or wont pay.

[durhamborn]

1 hour ago, Majorpain said:

http://www.zerohedge.com/news/2017-11-13/uk-litigation-cases-defaulted-consumer-debts-soar-beyond-2008-levels

One of the better articles from Zerohedge, latest rises in GDP are just consumers borrowing more money they cant afford and juicing up growth temporarily.

The real economy where people actually have to make real stuff is IMO in deep trouble at the minute.  Construction in particular is showing the strain of requiring higher prices to pay for higher costs, but clients cant or wont pay.

I think that is the key.Higher costs that cant be passed on.Margins are going down and down.I would expect we are starting to enter the period where a lot of companies go negative cash flow and the banks start to cut back on lines of credit.This thing is just starting.Retail stocks are being hit very hard already and as predicted consumer facing companies are starting to really feel it.They aint seen nothing yet.

I was looking at Intu the owner of most of the big shopping malls.£5 billion of debt.Net interest is about half the operating profit.Supposed net assets of £5 billion would make them around 30%/40% undervalued.However in a reflation can they push rents up quicker than their interest rate bill will be going up?.Add on a refinance if asset prices fall 30%.A company that might be cheap,or might end up being owned by the bond holders with zero left for the equity.?

[Barnsey]

1 hour ago, durhamborn said:

I think that is the key.Higher costs that cant be passed on.Margins are going down and down.I would expect we are starting to enter the period where a lot of companies go negative cash flow and the banks start to cut back on lines of credit.This thing is just starting.Retail stocks are being hit very hard already and as predicted consumer facing companies are starting to really feel it.They aint seen nothing yet.

I was looking at Intu the owner of most of the big shopping malls.£5 billion of debt.Net interest is about half the operating profit.Supposed net assets of £5 billion would make them around 30%/40% undervalued.However in a reflation can they push rents up quicker than their interest rate bill will be going up?.Add on a refinance if asset prices fall 30%.A company that might be cheap,or might end up being owned by the bond holders with zero left for the equity.?

Intu are an interesting one, recently been changed to hold from sell due to no further deterioration since the Summer, but they are geared above average, fingers in too many pies, too much reliance on the dining side of retail. On a positive note they are taking steps to streamline in some instances, such as the recent 50% stake sell off of the Chapelfield shopping centre in Norwich. They're going to be hit very hard I think next year and 2019, the British consumer is having one last hurrah this Christmas then I think we're done. The closing of BHS had a notable impact on the business, what if we see Debenhams go bust, and perhaps a couple of the Intu situated M&S stores?

UK retailers suffer worst October since 2008 - BRC

Quote

The BRC said its figures were a cause for concern ahead of the Christmas holidays. “The decline was driven by the worst performance of non-food sales since our record began in January 2011,” said Helen Dickinson, BRC’s chief executive.

https://uk.reuters.com/article/uk-britain-economy/uk-retailers-suffer-worst-october-since-2008-brc-idUKKBN1D701B

Incredible isn't it, that we're seeing headlines like this despite employment at record highs and interest rates at rock bottom. The consumer is tapped out. Peak debt, peak everything. We're starting the next crisis with no room to go lower with rates to stimulate spending.

I expect to see many overseas based firms early next year, which employ many in these regional traditionally working class towns/cities where Intu have invested heavily such as Derby and Nottingham, to trigger their 1 year contingency plans to relocate jobs or streamline prior to March 2019. Combine that with exactly what we've discussed on here regarding zombie companies, and it's not looking great.

Edited November 14, 2017 by Barnsey

[durhamborn]

7 minutes ago, Barnsey said:

Incredible isn't it, that we're seeing headlines like this despite employment at record highs and interest rates at rock bottom. The consumer is tapped out. Peak debt, peak everything. We're starting the next crisis with no room to go lower with rates to stimulate spending.

I expect to see many overseas based firms early next year, which employ many in these regional traditionally working class towns/cities where Intu have invested heavily such as Derby and Nottingham, to trigger their 1 year contingency plans to relocate jobs or streamline prior to March 2019. Combine that with exactly what we've discussed on here regarding zombie companies, and it's not looking great.

It really is.From a macro point like you say this is all happening with rates at pretty much zero and record employment.We are probably as far along the risk curve as you can get now and so assets should be pricing in those falls.The mass delusion is that the central banks have the markets back.They dont.If we take certain stocks they are starting to price in the huge risks.Retail is seeing -50% in places.The problem is they could be cut in half again (or more) because the next cycle probably wont favour the consumer at all.Im pretty convinced that the big gainers will be the companies with assets that are very expensive to build.Free cash flow is going to be king from here on and low leverage,because a lot of companies are going to struggle to re-finance their bonds.

[Barnsey]

15 minutes ago, durhamborn said:

It really is.From a macro point like you say this is all happening with rates at pretty much zero and record employment.We are probably as far along the risk curve as you can get now and so assets should be pricing in those falls.The mass delusion is that the central banks have the markets back.They dont.If we take certain stocks they are starting to price in the huge risks.Retail is seeing -50% in places.The problem is they could be cut in half again (or more) because the next cycle probably wont favour the consumer at all.Im pretty convinced that the big gainers will be the companies with assets that are very expensive to build.Free cash flow is going to be king from here on and low leverage,because a lot of companies are going to struggle to re-finance their bonds.

Indeed, just look at what's going on with GE in the U.S. over the past few days, much more to come. Disney relying on the Star Wars franchise to save them, Tesla credit rating downgrade on the way...

Edited November 14, 2017 by Barnsey

[winkie]

8 minutes ago, durhamborn said:

It really is.From a macro point like you say this is all happening with rates at pretty much zero and record employment.We are probably as far along the risk curve as you can get now and so assets should be pricing in those falls.The mass delusion is that the central banks have the markets back.They dont.If we take certain stocks they are starting to price in the huge risks.Retail is seeing -50% in places.The problem is they could be cut in half again (or more) because the next cycle probably wont favour the consumer at all.Im pretty convinced that the big gainers will be the companies with assets that are very expensive to build.Free cash flow is going to be king from here on and low leverage,because a lot of companies are going to struggle to re-finance their bonds.

....I fear you may be right, wipe out or buy out the competition, few huge cash and asset rich global companies/ governments doing deals between themselves on the things we all require to live on this world....not a good place to be I would imagine.....but power, greed and influence will get us there.

[Sancho Panza]

 

On 11/13/2017 at 11:43 AM, Errol said:

Fears of a nightmare before Christmas for UK retailers as footfall and spending dip

The decline in the number of shop visits was the worst October in four years, and the biggest fall since June 2016. The three-month average, a key measure of momentum, is also the lowest since last June

http://www.cityam.com/275587/fears-nightmare-before-christmas-uk-retailers-footfall-and

Interesting.I was out for a few beers on Remembrance Saturday and I have to say,the bars of Leicester were quiet.Never read too much into these odd weekends out .

Having said that,my dad has been over from abroad and has picked up my habit of looking at shops and watching the footfall as he browses.He said he couldn't believe how many barber shops he was seeing,that were all mostly empty.Also remarked on the increasing tide of charity shops and empties in Leicester city centre.

 

23 hours ago, durhamborn said:

Another day and another smashing down of large parts of the market.Dixonscarphone down below £1.50 now from highs of £5.00.Id expect profit warnings to start showing themselves soon and they should also spread into other sectors.There are going to be a lot of 70% falls in this bear i think.Leveraged will not come out the other side without massive dilution of equity.

Worth pointing out that there are huge chunks of the market 70% off peak,maybe not on an annual basis but nevertheless proof that this latest move up isn't the broadest in history.

On 11/12/2017 at 12:55 PM, duckwomanloulou said:

King dollar?

 

Real Vision's latest 20/20 Killer Charts re the US dollar

I'm not sure the dollar is on  a killer rip higher but if that guy is right and it is,all hell could break loose.

[Liquid Goldfish]

Do today's inflation figures all fit in with the big picture?

[durhamborn]

9 minutes ago, oldsport said:

Do today's inflation figures all fit in with the big picture?

RPI 4% oldsport,benefits going up zero,wages going up about 2.5%.More of a squeeze.Given most of the inflation is also going directly abroad (most is due to the £/$ on Chinese imports) once credit tops out its going to get a lot worse.I expect the dollar to do the opposite of what the markets think and head down towards my target of 88.I still think gold might take a pop up to $1450 before this thing really gets going.

What is good is a lot of stocks are really getting hit hard already.Big companies as well.As Sancho said a lot of 70% down stocks out there (and a lot more to come).