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The threat of secular stagnation has not gone away
Unemployment in the US is below 4 per cent and growth in the economy is accelerating. By recent standards growth in Europe and Japan is also strong. In these circumstances many believe the idea of secular stagnation can be written off.
Certainly if the phenomenon is defined as the fatalistic view that the economies of the industrialised world are condemned to suffer permanent stagnation with high unemployment, then we are obviously not in a moment of secular stagnation.
However, this is not what Alvin Hansen intended when he coined the phrase, nor what I had in mind when I sought to revive the concept in 2013. Rather the idea of secular stagnation is that the private economy — unless stimulated by extraordinary public actions especially monetary and fiscal policies and, or, unsustainable private sector borrowing — will be prone to sluggish growth caused by insufficient demand.
On this interpretation, the past few years have confirmed the hypothesis.
In the US the Congressional Budget Office forecast, which is comfortably in the mainstream, calls for annual growth of 2.5 per cent over the next three years with growth of 3.3 per cent during 2018. But what is necessary to support this growth? As far as fiscal policy is concerned, the CBO projects growth in actual budget deficits of more than 1 per cent of gross domestic product in 2017-2019, with substantial further increases over time and the most rapid increase in the debt-to-GDP ratio during peak business cycle times than has ever been seen in peacetime.
In terms of monetary policy, indexed bond markets imply that real interest rates will be kept well below 1 per cent for the next 30 years. Meanwhile the economy has been supported by a stock market that has returned 22 per cent in 2017 and an average of 16 per cent over the past five years. This while private sector debt has grown relative to GDP.
If budget deficits had been at normal levels and not growing relative to the economy, real long-term interest rates had been steady in their customary range above 2 per cent and an extra $10tn in wealth had not been created by abnormal stock market returns, it is hard to believe that the US economy would be growing much at all. And it is almost inconceivable that it would be near its 2 per cent inflation target.
I thought we might get some movement today, with ex-div on the 4th....lets see what happens tomorrow.
Rhodium up at $28,450 / oz this morning (JMAT price).
Iridium steady at $4,800 / oz, ruthenium also up at $350 / oz.
For those interested, over at Tharisa (THS) it looks like the seller may have finally cleared.
Edit:
That's WHY we are here :)
Ups1de
It can't be. That's we we are here :)
Looks like a strong commodities rally underway. Slp set for a strong 2 nd half & impressive full year. However the strong PGM price action is set to propel next years results too. Just look at the net basket price trend. $140m+ Ebitda this year , $160m+ Ebitda next year ? If so with growing cash pile how can company be valued at net of cash PE under 3 ?
final price.... large sell in the background, as yet unreported??
Baird bid price up another 2.3% today!
Consolidation/bull flag on the 1 hour timeframe:
https://www.tradingview.com/x/GP6DFif9/
Break of critical 120p level and asecending triangle, possibly retesting:
https://www.tradingview.com/x/eODwnzgS/
Lastly, Platinum is in a bull flag/consolidation pattern on 4 hour chart:
https://www.tradingview.com/x/JcrPFGD7/
Still going up...
$27,900 / oz this morning (JMAT price).
Apparently, global platinum supply fell about 9% last year, driven by a decline in SA production. This would imply (since the vast majority of the world's rhodium also comes from there same SA mines), that rhodium production must have declined significantly as well. So, IMO, we're not looking at speculative money flows driving up the price of rhodium, but at an acute deficit of a metal that car manufacturers simply must buy. Here's the report:
www.kitco.com/news/2021-03-01/Global-platinum-production-fell-9-in-2020.html
Morning Velo, you noticed that too! Maaaan, this world eh?
I personally hate the media. Been tracking the so called forecasts of the self serving nuts on Wall Street through this pandemic. You couldn't make it up. Well you could, but hey :) Goldman Ball Sachs with their "we see a oil at $20 through the rest of 2020, and oil prices may never recover" back in April last year to "we see triple digit oil within the next 2 years". Pathetic.
Hey ho, on we go! Come on Sylvie what you got this week?
" Like the current 3 day trading shape if SP were to close here. "
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A good close but didn't hold the 3 day pattern. Quite a rare candlestick pattern if it had held because possibility of suggesting an explosive rise as the next stage. Never mind. Odd day. Still good.
I've read: Bonds stabilised, as the reason for today's performance, then it was inflation concerns, then housebuilders responsible.
In other words no one knows with any certainty but they have publishing deadlines to meet, so have to pretend they know the reason for today's bullish performance across the market :)
Supply-constrained rhodium to potentially see more upside after all-time high
What's happening? Rhodium base prices have surged above $25,000/oz for the first time. The precious metal has been on multiyear bull run, rising forty-fold since mid Aug 2016 when it stood at $625/oz.
The latest rally was caused by supply shortages from South Africa, which accounts for around 80% of global rhodium mine supply; an existing deficit; and strong buying from China and Europe due to stricter auto emissions regulation.
Nearly 80% of demand for rhodium comes from the global automotive industry, for catalytic converters to control emissions of greenhouse gases and pollutants.
What's next? Rhodium is a by-product of platinum group metal mining, and there is talk of projects in the sector that have been abandoned or cancelled, such as Stillwater-Sibanye's K4 project, coming back into play.
However, market sources say mining restarts and new projects can take years to reach full production. Given the volatility of rhodium prices, analyst have suggested the increase in prices to continue in 2021.
https://www.spglobal.com/platts/en/market-insights/blogs/metals/030121-ct-rhodium-price-spike-styrene-polystyrene-ethanol-crude-oil
That's jazz baby :)
123.50 close on Thursday
Entire FTSE market has opened up well bullishly this morning with most stocks reacting well.
Like the current 3 day trading shape if SP were to close here. But a general upbeat market day, so any previous thoughts on the SP now on hold.
Rhodium now at $28,000 per oz
I did get my £1.25 close on Thursday :) I knew something was up with that apparent closing price!
Velo. Haha. That's hilarious re the subscription.
FYI, I fully understood the context of your 'averagey' gains with respect to the over performance of other months. Such interesting analysis as ever, always good to hear.
Your take on Monday is interesting too. I think it might get interesting next week :)
Concludes . . .
. . . With SLP showing so many 100% positives - for curiosity started Googling specialist sites last summer, in seasonality forecasting data and was surprised to find quite a thriving underground community of them, one of them let slip of the hedge funds, and institutions et al that subscribe to their services (they were big on indices, as it was indices that were my particular interest when I Googled last year).
I was starting to fall for the soft sell on the home pages as each boasted of their documented success for their clients, so seductively I was induced to take a peek at their subscription page (US sites) and what I saw made me click out and never visit again as they wanted triple digits £££'s subscription rates - PER MONTH! They can feck orff :) :)
" . . . and those 'averagey' gains you talk of in the flat months to come . . . "
-----------
Morning Stoodio,
Feel I should expand a little on methodology. I describe them as averagey because the computer is 100% "certain" that Jan/Feb & July/Aug will be the best performing months of the year.
Ego: therefore all other months must be averagey.
I may have given the impression that means "flat".
However, the computer is actually saying the months of between March and June are of insufficient reliability to be taken as valid and so are displaying low percentages of reliability. (And for the most; single digit % gains).
So they could be flat, could be not half bad, or one or two might end up within spitting distance of the best performing months - because the computer has no confidence in the reliability outcome for those months. If it said 100% confidence of a single digit performance then that would be wholly different matter.
So the computer is not at all confident anyone can draw a safe conclusion. When I posted that of the spring/early summer season, March is likely to flat, that's the % gain the computers are showing but it has no strong faith in its own conclusions.
It's actually forecasting a gain of 0.8% gain for March but is shrugging its shoulders splaying upturned palms sideways, saying 50/50 chance of that occurring by displaying only 50% confidence.
50% chance of accuracy is an inadequate percentage to even think of posting under 1% gain for March - could be anything, so will be glancing at immediate indicators and ultra short term trends for March; if I even bother as long term trends say all is v strongly bullish.
However, I'm personally holding the view of a close on Monday of between 122 and 117 with a tilt towards the lower end of that range rather than the higher end. My confidence of that occurring? . . . hmmm well-less than 50% :)
So see what comes out in the wash :)
Incidentally, I only ever look occasionally at historic seasonality data whenever I'm interested in taking a position in a stock and I muse to myself: I wonder if it has a low spot in the year and if it's nearby as that might be a good month buy. To see 100% confidence ratings is not rare but it is uncommon, and SLP has 5 months of them for this year, now that's outstanding!
- Five!
Jan/Feb,
July/Aug
and new entrant for 2021 - November!
(With a 100% probability forecast of 9.6% gain in Nov).
(It's showing Aug as the likely recipient to receive the Month of the year award at a whopping 23% gain!
With SLP showing so many 100% positives - for curiosity started Googling specialist sites last summer, in seasonality forecasting data and was surprised to find quite a thriving underground community of them, one of them let slip of the hedge funds, and institutions et al that subscribe to their services (they were big on indices, as it was indices that were my particular interest when I Googled last year).
Continues .... > >
The bizarre thing with the Mello bash was that Bruce didn't even mention Rhodium or Iridium, it was all about Platinum and having lower costs than the larger producers. Bruce was once again the weakest link on the panel imo. It was actually Jack who introduced Rhodium into the debate. Where you detail he speaks of all being aware of SLP I think he would mean all stokopedia subscribers and he is probably right as he and stockopedia have brought it to their attention. I'm sure the majority of Advfn and LSE users won't be aware of the metrics available here at the more than reasonable price
Velo, I'm well aware your postings from January were on the money too - so congrats also buddy :) For me? Sitting very happy like you. Never been more confident in my holding, and those 'averagey' gains you talk of in the flat months to come will be taking us to upwards of £1.40 if my due diligence rings true :)
The only problem with the above of course, is for the umpteenth time I'm going to have to get back to the chalk board to revise my TP as this was sitting just a smidgen below it. I haven't revised it in a while tbh, so have some homework to do :)
Apologies.
With "their performance is measured" I meant the pundits, not the company. To be clear.
Don't get spooked out of a good position. As more people want in, it is in their interest to do this as low as possible (as is mine).
mra1984
"(1) These twits from conker's corner - they keep tweeting out this rubbish without even fact checking, listening to there podcast where they think SLP is risky just because the share price has gone up a lot and then start talking about platinum a lot...ok weird, no knowledge or mention of Rh and Rh market deficit"
---
In principle, this is correct. As the price increases, especially like in this case, so does downside risk.
But that is not telling the whole story. Looks at the quality and value ratios and it's extraordinary. And now momentum comes into play as well? The valuation is ridiculously low. To keep it simple, the sector average is PE 15. Never mind any other objective measurement.
Their performance is not measured in the value of wealth they contribute to their readers, but as to how many people continue reading their musings. Not quite the same. And yes, there is a bit of a contrarian play with SLP, but that's exactly where the fun begins ;)
Happy holding.