Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Today's £450m provision for alleged car-loan misselling looks way too low. Investors need to be thinking in billions, not millions. RBC Bank reckons LLOY need to set aside £2b. I estimate £3b. This is just the start, and will drag on for many quarters ahead.
https://www.cityam.com/lloyds-announces-record-annual-profits-and-announces-bumper-shareholder-returns-but-expects-motor-finance-probe-hit/
Know someone who recently went to fetch a prescription from the chemist. First time they'd been in years. When the lady behind the counter asked "do you pay for your prescription", the lady looked startled and taken aback when the fetcher replied "yes"... Like it was an unusual and rare event for anyone to actually pay for their prescription meds!
The FTSE100 today is tanking again. Down -1% YTD and -4% YoY. Nvidia results tonight may well be bad, sending the S&P500 back into a slightly bearish mindset. US banking regs are about to tighten further. The UK car-loan misselling scandal is going to cost billions. Labour will be rubbing their hands at a bank windfall tax.
A heckuva lot of short-, medium- and long-term headwinds out there for LLOY right now. Hard to see much upside, at this point.
A back-envelope guess says this alleged car-loan misselling (CLM) scandal will cost the UK finance industry somewhere between £5-30b in total between 2025-2035. Using a middle £15b estimate, and apportioning 20% marketshare to LLOY (Black Horse), this suggests Lloyds might be on the hook for a £3b payout in the next 1-10 years.
That £5-30b guess is half the £50-55b that PPI cost the UK banks in the 2010s.
A £3b payout would be roughly 50-75% of LLOY fullyear net profit in (say) 2024.
All speculation, and figures are for rough illustration only. But you get the idea. This CLM scandal could get very expensive very quickly.
Dyor, etc.
PPI = £50-55b
CLM = £5-30b
As posted yesterday, those UK "recession" stats for H2 2023 will almost certainly be wrong, and be revised up in a year or so. It's a fair bet that the UK is NOT in technical recession at all, and the "official" stats are wrong, knowingly way too pessimistic. The ONS (weirdly) delights in talking down the UK.
UK nominal GDP jumped +5% YoY, retail sales leapt +3%, unemployment is near a record low at 3-4%, wages are strong, and everyone who wants a job has one. They are not signs of recession. They are signs of economic health.
If the red Tories are replaced by red Labour, it's going to be more of the same -- only worse. Think USSR, circa 1975.
Banks are capitalist exploiters of the West, and comrades will want a slice. What's yours is theirs. Those calls for a punitive bank windfall tax are only going to get louder (not quieter). UK bank shares remain risky.
Finance oils the wheels of capitalism and wealth. Finance delivers a generous multiplier effect, that enables a lowly carpenter to buy a midsized house.
A no-finance or low-finance economy has a name -- it is called communism.
With all the negative misery on here, year after year, it's always a surprise that nobody is shorting this share! A 3 x leveraged short on LLOY would have netted +50% since Xmas alone and folks would be raking in the cash.
Labour's poll lead over the Tories has fallen a huge 7 points in 2 weeks, due to Labour's humiliating green u-turn and yet more horrific anti-Semitism.
If the Tories can deliver giant tax cuts in H1 2024, and restore the feelgood factor by summer, Rishi can win the UK election in H2 2024.
https://www.dailymail.co.uk/news/article-13081807/Chaos-Labour-poll-lead-falls-seven-points-anti-Semitic-crisis-Rochdale-meeting.html?ico=related-replace
It's been mentioned before -- the ONS is an utterly discredited institution, its figures are often wildly wrong, and they are often subject to wild future revisions. Keep in mind also that the ONS is just a small department with a small number of staff in a small office in London. It's not a great office of state with an AI supercomputer and millions of staff. Thus, it's vital to treat their stats with a large pinch of salt...
One should also note:
1. Don't be surprised if these stats get revised up bigly in a year or so...
2. Strip out the neverending NHS, train and other *strikes* -- which are deliberately designed by red unions to drag down the Tory economy -- and GDP is almost certainly in positive YoY real growth.
3. Look closer at today's press release, and you will see UK nominal GDP grew a huge +5% YoY in Q4 2023 (yes, it really did).
STP -- Think we all know the UK is sliding into hard-left communism, and there is nothing we can do to stop it. Whether it it is red Tories or red Labour, the result is going to be (roughly) the same. More taxes, more surveillance, more oppression. It's just a sliding scale of how bad it gets. And, without question, Labour is going to be worse than Tory.
UK bank shares are struggling (again) because the US is about to enact even tougher banking regulations in 2024, there is the ongoing Iran wobble, while a UK Labour govt may be poised to slam the financial sector with a vicious windfall tax in 2025. The overhang from America, Iran and UK is keeping a lid on LLOY for now.
LTI -- It's a commentary on the UK stockmarket and culture. Misery, doom and pessimism among UK investors, pension funds, govt, media, journalists and analysts are driving the FTSE down into global irrelevance. If I were the Lloyds CEO, I'd be delisting from London and relisting in NY for 2024.
Rich78 -- Yup, the FT got it wrong and mis-predicted the Brexit result. That must sting.
STP -- Can totally understand why UK folks go on a lifetime of benefits. You can get from the state a free house, free car, free food, free cash, the list now is almost endless. Some claim you can make the equivalent of ~£80k a year, if you know which forms to fill in.
You can see why ARM chose to list in the US, and not in the UK. American investors are way more positive, can always see the tech future more clearly than any other nation, and they love to talk companies up. That $123b ARM valuation today is a huge 4 times higher than one the UK FT newspaper published just a few months ago, in a misery-laden report at the time of the float. No wonder the UK stockmarket is all but dead, and the US is half the world equity market.