Member Info for steph

All in the valley of Death
Rode the six hundred.
“Forward, the Light Brigade!
Charge for the guns!” he said.
Into the valley of Death
Rode the six hundred.

Those of us topping up right now may look foolish in a few weeks time when the guns on all sides smash our sector and our SP. May, DUP, Labour, Mogg, Trump. SNP, EU, Ireland, Gibraltar, French fishing, etc

Personally I think we will find a way though this self inflicted mess as a nation and the relief rally will carry us up very quickly to 4 quid. What is a self inflicted mess can have a self initiated solution.

All our chat spurred me on into the valley of death that is the politics we have at present.

Great posts. Strictly many thanks for your analysis on relative and historic values. If one assumes as I do that we will "bugger on" and the doomsday scenarios will not come to pass great relative value right now.

James off topic to TEF but I was being a bit flip in saying it was all about some abstract notion of sovereignty. Of course it is multilayered. The point I was trying to make is that in the interconnected world we now live sovereignty is alys gong to be limited compared to our past

https://www.thetimes.co.uk/article/make-the-most-of-the-brexit-divide-on-the-stock-market-273x3t3n5

https://www.theguardian.com/politics/2018/nov/24/eu-wont-miss-britain-after-brexit

I am hoping that company specific good news will balance the political mess that is holding all uk shares down.

I am also hoping that one way or anouther the Brexit uncertainty will lift within a month. I think that either May's "home office led" deal will pass parliament and be implemented (still uncertainty over the next few years but a lot less than now) or it will be put to a referendum with remain on the ballot (uk stocks will shoot up as remain will be assumed the front runner).

Interesting times but I am not Sores looking for shorting opportunities. I am a (micro) Buffett looking for steady growth and Brexit uncertainty is interfering with TEF's SP.

As the Guardian article notes the UK led by May has made a hash of our negotiations and exiting is worse than it needed to be. Should have been a white paper on Brexit options and a solid parliamentary vote on a preferred option before triggering article 50 (Corbyn whipped LAbor MP's for article 50 so May was not the only short sighted idiot). If no parliamentary majority for a singular Brexit option we needed a referendum to decide between competing Brexits (without remain on the ballot) before triggering article 50.

Unicorn thinking and May's weaknesses as visionary leader (plus Corbyn's very idiosyncratic left wing EU objections) combined to deprive us of an orderly brexit commanding broad public support.

I've always felt that consensus was Norway, in the single market but not in the customs union with a customs border down the Irish sea to avoid a hard land border. Free to sign independent trade deals and have independent customs schedules but otherwise in the single market.

I don't think there are many free trade deals out there the UK public want that are not already negotiated by the EU on our behalf but Brexit was never about practicalities. It was about an abstract notion of sovereignty and being able to sign our own deals was important -however trivial the differences might have been compared to EU negotiated ones. The backstop where we are in the customs union but not fully in the single market is the worst of all worlds. It's Turkey plus rather than Canada plus.

May has missed the point thinking it was all principally about immigration control which was the bee in her bonnet. As EU net immigration has naturally dropped and concerns on labour shortages, not the least in the NHS, have risen the tide has gone out on her principal red line. IN any case the UK never remotely hit May's targets on non EU immigration in her 6 years as home office Minister nor in her 2 years as PM so was always a bit of a red herring. Blaming the EU for her own failures.

The irony is that she has made such a mess of Brexit that remain is actually still a viable option even at

Whole sector TEF included has been under 1.0 p/PV during he crash and immediate aftermath but most companies in sector had large losses mainly due to land bank write downs. Not the situation today. All sector in robust health and much safer against even a pretty severe recession than there were in 2007.

I'm not in cash in my ISA for the following 3 reasons:

1) The market is assuming May will lose a vote on her Brexit option and that is priced in. What happens after that is unknown. We could get the downside risk of a chaotic brexit (not priced in) but more probably will get some more certainty than we have had (upside not priced in).

2) Even if we have a downside event (odds less than 20%) I am confident my ISA TEF shares will rebound so worth holding on the hope there will be an upside surprise. Otherwise I risk and 80% chance I will need to rebuy at a higher price.

3) I am lazy and a TEF fan so moving in and out of TEF to cash in my ISA is a lot of work and not confident I will get the timing right. Risk of overtrading.

Once all this political uncertainty clears that is where we will be. I think TEF and sector oversold against the risks. I just can't afford to take leveraged risk even if the odds of something really bad happening is quite low. Happy to have a big holding in my ISA and will be adding to that in April again.

Labour is the problem.

I wish Labour would just agree to amend the withdrawal bill to include a referendum to confirm May's deal is what the people want (with a remain option if they don't).

Labour is going to play politics until then and humiliate and destroy the Tories as much as they can before this 'Get out of jail free" card is ever played. They risk leaving it too late.

I'd think the best referendum option would be to have remain, May's deal and any additional options 50 MP's or more wish to sponsor on it. Then all the main Brexit options could be tested by public debate and vote. Canada plus, Norway or crashing out would all have the chance to be included and voted on. Whatever happened after that would shut down this debilitating debate of "which Brexit" for a couple of decades.

Conclusion

https://www.jus.uio.no/pluricourts/english/blog/freya-baetens/the-feasibility-of-falling-back%3A-the-uk-the-eu-and.html

"In sum, the terms and conditions of the WTO fall-back option and the extent to which the WTO could act as a safety net for the UK’s future economic relations depend, to a great extent, on successful negotiations with all other WTO members. This situation would be further complicated if the UK’s negotiations with the EU were to break down, since the EU’s cooperation is crucial."

https://www.ictsd.org/opinion/nothing-simple-about-uk-regaining-wto-status-post-brexit

https://www.reuters.com/article/uk-britain-eu-wto/britain-and-eu-formally-start-splitting-wto-membership-agreements-idUSKBN1KE2LJ

For us investors even in a tiny share such as TEF this is a crucial point in risk management.

It is not automatic that we will be an independent member again of the WTO if we come out of the EU representation even if we propose no change to the EU negotiated tariffs and quotas. There are details to agree and some countries may cause mischief.

Indeed since July 2018 we have submitted a 700 page plus draft agreement that has not been approved by any of the 164 member states and difficulties are expected -not least from the USA. Russia has started to make mischief as they may well be expected to do even if what they want is not related to trade. It will not be cut, paste and approve no matter what Davis may have said to us.

While I think it likely we will achieve WTO independent membership by the end of the transition period (we might get screwed by a few countries sniffing blood in the water and taking advantage of the fact we will be racing against the clock but we will settle because we simply must). However, I can't see how we can do that by March 30 2019. If we crash out of the EU with no EU transition we must complete these WTO negotiations and 164 country approval process by then.

So yes I fear crashing out as a TEF investor. It is not just the EU trade block we crash out of but maybe the whole world all at once. There is no guaranteed WTO membership to fall back on. I think TEF will survive that so long as we do not have at the same time a banking crisis.

Unfortunately getting back in to the WTO as an independent member requires agreeing with the EU apportionment of quotas for some agricultural goods. Apportionment is within an agreed "divorce" with the EU. No deal means no agreement on this. Of course the EU might expedite a separate no deal apportionment with us to help our WTO accession but then again they might not if we throw the draft divorce deal back in their faces. We have been pissing off, and occasionally calling Nazis, people we badly need even if we crash out. It would end in tears, mostly British tears.

If we crash out and have a banking crisis at the same time there will not be any safe UK stocks, TEF included. Maybe invest in pharmaceutical producers of anti-depressants.

IN that scenario we might not be able to borrow fresh money on the international markets so would need to close our exiting (and in that scenario rapidly expanding deficit due to automatic payments) immediately no matter how savage the cuts were needed to do so.

Printing money in that scenario can't be done to stimulate demand as the business confidence needed to do so without wild inflation will not be there. So on top of lost export jobs would be a whole leveraged contraction of the economy due to obligatory fiscal tightening. Pensions, wages and other payments would be unilaterally lowered as Greece needed to do and the spending withdrawn from the economy.

We would be looking at a 20% to 30% drop in GDP until things stabilized. No recession except the great one has done that. GDP did drop 50% in the war period but we were very unified as a nation on the necessity of that. If we dropped 25% due to self inflicted stupidity the national consensus that makes us a stable governable nation and thus attractive for footloose investors would be severely strained.

My money is on the assumption that we will not crash out. I give it 20% odds for investment purposes but in my gut I can't believe it would actually happen and in my gut I give it odds well below 5%.

There is no WTO safety net to fall into as we are not already members and it takes years to get in. There is no EU transition period if we crash out (as the idiot Davis seemed to believe).

Only Iran is an example in the world of a mid sized (ranked 27th by GDP) industrial nation without WTO membership and no significant trading agreements so it would be uncharted territory.

The 34 countries who are not members of the WTO (of which Iran is the largest) face significant obstacles to export as they are not guaranteed the same lower trade tariffs and no "non tariff barriers" all WTO members must grant one another.

http://www.tradeready.ca/2016/topics/researchdevelopment/8-important-trading-nations-arent-wto-members/

The UK could unilaterally have low tariffs on imports but can't compel it's export markets to do the same without WTO membership and an agreed WTO schedule of reciprocal tariffs. Even if there is not immediate chaos (your flotilla of volunteers) any footloose company that can move their base from the UK to a WTO nation will want to do so until things settle. No amount of British Dunkirk spirit can stop that. It is "just business" as the mafia might say.

The hit in jobs and business confidence would be immense. The whole domestic UK stock market would crash TEF included. It is so bad that the market is assuming it can't happen. Market is down due to uncertainty but not down as much as it would be if crashing out was considered a serious option with 20% odds.

I am at the moment crash proof as all my TEF shares are fully owned and I don't need to sell for 10 years. So as long as TEF survives us crashing out I will in the long run not lose my money.

I expect TEF will survive a crash out. We will print money as a nation and some of that will go into the domestic housing and infrastructure markets to stimulate demand to make up for lost export jobs. TEF is well positioned to survive and even increase volume (on tighter margins) in such a market. Some rivals might fall so TEF might emerge in relative terms larger and stronger.

I am assuming we will not have a banking crisis if we crash out. I am assuming the banking reforms made since 2009 (which have flat lined the SP's of all bank shares) are sufficient.

https://www.standard.co.uk/news/politics/government-refused-appeal-against-ruling-to-ask-european-court-if-brexit-can-be-reversed-a3994556.html

I wish I had a crystal ball and then could invest accordingly. Almost anything could happen now from crashing out to no Brexit at all and all stops between. The market has not yet panicked at the no brexit scenario but it is having a drag. Maybe the growing possibility of no Brexit is a counterweight.

A referendum and then a vote to stay would make markets rocket I think. We would become overnight as one of the most stable EU counters to invest.

besides the secrecy and chaos of our positon May's Brexit is a home office Brexit. It prioritizes immigration control above almost all other economic considerations ignoring the fact that if we put EU nationals in a queue UK citizens will get reciprocal treatment for a net gain of nothing much . We will all be queuing a lot more to travel.

We need 80% of the EU immigration due to skills shortages and our citizens and businesses benefit to be able to travel front of the queue throughout the EU for business, pleasure or retirement (as many do in Spain).

There were many ways of controlling immigration more than we did. EU immigration was not fully open ended and other EU countries have said work permit EU immigration only. Many others have structured their social welfare payments to exclude recent EU migrants while ours was wide open to abuse. We ourselves put in hire local restrictions during the Olympics but did not repeat this in the midlands where there are sensitivities when scarce new factory jobs come up.

We are all going to pay heavily for UK policy failures that have nothing to do with the EU.

I am hoping not so heavy that it spoils TEF's business plan.

The Germans don't particularly want us in the EU right now. They are happy if we stay but not at all worked up about it either way. The Germans are much more focused on preserving the remaining common market -which benefits Germany far more than existing trade with UK. That is why so few concessions on giving us single market access without single market obligations.

The Dutch and some accession countries seem to want us to stay (or have a soft Brexit) more than others as a free trading counter weight to the German/French axis. The French positively salivating at the prospect of us leaving hard and then poaching some lucrative city jobs. The Spanish seem neutral in spite of Gibraltar. The Italians self absorbed as always.

Overall the 27 EU counties are just tired of us on Brexit, consider us unreliable allies, self absorbed and out of touch and just want the divorce to end on reasonable terms. They are rapidly loosing interest in a post Brexit "strategic partnership" and would probably prefer the arms length relationship of a Canada free trade agreement (same as our hard Brexiteers want) and have said so.

Incredible senior government figures such as Boris and Hunt throwing around the 'Nazi" label so causally. A textbook lesson in how to lose friends and dis-interest people. We have burned many bridges and good will in the last 3 years and difficult to see how that undisciplined venting has served our self interest.

WTO is not some alternative trade bloc we automatically fall back into as a backstop. WTO accession is usually negotiated over a decade or two and any of the 164 members can veto our accession. SO we need to start being very very nice to the Russian and numerous tin pot dictators. If we want to jump the long queue to negotiate accession we need our EU "friends" rather badly or we are stuck behind Iran and over a dozen others. Even fast accession will take a few years.

SP moving in lockstep with troubles of government. UP a bit on open as things political appeared to stabilize a bit over the weekend.

Cov we are a mix of pro and anti Brexit voices here but we have in common trying to understand what influences our SP.

Maybe a hard exit would be good for us all in the long run but the market thinks not and thus our SP goes down every time a very hard exit becomes more likely and up every time a soft exit or no exit become more probable. The best forward indicator of that seems to be the exchange rate.

I expect company specific good news will help a bit on the half yearly results. Other builders have reported good results and gone down anyway but I think TEF is now a bit oversold even for the current market sentiment.

https://www.telegraph.co.uk/business/2018/11/16/sterling-holds-hedge-funds-bet-may-victory-second-referendum/

One good indicator of market views of the political woes that affect in time our sector is the exchange rate.

Seems the market has not crashed the pound as much as expected as there are two probably outcomes. May gets her deal through parliament or she is forced to hold a second referendum. Either good for TEF. The market must be expecting a second referendum would either cancel Brexit or give May's plan enough momentum to get it through parliament.

nice map. Surprised on the number within zone 1. Clear clustering effect to be near (although not necessarily in) zone 1 and very near good rail networks. Certainly maps TEF's patch well.

Our share price right now in the short term seems to go up and down in lockstep with the waxing or waxing of government troubles. Things stabilized a bit Friday with the last 5 true believers in Cabinet staying for now and the government not imploding. Not imploding is what passes for stability these days in the UK.

Odds of crashing out 15 to 20%. Mays existing deal passing Parliament and EU down to 40% and a new referendum which leads to Brexit being cancelled entirely now up to 30%. The odds of a different Brexit emerging (Norway or Canada) with the requisite delay in article 50 or the transition period 10%. In short anything possible.

I fancy myself a political (as well as a long term economic analyst) but even so don't feel comfortable investing on this set of politics. Too random and unpredictable. A micro event such as Corbyn or May getting too ill to continue would have a substantial impact. Too fine grain.

Comfortable in my ISA held TEF but that position is fixed for at least 5 years (I'm even assuming dividend reinvestment and probably topping it up by 20k yearly for now so a low share price not catastrophic in that position as still adding) so presumably will mature beyond current UK government difficulties. 80%+ chance this SP will be double it's value today in 5 years time and that prediction can include a mild recession along the way.

As you know I’m a remainder but prefer Gove to may. I’d rather have a competent exit than chaos. Norway for now would be fine for me and l’ve long predicted on this blog that was the most likely exit.

I doubt if there are more than 30 MP's who actually welcome a no deal (Moggites) but the risk is by accident we might get there. Still say the odds are 20% and I am invested cautiously as a result.

So irritating the mismanagement no matter what your leave remain preferences. Should have been a white paper before article 50 and a clear parliamentary vote for a specific brexit strategy. May trying to secretly control what was always an intensely political choice has pi__ed of everybody.

Just the wrong PM at the wrong moment and she is now losing me hard earned money. She was an awful home secretary unable to see a move or two ahead (windrush) and just a tragedy she was promoted way above her abilities. She is not strategic. Needs to be told what to do and then beavers away regardless. History will be harsh. Thatcher had her detractors to be sure but while we have "Thatcherite" polices we are not going to get a "Mayite" anything except in joking reference to general incompetence and mismanagement.

Took some losses on my spread. Just too much uncertainty for me.

Still all in on my ISA. I have not traded within my ISA for years. Maybe should have aka Terr but too late now.

This volatility will end and the sunny TEF uplands await.