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CS post 3

However, for investors that have bank or insurance holdings that do not have sufficient liquidity and/or are exposed to depreciated bonds. ‘Mid tier’ banks and non life insurers then the equity could be written to zero! So sell!

Imo. even if you think it’s ok just be first out and have the option to buy back if you ‘are in love’!

The new IFRS reporting means that devaluation of assets like property, plant, bonds etc show a negative mark-to-market on the balance sheet. So with rates rising and bond values reducing together with amortisation that means a loss on the balance sheet. Those losses are significant for pension funds. They are billions! Albeit until SVB nothing had really changed as you win on some bonds and loose on others and the investment normally averages out over the longer term.

The difference now is the IFRS loss includes financial instruments so banks and insurers are caught up. But also another example is DEC a gas company that has its production hedged. So they didn’t benefit from last years increase in gas prices which translated to an IFRS loss of over a billion from memory. But it had zero impact on their operations as it was within the business plan. Now the gas price is lower than their hedge they will show an asset profit. In reality from an investor pov nothing has changed!

Their profitability is still derived from income. They just protect their balance sheet with hedging. Some you win some you loose but the objective is to smooth income and profit.

This is similar to LGEN and PHNX’s recent results and shows the accounting flaws. As an investor you have to be able to contextualise this on a balance sheet as it can be misleading.

So those bonds that those companies where encouraged to buy post covid at low rates to kick start investment are now out of the money.

That has been exacerbated by the pulling back of QE. But then the markets had been on QE steroids for ages since the GFC!

Bonds are tied to the economic fortunes of the host and are impacted by tax receipts, borrowings and QE.

Truss and kamakawzi’s budget was an illustration how rapidly fiscal policy could upset market stability! No one ever thought liability driven investments (LDI) were anything other than risk mitigation! It showed how fragile these books were if the likes of LGEN, AV, LLOY and BARC could be significantly impacted and the BoE had to step in at the stroke of a pen! These have capital tier 1 ratio’s averaging 200%!

Yes it was a lovely trading opportunity but also a warning!

CS post 4

But despite all the economic scaremongering, 50 years of doomsday gold bugs and even war! The USD has still held up. Even though I don’t agree with its worth it is a reality. The USD has been king! The question is for how long?

Imo the biggest threat is the macro erosion from BRICS as they move to exclude the US and de facto EU/UK whilst developing their own currencies and markets.

But a devaluation of the USD by realised dilution instead of making other currencies stronger the wash will also devalue all esp those with debt to GDP ratios of over 100%! That includes GBP, Euro and many EM’s.

I understand that if you devalue all then it nets the same but that’s when benchmarking of tangibles like Metals and Commo’s come in and of course debt!

So instead of inflation going down it could actually rocket because real stuff is more expensive and you can’t frig your way around it by printing!

As a world we are gradually polarising ideologically and those on the periphery like India and Brazil will soon have to pick. I hope not though as once you have two sides confrontation is more likely. Economic woes, poverty, disenfranchisement, austerity and a grab of commodities can be unsavoury!

What we are seeing playing out in France atm really needs to be resolved. The secular western democracies with its debasement of moral values in search of ‘me culture’ supporting the autocratic narrative domestically!

Capitalism is in danger of becoming its own worse enemy! As Shakespeare penned ‘Beware The Ides of March!’

Usual caveats

Trek

Nom,

Thanks I didn’t think of signing up to that one., have added it now.

I use the weekly fix which focuses on the bond markets. Quite relevant atm and I like the ‘humour’!

https://www.bloomberg.com/account/newsletters?source=NLshare

Trek

China insights. Interesting vid on trade slow down and impact on China.

https://youtu.be/RTtK3kHyv7s

Trek

That’s the way to do it!

https://youtube.com/shorts/8QmOepa-TeM?feature=share

Trek

Hi Rob,

When shares like DEC are falling and as an investor you are still convinced of the story. It’s worth considering selling and buying back cheaper.

I held DEC from 120 and am now at 94p average with the same number of shares. I have been buying on the down days and selling on the up days. Sometimes only for £100 profit! I also exited completely once and bought all back cheaper.

Likewise at PAY I started at 550 and am now at 472 but there I have more shares atm but am confident there will be a lift soon and I will go back to equal weight.

It helps that I only pay 3.99 a trade so it’s the stamp and spread that you have to consider.

If 90p goes at VOD I will sell some stock with a view to buying at 88p. Then sell as soon as that trade is back in profit etc.

I try and work the same number of shares but I always keep a bit of cash as well to cover a position and put in if it has a v low intra day again to hopefully sell for small profit.

If worse comes to worse I sell completely and come back later which is what I have done here several times and been lucky making a few % each time.

At MNG I bought 177 and sold down over 200p and exited before the xd as I thought it would tank after!

You can see my comments on YU. I sold there the day before the results and bought back in after expecting a drop after a good run. I have now nearly doubled my money there and am buying again under 600 to sell some at 850.

Of course all this only works if a stock comes back up else you still loose on the bottom line! I fully appreciate it’s not for everyone as it takes time. It’s just another way to invest until hopefully there is a cushion and we can all just switch off and take the divi’s!

Good luck

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Trek

Have a skip through this! Amazing all the logistics required. Fuel, food, arms etc. must be a huge operation!

https://youtu.be/UaBik3nDBdA

Trek

‘ does anyone have any shares that are making money at the moment?’

Yu is one I have. Others like ECOR and DEC seem to have hopefully turned but YU is recovering after profit taking on their results. It’s v volatile though as only 17m shares. Buys under 600p should see +800p again at interims.

Usual caveats

Trek

As I suspected,employee dismay at performance objectives seems to be the root cause here!

Well if that is the case then it has no place in a court at least in the UK unless it’s due to unfair dismissal AFTER all internal avenues have been exhausted!

Imo irrespective of the rights of wrongs this should be thrown out. You simple cannot go to a judge without first following internal procedures unless it is such a savage act that the individual(s) terminate their own contracts which isn’t the case here.

Don’t get me wrong I have experienced a reckless HR cultures in the past of imposing performance ‘bell curves’ no matter what or moving the bottom out and the top on - ‘healthy churn’ ffs!

It doesn’t in my experience work. It can be divisive and really has no place in modern management practices which revolve around engagement and empowerment.

But wtfdik I am a dino compared to todays tik tocking me now standards!

I have even been informed as such by my son whilst trying to advise him on substantiating a critique with data points!

Time for an Ovaltine! Lol!

Usual caveats

Trek

Lgen went to 204 with LDI, I wonder if the market is considering a revisit. I wouldn’t rule anything out.

I picked up a load here, Phnx and mng on that drop so doing ok overall but it’s another tough call!

Usual caveats

Trek

I think it’s a quadruple witching Friday.

Sold my insurers. Small loss this time. Was too early trying for the bottom.

762 and 228 supports for Phnx and Lgen look like going!

Will come back later!

Usual caveats

Trek

Yep for sure QE following the GFC hasn’t helped but there wasn’t really an alternative.

Anyways I have sold here again. Lost on the trade but only a small amount.

I figure I bought too early. sP looking week and market was up. Dow looking like giving up yesterday’s gains.

Done well elsewhere so can take the hit with a definite view of buying back cheaper or paying more for some stability!

Usual caveats

Trek

I held AAZ back when it was pence. Imo it’s run is over. I would avoid due to the politics an Azerbaijan it’s worse than where CAML are!

Usual caveats

Trek

ULVR building factory in Kyiv….

https://www.unilever.com/news/press-and-media/press-releases/2023/unilever-announces20million-investmentin-new-ukraine-factory/

Looking to make it carbon neutral as well!

Usual caveats

Trek

Why is that the question? I hold some and trade some.

Bought back yesterday the ones I sold from 260 to 258.

This may still have further to fall yet so averaging back in. The IFRS reporting is exacerbating Bond depreciation.

As far as the balance sheet goes it now looks like a loss. That never really mattered before as some bonds you win on some you loose and LGEN derives it’s income and divi’s from revenues. But with the three US Bank bailouts and now CS the market is paying attention to asset depreciation and volatility. The fear is investors cash out and even big institutions like LGEN do not have sufficient liquidity to front such a run.

Think back to Blackrock during the property devaluation in January. A huge institution like that had to freeze investors out as they couldn’t finance the run on their property ETF’s! It then becomes self fulfilling as they sell assets to fund withdrawals so prices depreciated further.

It’s an absolute possibility that we could see the same in the bond market.

The ECB has foolishly gone ahead with 50bps rise, to save face ffs! And next week we find out what the Fed does. That’s the biggy.

At least the US are fighting inflation with huge infrastructure spending, making stuff, mining and have a meaningful energy infrastructure. The root of this inflation stemmed from the war and global tensions as we could no longer get stuff. Wood, oil, beans, wheat chemicals etc

By comparison to the US where the Biden seems to under the need the EU is deindustrialising and decarbonising at pace. And guess who is filling the void. China who are cornering the commodity space and manufacturing. E.g You cannot refine lithium to any notable scale outside of China! That’s all your EV batteries dependant on them!

Until there is some cohesive plan to be as autonomous as possible within the EU then our market will gradually be more dependent on others setting price. You can only prop currency up with rates so much.

That’s when bonds become of even less value as they are dependent on the economy as well as liquidity.

It’s of course far from a doomsday scenario but it illustrates that houses ain’t always safe.

But yes I am buying here and PHNX not MNG again at least for a while. Bagged excellent profits there! But averaging in over time and price to an affordable position and that’s all.

Usual caveats

Trek

Flipping heck 8% up already on my buy! This share is seems so predictable!

Usual caveats

Trek

It’s bounced on no volume. It dripped down on low volume. Been no TR1’s to justify or declarable shorts.

Buyers now getting much lower than BoD.

Results Tuesday could see 105p easily with a little good news on the acquisition in which case what a missed opportunity this is or there may be a howler in there or there they may be ordinary in which case sp has oversold!

Take your pick!

I am always concerned that the market knows something. If that’s the case surely a 45p drop from the highs has accounted for it!

Any ideas I am all ears!

Usual caveats

Trek

You beat me to it! I just noticed that Samson have closed their short.

https://www.shorttracker.co.uk/company/GB00B02QND93/

Well if that accounts for the drop then it should help a bounce bwtfdik!

Now at 472 but toooooo many shares! Lol!

Usual caveats

Trek

Just averaged back in at a tad under 94p. See another trading opportunity once CEO announced. Thinking 102/103 achievable then sell into the news, again!

I like to trade a basket of high yield stocks coz if you get the wrong side there is usually a divi or you can play one off agains the other to escape. It’s something that I have ended up discovering rather than by design. E.g had MNG from 179 and sold from 220 down to 206 and out and didn’t wait for the xd. Then put some of the money in here.

Fingers crossed!

Usual caveats

Trek

Bought YU and VOD at the bell. Both I have traded well.

Bought insurers just PHNX and LGEN on the drop. Didn’t touch MNG as no point I had my money there from the trade selling the day before the xd. MNG May run up on takeover rumours but I think that is less likely now.

Don’t have any banks.

Added ECOR on the drop at 114. It’s a commo royalty business. I sold it in high 150’s and been waiting to get back in. Now got over 6% quarterly yield there and a price well below Director recent buys. I will add more.

Bought back in to DUKE on the dip just 20k shares to restart a position there, I was amazed at how well it held up. Directors are at 35p.

Got my PAY average down to 472! That one is imo silly cheap now and due a run on TA so will have to sell some as top heavy.

DEC I sold the lot again and bought back cheaper again! Lost lots on that one unless it comes back up. Results are Tuesday. I absolutely have no idea what to expect. The market is seldom this wrong but then it could be that the price has now oversold the results. If anyone has an inkling I’m all ears!

Also got pot of cash now from sells. Just in case but bar 4 holdings everything else is high yield. It offers a floor. I think??

Made a few top ups in the old favs but don’t want to bore everyone! Lol!

Usual caveats

Trek