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SillyBilly

By SillyBilly
in The Jim Smith Room

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Zag zig

Zag zig

Posted
Posted
13 hours ago, SillyBilly said:

Another 3 US departed crude tankers this week turned back in the Mid-Atlantic after no buyer found in Europe. To dock in U.S waters again. Unprecedented really.

Zero-hedge have just ran an article claiming not a single container or tanker was in the Mid Atlantic last night. How true that is I don't know. They seem to barely believe it either. Baltic dry index completely collapsed at the moment. Its just not profitable to ship at the moment, must all be running at losses on every voyage.

I take shipping as a lagging indicator. As such we will only feel the reverberations of this in a few months time when it filters through to corporate earnings, profits and therefore equity prices - there is a dearth of global trade so I cannot see how earnings are not going to under-perform against this backdrop later in the year?

This explanation comes from a fellow trader, well he's more than that, as he moves in the circles of Schiff, Martenson and many others of similar ilk, but he's good and despite his more "extreme" views outside financial matters, having met the guy I always listen to what he says about markets with interest. So i'll quote you a response as they are his words not mine. 

Quote

It is nonsensical the way the BFI is being used - I have traded it, and understand it better than 99% who write about it , spoken at shipping conferences about trading freight. (After writing magazine articles and a book about shipping cycles, I had a global reputation about accurate forecasts for freight rates.)

Here's what you need to know: The Index is set by Supply and Demand, right?

Well, years ago when freights rates were healthy, too many ships were ordered - at one stage there were as many ships on order, as were afloat : Think about that: Transport Demand would have to DOUBLE to absorb all the ships! 

But it takes years for all those ships to be delivered by the shipyards, and they keep rolling out, even though rates are so low.  People who talk about the BDI say they are saying something about Transport Demand, and that the low rates mean that demand is lower than it was years ago. It does not - Right now, the low BDI it is ALL ABOUT THE EXCESS SUPPLY OF SHIPS not transport Demand - check the figures, they will back me up.

This is a Supply versus Demand thing.  And the problem is on the Supply side.

The way this worked was: a few years ago when freight rates were high, shipowners all around the world, went out and ordered massive amounts of ships. Cheap deals from chinese shipyards inspired even more orders.  For some sizes of ships, the supply was contracted to nearly double,

It takes 3-6 years for those ships to be delivered, and now they are being delivered into a weaker market.  This is not the first time this happened.  It happened a few years ago with tankers, and the impact of the supply glut lasted for more than 10 years - ships are long-lifed assets.

The idiots who are taking this as a warning of a coming economic downturn may be right, but if they are, it will have nothing to do with a record low BDI - this is all about a record supply glut, not about a collapse in demand.

I've kind of jumbled a couple of messages into one, only to add detail to his last point on the BDI. If you check the charts his points are well made and correlate well. The jist is that whilst you can infer a downturn may be coming from economic data, it's not necessarily because of the number of ships not sailing.

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SillyBilly

SillyBilly

Posted
Posted
8 hours ago, Ramarena said:

USDGBP has fallen 5.3% in the last 3 months, 80% of the fall (4.2%) has been in the last 12 days

Just read this in a blog. If true it's very worrying. 

Tis true, I'm in that trade and have been increasing my stake. Maintain that BoE was not interested in hikes until the currency forces Carney's hand. Still think the trend is down regardless.

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SillyBilly

SillyBilly

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4 hours ago, Shang said:

Guardian just posted this article:

http://www.theguardian.com/business/2016/jan/12/sell-everything-ahead-of-stock-market-crash-say-rbs-economists

Time to buy physical gold?

Should be buying a bit every month (dollar-cost-averaging) IMO until this goes pop.

 

7 hours ago, Zag zig said:

This explanation comes from a fellow trader, well he's more than that, as he moves in the circles of Schiff, Martenson and many others of similar ilk, but he's good and despite his more "extreme" views outside financial matters, having met the guy I always listen to what he says about markets with interest. So i'll quote you a response as they are his words not mine. 

I've kind of jumbled a couple of messages into one, only to add detail to his last point on the BDI. If you check the charts his points are well made and correlate well. The jist is that whilst you can infer a downturn may be coming from economic data, it's not necessarily because of the number of ships not sailing.

Thanks for that. I have read similar elsewhere too but not as well put. Guess it justifies why we are at crisis lows despite not being in a crisis. Going off export data is perhaps more reliable in that case and that is poor at the moment.

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Rev

Rev

Posted
Posted

Time to batten down the hatches for me personally, during the last crisis the oil price remained high, indeed grew, working in the industry I never saw less than a 10% pay rise year on year, until 2015 saw no rise at all!

Been incredibly lucky to maintain a 2 earner household throughout that time, seems like a good time to bunker down and keep expenses to a minimum!

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Zag zig

Zag zig

Posted
Posted
8 hours ago, reveldevil said:

Time to batten down the hatches for me personally, during the last crisis the oil price remained high, indeed grew, working in the industry I never saw less than a 10% pay rise year on year, until 2015 saw no rise at all!

Been incredibly lucky to maintain a 2 earner household throughout that time, seems like a good time to bunker down and keep expenses to a minimum!

Good luck with that Reveldevil feel a bit like yourself.

If you can be debt free too, or as near as possible to it and increasingly develop ways to become self sufficient, be it energy, food or extra income that may help too. It's something I'm constantly striving to improve myself.

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GeneralRam

GeneralRam

Posted
Posted

I always told myself I'd sit through any storm but all the noises from everyone at the moment is making me feel like to take £300 or so hit (Been investing £400 a month for the past 18 months in a FTSE tracker) and wait till it all goes kaboom.

Then possibly buy them stocks again when it starts to rise.

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SillyBilly

SillyBilly

Posted
Posted
1 hour ago, GeneralRam said:

I always told myself I'd sit through any storm but all the noises from everyone at the moment is making me feel like to take £300 or so hit (Been investing £400 a month for the past 18 months in a FTSE tracker) and wait till it all goes kaboom.

Then possibly buy them stocks again when it starts to rise.

Entirely up to you, it might surprise you to know that I am heavily invested in the FTSE too FYI but I am not in the least bit concerned (in fact I want a crash!)...like you I have generally been buying every month of every year, that includes crashes, rallies, troughs, peaks. I am interested in where the FTSE is at in 10 years, not in 2016 or 2017 so why do I care? Sometimes you need to employ this attitude IMO otherwise you become the classic buy high, sell low, over and over again. I buy less when its high and buy more when its low (I just use basic valuation metrics so that way I make unemotional investments). It pays to be diversified though, why don't you just shift the new £400 each month somewhere else so you are hedged.

Personally when I talked previously of selling the FTSE (I sold at 6700 after the happy-clapping post Greek bailout) and more recently buying at 5500 or lower that for me is the small % of my portfolio I trade with. The mechanical investing still happens each month like clockwork despite what I think I know (believe me it takes discipline to follow a rules-based system!). I don't back myself to beat the market and pick and time things, you lose out unless you are really clued up.

FWIW the FTSE will invariably take a hit this year in my view, you just have to decide whether that concerns you in the long run. If you need the capital in the next year or 2 then I would say sell!

 

 

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GeneralRam

GeneralRam

Posted
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12 minutes ago, SillyBilly said:

Entirely up to you, it might surprise you to know that I am heavily invested in the FTSE too FYI but I am not in the least bit concerned (in fact I want a crash!)...like you I have generally been buying every month of every year (for longer though), that includes the crashes, the rallies, the troughs, the peaks. I am interested in where the FTSE is at in 10 years, not in 2016 or 2017 so why do I care? Sometimes you need to employ this attitude IMO otherwise you become the classic buy high, sell low, over and over again. I buy less when its high and buy more when its low (I just use basic valuation metrics so that way I make unemotional investments). It pays to be diversified though, why don't you just shift the new £400 each month somewhere else so you are hedged.

Personally when I talked previously of selling the FTSE (I sold at 6700 after the happy-clapping post Greek bailout) and more recently buying at 5500 or lower that for me is the small % of my portfolio I trade with. The mechanical investing still happens each month like clockwork despite what I think I know. I don't back myself to beat the market and pick and time things, you lose out unless you are really clued up.

FWIW the FTSE will invariably take a hit this year in my view, you just have to decide whether that concerns you in the long run. If you need the capital in the next year or 2 then I would say sell!

 

 

Well my circumstances have changed at work - They having me relocate to Northampton and that'll be my deposit money. I don't need the capital as such (If I keep it in I'll be renting).

I have a company car now too so I'll be selling mine (That's an extra £8-9k in the house kitty). So I'm tempted to take the hit, get the capital all together and get the guaranteed 3% Santander current account interest as I wait for the right moment of buying a place.

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SillyBilly

SillyBilly

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1 minute ago, GeneralRam said:

Well my circumstances have changed at work - They having me relocate to Northampton and that'll be my deposit money. I don't need the capital as such (If I keep it in I'll be renting).

I have a company car now too so I'll be selling mine (That's an extra £8-9k in the house kitty). So I'm tempted to take the hit, get the capital all together and get the guaranteed the 3% Santander current account interest as I wait for the right moment of buying a place.

Sounds like a reasonable decision given your circumstances. Good luck with the move.

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Zag zig

Zag zig

Posted
Posted

Back on gold. Good little article by one of my favourite commentators and decent trader Frizzers.

http://moneyweek.com/gold-time-is-coming-again/ usually you get free view for a week or so, then it becomes subscription to read back articles.

Personally I don't see any rockets soon either, just a useful hedge. But Dominic always puts forward a good theory and a top bloke; plus unlike some being a trader he calls it both ways.

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