The Finance Thread

[SillyBilly]

A quick summary of highlights of last week or so:

I mentioned before that I like to track what the billionaires are doing. Carl Icahn came out this week and repeated the central theme running through this thread. Worth a watch:

On Thursday (Armstrong's peak government date) Congress revealed that America will default by November 5th without a raising of the debt ceiling.

American September jobs data disappointed on Friday with the previous 2 months revised downwards as well (slow march to recession?). Interestingly the DOW shed points to begin with and then strongly rebounded. So the markets preparing for no rate rike, maybe more QE? One last leg up to test previous highs?

Personally, my investment strategy now is to wait for the bottom in the commodities sector and buy the hard assets on the cheap, not gamble on the indices or financial stocks depending on whether more funny money is coming online and timing the exit to the perfection. I think we could be a year or more away from the commodities bottom. I intend to be snapping up the likes of Rio Tinto at not far off 2008 prices in 2016 for 3 or 4 times money return while the majority try and squeeze the last 20% out of this dead market.

[Rev]

I have a similar investment strategy, however I'm waiting for Sainsbury's to run their buy 6 get 20% off offer, then I'm piling into the Vino Tinto while prices are low!

[Ramarena]

Interesting article in the Guardian about how a crash could pan out from the perspective of the Chancellor. Obviously open to interpretation and has a political agenda, but interesting none the less. 

http://www.theguardian.com/commentisfree/2015/oct/05/october-2017-crash-george-osborne-uk-global-economy

[SillyBilly]

Interesting article in the Guardian about how a crash could pan out from the perspective of the Chancellor. Obviously open to interpretation and has a political agenda, but interesting none the less. 

http://www.theguardian.com/commentisfree/2015/oct/05/october-2017-crash-george-osborne-uk-global-economy

Good read. I am intrigued as to how Osborne will handle it as its coming within this parliament. I notice service sector PMI dropped to 53 something yesterday or the day before, which will likely mean lower GDP figure for Q3. Weakening jobs data also suggests the economy's pace of growth is slowing. Other than the tick up in oil price I haven't seen any positive data over last couple of weeks, markets surging again. Supposedly Glencore is now romping upwards again, can't see it lasting, can only see Copper turning further down as the global economy slows more. China can't go on the same infastructure binge again so who in 2016/2017 is going to take up that massive slack - noone.

[SillyBilly]

http://www.reuters.com/article/2015/09/30/usa-fed-reverserepos-idUSL1N12021B20150930

Gone unnoticed but something blew up mid Sept that required a massive short term injection of treasury collateral into the repo market - derivatives starting to go tits up? Can't see on the graph but it spikes to over 600,000 on scale in Sept. 2008/2009 on that graph looks small time doesn't it?

Even the IMF are finally opening their eyes:

http://news.sky.com/story/1564804/world-is-on-brink-of-new-recession-imf-warns

 

[Chris Mills]

Has anyone had a look at P2P lending? I'm getting close to maxing out my ISA for the first time ever thanks to a hefty wage increase and am looking to start investing a bit of money.

What are your guys' experience/knowledge on P2P loans when compared to say the stock market? Would you recommend me putting my money up or maybe picking up a few books and put it in shares instead?

I should add, I'm looking for a relatively passive inentment strategy with the majority of my money.

[SillyBilly]

Has anyone had a look at P2P lending? I'm getting close to maxing out my ISA for the first time ever thanks to a hefty wage increase and am looking to start investing a bit of money.

What are your guys' experience/knowledge on P2P loans when compared to say the stock market? Would you recommend me putting my money up or maybe picking up a few books and put it in shares instead?

I should add, I'm looking for a relatively passive inentment strategy with the majority of my money.

Not got any knowledge in P2P to be honest. I am mostly in cash at the moment so nothing interesting to advise on, just waiting for the right moment. Commodities are at 12-15 year lows, the small players are going under, even some of the bigger boys like Glencore could go under, prices are going to be hammered further over the next 12-18 months in my opinion. You wait for a decade for these sorts of buys coming up! My largest holdings in 2009 were in UK housebuilders and construction, about 6 months after the crash I was better off despite buying some of the worst hit stocks (made sure balance sheets intact), I made an absolute killing in Taylor Wimpey when I sold last year, I will be doing the same this time in the commodities crash with the likes of Rio Tinto. No qualfied advice but I'm keeping the power dry and investing in industrial metals in 12-18 months. Pick the big boys with a nice divi and won't worry myself. Hold for 5 years+. 

[Ramarena]

Has anyone had a look at P2P lending? I'm getting close to maxing out my ISA for the first time ever thanks to a hefty wage increase and am looking to start investing a bit of money.

What are your guys' experience/knowledge on P2P loans when compared to say the stock market? Would you recommend me putting my money up or maybe picking up a few books and put it in shares instead?

I should add, I'm looking for a relatively passive inentment strategy with the majority of my money.

Wilst I don't now that much about it, P2P does seem like a more "ethical" option. It would allow you to take an interest in the enterprise you are lending to and give a helping hand. The rise of P2P is interesting and at least in part seems to be because the big banks don't like lending to SME's. 

I'm not sure but I imagine there is not much security for the lender if things go belly up for the enterprise. And given how increasingly rocky the economy is looking, it could be a risk. 

As SB mentioned an increasing number of people seem to be "sitting tight" at the moment and watching how things pan out. 

[Ramarena]

Good read. I am intrigued as to how Osborne will handle it as its coming within this parliament. I notice service sector PMI dropped to 53 something yesterday or the day before, which will likely mean lower GDP figure for Q3. Weakening jobs data also suggests the economy's pace of growth is slowing. Other than the tick up in oil price I haven't seen any positive data over last couple of weeks, markets surging again. Supposedly Glencore is now romping upwards again, can't see it lasting, can only see Copper turning further down as the global economy slows more. China can't go on the same infastructure binge again so who in 2016/2017 is going to take up that massive slack - noone.

Yup, the only positive data is coming from the construction sector, which is heavily subsidised so hard to judge. I think things are going to deteriorate from here on in. I had thought we would see trouble in late 2017-2018, but it looks like it could be sooner. 

The knock on effect from Redcar, the job losses are starting at RR and JCB amongst others locally. There may be some help from the Xmas seasonal staffing, but the new year brings it's own problems with the cuts to tax credits for the working poor, uncertainty over the E.U referendum, increase in minimum wage, etc. 

[Stive Pesley]

I had a look at P2P lending - it still seems relatively risky and an immature model. I think it will become more popular in the next few years, but for now I suspect that only the most cavalier investors are getting involved (ie those who can afford any losses they incur)

It also looked like there were tax implications (ie not tax free like the ISAs) - which is fine if you file your own taxes but a PIA if you are on PAYE with an employer

[SillyBilly]

Yup, the only positive data is coming from the construction sector, which is heavily subsidised so hard to judge. I think things are going to deteriorate from here on in. I had thought we would see trouble in late 2017-2018, but it looks like it could be sooner. 

The knock on effect from Redcar, the job losses are starting at RR and JCB amongst others locally. There may be some help from the Xmas seasonal staffing, but the new year brings it's own problems with the cuts to tax credits for the working poor, uncertainty over the E.U referendum, increase in minimum wage, etc. 

I did hear JCB were shedding some jobs. I know that a lot of people in the States (and myself since I learned of it) use CAT's profit forecasts for a barometer of the wider global economic picture (similar to copper price). Not many other companies trade in so many countries and have so much historic data to look back through. They recently announced 10k jobs going and closing/mothballing 20 sites. To me that is as good a leading indicator for further weakness in China than any other piece of data, these guys know their markets better than any money manager.

Veering into politics slightly, noted Hunt's comments about people need to learn to work harder to compete with the likes of China this week. Zero sum game Hunt... lower wages/increasing working hours to increase global market share? This is the problem with globalism which politicians (particularly the likes of Corbyn who claims to be a globalist) just can't grasp. Ultimately to compete you need to downgrade the population's standard of living against another, that is not an economic strategy, its a race to the bottom. I don't know the solution but I know our current lot don't even talk about the issues. If they did they wouldn't suggest that British workers need to compete with workers who earn less than $5k/year on average. There is an endless supply of cheaper labour once China is done too, who is talking about this? All I can see is the championing of more free trade deals opening up western markets to lower cost ones, always sold to the public as worth £X billion to the economy.

I also noted May's comments this week on immigration, thank god somebody actually put out the real economic benefit of importing 330,000 non-skilled migrants a year - zero (generous I think). Yes, selling to the public that nominal GDP has gone up by 0,1%/quarter as a result of that immigration (more goods and services being bought and exchanged) may buy some of them off but it is painting an inaccurate picture of what it actually does to the economy. If the population increased by almost 0.5% over the year then on GDP/capita basis the people are actually becoming poorer as the nation is becoming "richer" - this follows Hunt's comments, its a zero sum game. You don't become more prosperous by importing millions of low skilled people, you start a slow process of impoverishing the nation while picking up scraps of global market share. When I'm sat on the M4 every morning bumper-to-bumper I don't exactly cheer another 300,000 being added to the mix when there isn't any benefit. I don't even have a dentist anymore as I couldn't find an NHS one that wasn't overwhelmed!

[GboroRam]

I did hear JCB were shedding some jobs. I know that a lot of people in the States (and myself since I learned of it) use CAT's profit forecasts for a barometer of the wider global economic picture (similar to copper price). Not many other companies trade in so many countries and have so much historic data to look back through. They recently announced 10k jobs going and closing/mothballing 20 sites. To me that is as good a leading indicator for further weakness in China than any other piece of data, these guys know their markets better than any money manager.

Veering into politics slightly, noted Hunt's comments about people need to learn to work harder to compete with the likes of China this week. Zero sum game Hunt... lower wages/increasing working hours to increase global market share? This is the problem with globalism which politicians (particularly the likes of Corbyn who claims to be a globalist) just can't grasp. Ultimately to compete you need to downgrade the population's standard of living against another, that is not an economic strategy, its a race to the bottom. I don't know the solution but I know our current lot don't even talk about the issues. If they did they wouldn't suggest that British workers need to compete with workers who earn less than $5k/year on average. There is an endless supply of cheaper labour once China is done too, who is talking about this? All I can see is the championing of more free trade deals opening up western markets to lower cost ones, always sold to the public as worth £X billion to the economy.

I also noted May's comments this week on immigration, thank god somebody actually put out the real economic benefit of importing 330,000 non-skilled migrants a year - zero (generous I think). Yes, selling to the public that nominal GDP has gone up by 0,1%/quarter as a result of that immigration (more goods and services being bought and exchanged) may buy some of them off but it is painting an inaccurate picture of what it actually does to the economy. If the population increased by almost 0.5% over the year then on GDP/capita basis the people are actually becoming poorer as the nation is becoming "richer" - this follows Hunt's comments, its a zero sum game. You don't become more prosperous by importing millions of low skilled people, you start a slow process of impoverishing the nation while picking up scraps of global market share. When I'm sat on the M4 every morning bumper-to-bumper I don't exactly cheer another 300,000 being added to the mix when there isn't any benefit. I don't even have a dentist anymore as I couldn't find an NHS one that wasn't overwhelmed!

Bthe isn't that just a numbers game? Effectively a baby boom 18 years ago would have the same net effect. The economy to my mind is fairly self sustaining - more people means more commodities and costs being paid by the working people, more services required and more goods made and sold. Wouldn't we be in the same boat if there had been a population explosion, except the names and skill colours would predominantly be more British? Doctors and teachers would have the same demand issues, housing would be stretched the same, presumably there would be similar numbers on benefits - it's just the 'kippers wouldn't have their easy targets?

[SillyBilly]

Bthe isn't that just a numbers game? Effectively a baby boom 18 years ago would have the same net effect. The economy to my mind is fairly self sustaining - more people means more commodities and costs being paid by the working people, more services required and more goods made and sold. Wouldn't we be in the same boat if there had been a population explosion, except the names and skill colours would predominantly be more British? Doctors and teachers would have the same demand issues, housing would be stretched the same, presumably there would be similar numbers on benefits - it's just the 'kippers wouldn't have their easy targets?

You are comparing birth rate to instant arrival of workers as if they have the same net effect on the economy? I mean, are you joking?

I don't really know where to start but needless to say housing is easier to manage when you have 18 years notice of future demand and not a day...

An immigration policy should be a function of birth rate to manage the economy carefully, importing when the rate is low (Japan didn't do this for example hence deflation) to maintain demographics or to plug acute and chronic shortages. If you want to debate some silly idea that just throwing open floodgates, regardless of numbers or skills is sensible or helpful to the economy then I will decline.

In answer to your first question. It is purely a numbers game, glad we're both agreed. About a quarter of million too many to be exact.

 

[LesterRam]

I did hear JCB were shedding some jobs. I know that a lot of people in the States (and myself since I learned of it) use CAT's profit forecasts for a barometer of the wider global economic picture (similar to copper price). Not many other companies trade in so many countries and have so much historic data to look back through. They recently announced 10k jobs going and closing/mothballing 20 sites. To me that is as good a leading indicator for further weakness in China than any other piece of data, these guys know their markets better than any money manager.

Veering into politics slightly, noted Hunt's comments about people need to learn to work harder to compete with the likes of China this week. Zero sum game Hunt... lower wages/increasing working hours to increase global market share? This is the problem with globalism which politicians (particularly the likes of Corbyn who claims to be a globalist) just can't grasp. Ultimately to compete you need to downgrade the population's standard of living against another, that is not an economic strategy, its a race to the bottom. I don't know the solution but I know our current lot don't even talk about the issues. If they did they wouldn't suggest that British workers need to compete with workers who earn less than $5k/year on average. There is an endless supply of cheaper labour once China is done too, who is talking about this? All I can see is the championing of more free trade deals opening up western markets to lower cost ones, always sold to the public as worth £X billion to the economy.

I also noted May's comments this week on immigration, thank god somebody actually put out the real economic benefit of importing 330,000 non-skilled migrants a year - zero (generous I think). Yes, selling to the public that nominal GDP has gone up by 0,1%/quarter as a result of that immigration (more goods and services being bought and exchanged) may buy some of them off but it is painting an inaccurate picture of what it actually does to the economy. If the population increased by almost 0.5% over the year then on GDP/capita basis the people are actually becoming poorer as the nation is becoming "richer" - this follows Hunt's comments, its a zero sum game. You don't become more prosperous by importing millions of low skilled people, you start a slow process of impoverishing the nation while picking up scraps of global market share. When I'm sat on the M4 every morning bumper-to-bumper I don't exactly cheer another 300,000 being added to the mix when there isn't any benefit. I don't even have a dentist anymore as I couldn't find an NHS one that wasn't overwhelmed!

well written.

[SillyBilly]

I should add, that a decent education system/apprenticeships/access to uni in the "18 year" period is a function of a well managed economy based on market or likely market conditions, directing the future workers to the required outputs. Not instant worker arrival, take it as you get it. I think the difference is stark, obviously to some not, no difference apparently!

[Ramarena]

As suspected Deutsche Bank announced a big loss today, not surprising. What did surprises me is that I read that DB was holding $75 TRILLION!!! in derivatives. Holy cow, that's more than Germany's entire economy, bit I wasn't sure so did a little digging and found this. 

http://www.zerohedge.com/news/2015-06-12/deutsche-bank-next-lehman

If this is true the next financial crisis could well start in Germany, DB are cutting 25,000 jobs, the VW crisis, recent economic data has been very poor too. 

Could the economic poster-child actually be the epicentre?

[Ramarena]

I did hear JCB were shedding some jobs. I know that a lot of people in the States (and myself since I learned of it) use CAT's profit forecasts for a barometer of the wider global economic picture (similar to copper price). Not many other companies trade in so many countries and have so much historic data to look back through. They recently announced 10k jobs going and closing/mothballing 20 sites. To me that is as good a leading indicator for further weakness in China than any other piece of data, these guys know their markets better than any money manager.

Veering into politics slightly, noted Hunt's comments about people need to learn to work harder to compete with the likes of China this week. Zero sum game Hunt... lower wages/increasing working hours to increase global market share? This is the problem with globalism which politicians (particularly the likes of Corbyn who claims to be a globalist) just can't grasp. Ultimately to compete you need to downgrade the population's standard of living against another, that is not an economic strategy, its a race to the bottom. I don't know the solution but I know our current lot don't even talk about the issues. If they did they wouldn't suggest that British workers need to compete with workers who earn less than $5k/year on average. There is an endless supply of cheaper labour once China is done too, who is talking about this? All I can see is the championing of more free trade deals opening up western markets to lower cost ones, always sold to the public as worth £X billion to the economy.

I also noted May's comments this week on immigration, thank god somebody actually put out the real economic benefit of importing 330,000 non-skilled migrants a year - zero (generous I think). Yes, selling to the public that nominal GDP has gone up by 0,1%/quarter as a result of that immigration (more goods and services being bought and exchanged) may buy some of them off but it is painting an inaccurate picture of what it actually does to the economy. If the population increased by almost 0.5% over the year then on GDP/capita basis the people are actually becoming poorer as the nation is becoming "richer" - this follows Hunt's comments, its a zero sum game. You don't become more prosperous by importing millions of low skilled people, you start a slow process of impoverishing the nation while picking up scraps of global market share. When I'm sat on the M4 every morning bumper-to-bumper I don't exactly cheer another 300,000 being added to the mix when there isn't any benefit. I don't even have a dentist anymore as I couldn't find an NHS one that wasn't overwhelmed!

On the jobs front, I see Aston Martin are going to shed "a significant number" of jobs, along with Mark group shedding 1,000 and could go under full stop, NNL are shedding 10% of their staff in the U.K around 100, Lockheed Martin got rid of 30, that's just this week and yes there are some small numbers in there. But these are skilled jobs that may never be replaced. 

Sad times for many people.

[Ramarena]

On the jobs front, I see Aston Martin are going to shed "a significant number" of jobs, along with Mark group shedding 1,000 and could go under full stop, NNL are shedding 10% of their staff in the U.K around 100, Lockheed Martin got rid of 30, that's just this week and yes there are some small numbers in there. But these are skilled jobs that may never be replaced. 

Sad times for many people.

Add in Climate Energy who have just gone bust, today, 120 odd jobs on the line.

[GboroRam]

You are comparing birth rate to instant arrival of workers as if they have the same net effect on the economy? I mean, are you joking?

I don't really know where to start but needless to say housing is easier to manage when you have 18 years notice of future demand and not a day...

An immigration policy should be a function of birth rate to manage the economy carefully, importing when the rate is low (Japan didn't do this for example hence deflation) to maintain demographics or to plug acute and chronic shortages. If you want to debate some silly idea that just throwing open floodgates, regardless of numbers or skills is sensible or helpful to the economy then I will decline.

In answer to your first question. It is purely a numbers game, glad we're both agreed. About a quarter of million too many to be exact.

 

has any plan ever been in place to manage the economy to the population?  Planning ahead would be great and yes, 18 years notice makes planning simple. But I'd house building planning dictated by the needs of the moment or the expected need of the population? 

I think you hvery a lot more faith in politicians to act in anything but their own interests than I do.

But anyway I was just asking if the net effect would be any different. Other than having a chance to plan I don't see much.

[SillyBilly]

has any plan ever been in place to manage the economy to the population?  Planning ahead would be great and yes, 18 years notice makes planning simple. But I'd house building planning dictated by the needs of the moment or the expected need of the population? 

I think you hvery a lot more faith in politicians to act in anything but their own interests than I do.

But anyway I was just asking if the net effect would be any different. Other than having a chance to plan I don't see much.

Okay well we disagree then. Its not just planning, you can't compare an 18 year old entering the work force to say a 40 year old who comes either skilled or non-skilled. One is sustaining a balance (in theory) between retirement at one end and new entry at the other. Immigration should be used to correct this "balance" if average age increases or to import shortage jobs to sustain or improve a sector. Anything else is just numbers.

I have zero faith in politicians, I think its clear from this thread that I think they can't manage immigration and can't manage the economy either.