Monday, 5 March 2018

Recession Watch Part 3

Well, well, well. Things have been getting interesting since the last Recession Watch post. In the weeks since then, Carillion have gone bust, big high street retailers are dropping like flies (Maplin, Mothercare, Toys R Us, etc. ), casual dining restaurants are closing their doors in droves (Prezzo, Byron Burgers, Jamies Kitchen, etc.) In fact a report shows that a third of all casual diners are losing money. There is more carnage to come I think.

Carillion's plan to become the defacto government for building and doing stuff backfired on them when they turned out to be more incompetent than an actual bureaucratic government department. Hopefully the little companies that they took over MacAlpine, Tarmac etc. can be recovered and put to good work again. And the various services that should be looked after by govt. can be put back in the right place.

And now the 'Beast from the East' arrived and has decimated the business environment for a whopping 5 days. pffff... no effect whatsoever you'd say, but papers are reporting today as much as several billion pounds - maybe up to 0.2% of GDP. Once you add that to everything else going on, there will be no growth to minus levels in the first quarter of the year in the UK.

Over the weekend news of Trump declaring a trade war. Tit for tat tariffs are now virtually guaranteed and everything will get a little more expensive. Inflation will tick up again and the Fed and the BOE will have little choice than to up interest rates. While that might not have much effect in the US, here in the UK everyone has borrowed too much at tiny rates for too long.

Lastly, on Friday a leading indicator for a recession (quoting myself "so RecCon 4 will probably be the failure of an online stock broker")stockbrokers taking their clients money nefariously and running away with it. Beaufort Securities may have been little more than a boiler room operation but they were regulated by the FCA and they still managed to run off with everyone's money.

So the Recession Watch is going to move the RecCon meter straight past level 3 and on to level 4. One to go and we're in the mire looking for the paddle.

In the meantime I've gone half to cash after selling up in the second week of Jan and the rest is in world trackers. I'm no perma bear but if Mr Buffett can't find things to buy and is stocking up on Apples then that sounds a pretty sensible plan.

Be careful out there kids.

Monday, 23 October 2017

Recession Watch Pt 2

I'm moving the RecCon meter to level 2. Although I'm not completely sure we're not already at level 3. Let's be cautious though.

From the weekend's papers, we find that investment in the UK motor industry will halve this year.  Last week Sainsbury's announced job cuts of 2000 and IWG (formerly Regus), the purveyor of rented offices to the self-employed and small business sector announced a massive profit warning and shares dived 35%.

Today, profit warnings from more UK companies including Pendragon, the car retailer. 

With inflation at 3% and chugging north, Carney sitting on his misbegotten hands, and Brexit talks circling the drain there's no good news on the horizon. Where's the extra money going to be found for people to spend? Pay packets on the decline (not even remotely keeping pace with inflation) according to the latest stats from the ONS.

We are at the beginning of a maelstrom of disaster by the looks of things. Brexit caused or not, it increasingly looks more difficult to make as much money as last year. Which means less to spend in the real world.

Thursday, 12 October 2017

Recession Watch pt 1

As the bull market rumbles on into its 8th year, Investimouse has his ear to the ground looking out for signs of an impending recession in the UK.

Monarch Airlines Collapse

We just moved to RecCon 1

I see RecCon 5 being another run on the banks. But who has any money left in the banks? so RecCon 4 will probably be the failure of an online stock broker followed by the collapse of the property market to take us to RecCon5.

Some way off hopefully.

Wednesday, 30 August 2017

Finally someone else talks some sense about devaluation

It's not just me that can't see why the constant devaluing of the pound is a good thing. I wrote way, way back in 2012 about how poor I was getting due to the madness being caused by devaluation back then and it's only gotten worse due to Brexit and that fucking idiot Mark Carney (head of the Bank of England) dropping interest rates even further in 2016.

I really only care about the GBP to NZD rate which has been on a tear down ever since 2007. Take a look at this graph. It's halved in 10 years. That basically makes the UK and everyone in it half as wealthy as it once was.

Now a few people are starting to wake up to the fact that constantly devaluing the pound is only doing harm. Plus, if it was actually useful then its benefits would have been felt by now and the UK would be the most prosperous paradise in the universe.

Stephen King wrote in the FT over the weekend about it - no link to the original article as The Times has a paywall, but there's a discussion on it here along with the text from the article.

Friday, 30 December 2016

Is it the End of Times or the Start of the Greatest Boom Ever?

2016 rolls to a close with the FTSE100 closing on all time high of 7142. So have we hit peak times in the UK or is this the start of something truly great?

When I started investing (or at least started keeping proper records of my investing) in 2007, the FTSE was at 6607. So in the 9 years since, it has crept up just 8%. Hardly an indicator of a booming economy. Of course, we've had the Great Financial Crisis in that time and several other mind-blowing black swans like Brexit, Euro Crises, wars, and terrorism.

Every bit of finance reading I do tells me that it is foolish to try and time markets or even worse do your own stock picking, yet if you had bought a FTSE tracker you'd be just 8% better off over those 9 years. That is truly awful performance for your money. No wonder cash still holds its appeal even with its derisory interest rates.

This year the Team Dave Fund of Fun-ness finished up 24.7% - the best year for quite some time.

This result was all due to timing the market - going big with two chunks of money - once in January when markets were nervous about Fed tightening and immediately following Brexit. The rebounds after each drop have been huge and represented excellent opportunities. In January buying anything in the US market was the thing to do while in July buying anything in the UK was the correct option.

I got 'lucky' both times I guess. And so for this year, I can't help but feel we have hit the top and will probably bob around this level for a while. America seems massively over-valued and Trumptimism could be sadly mis-placed - how quickly can he genuinely make changes? And does anyone actually believe he knows what he's doing?

In the UK, there is no catalyst for a boom to come - everyone here is stretched massively by housing costs while business is equally poorly treated by appalling business rates and high rents. Meanwhile savers continue to be pillaged by Mark Carney's ridiculous behaviour at the Bank of England. How does he sleep at night while the pound is ravaged, companies and intellectual property are sold off to the world. Someone really does need to point out to him that currency / exchange rates are only useful to business when someone actually wants to buy your product / service. If you make something no-one wants, it doesn't matter how cheap it is in exchange terms.

This year's massive devaluation was the third one I've experienced here and every time, it provides only VERY short term boosts. Meanwhile it destroys savings, imports inflation, and reduces internal investment. Who knows how Brexit will turn out this year. Maybe that will be the catalyst for a boom? It's a fingers crossed time though and hugely reliant on people in the civil service and government actually caring and doing their best rather than feathering their nest. Maybe we'll see an actual real redistribution of income because of it but I doubt it.

My guesses for 2017:
Cocoa - it was destroyed in 2016 - bound to make a comeback eventually.
Gold - again decimated - got to be an option if inflation makes a re-appearance.
Any decent internet based world focussed company. eg. Boohoo, Superdry, Microsoft.
ITV to be taken over.
Samsung to fire a bunch of people and return from the ashes.

Monday, 15 February 2016

Management - is anybody worth 350x more than another person?

You have to listen to this podcast by NPR on why CEO pay exploded in the 90s and has continued ever upwards ever since.

Episode 682: When CEO Pay Exploded

Friday, 22 January 2016

They go down, they go up

Spotted in a telegraph comment on the fractious stock market this week. 

News from a week on the stock market. 
Helium was up, but feathers were down. Paper was stationary, but pencils lost a few points. Lifts rose but escalators continued their slow decline. Switches were off and mining equipment hit rock bottom. The raisin market has dried up. Pampers remained unchanged while Sun peaked at mid-day. Andrex tissues touched a new bottom.