Black Monday

[Daytr]

What I am looking at is with Australian interest rates being considerably lower than NZ will the ASX outperform the NZX? Although I cut to cash in NZ I left my Aussie funds on aggressive. Let's see in 12 months.

[Bjauck]

Yeah it's a total con job as a lot of things in finance are.

If comparing to overseas indexes like the S&P500 you need to use the NZ capital index.

The one that recovered from 1987 in 2018...

The NZ high dividend payment rate, as opposed to withholding profits to reinvest, boosts the publicised NZX50G so NZ share investing does not appear to lag overseas markets.

It is why NZ incredibly applies an unrealised capital gains tax on overseas shares via the FIF regime. A punishment for daring to withhold dividends in order to invest in applying capital to increase productivity. A Very unKiwi thing to do.

[SailorRob]

The NZ high dividend payment rate, as opposed to withholding profits to reinvest, boosts the publicised NZX50G so NZ share investing does not appear to lag overseas markets.

It is why NZ incredibly applies an unrealised capital gains tax on overseas shares via the FIF regime. A punishment for daring to withhold dividends in order to invest in applying capital to increase productivity. A Very unKiwi thing to do.


Don't go mentioning capital gains taxes, old balanced will throw a fit!

Yep, but ultimately if a NZ company pays a 5% dividend then the tax you pay will be identical to if you had the same amount invested in FIF regime companies.

With FIF regime if you have a company paying a 10% dividend then you could argue that 5% of that is tax free.

[Bjauck]

Don't go mentioning capital gains taxes, old balanced will throw a fit!

Yep, but ultimately if a NZ company pays a 5% dividend then the tax you pay will be identical to if you had the same amount invested in FIF regime companies.

With FIF regime if you have a company paying a 10% dividend then you could argue that 5% of that is tax free. Perhaps the deemed rate of return for tax purposes should be applied for all investments including investor real estate, payable on sale of the asset if there is no actual net income earned during possession.

[Daytr]

Where would stock indices be without this outflow from banks? Not sure it was about better returns in a rising interest rate environment driving the flow but the risk associated with banks.
https://www.nzherald.co.nz/business/weaker-than-expected-inflation-unlikely-to-stop-rate-hikes/G6KZXJJN7NDXVCXXYPV3OMCBNQ/?utm_source=newsletter&utm_medium=nzh_email&utm_campaign=20230419_Premium_News_Briefing_Newsle tter&uuid=137d042e2cf04bf38a61358fbe6ffe3b

[bull....]

What I am looking at is with Australian interest rates being considerably lower than NZ will the ASX outperform the NZX? Although I cut to cash in NZ I left my Aussie funds on aggressive. Let's see in 12 months.

asx has done better than nzx last wee bit esp in certain sectors ie resources. weather that will continue who knows

[SailorRob]

Where would stock indices be without this outflow from banks? Not sure it was about better returns in a rising interest rate environment driving the flow but the risk associated with banks.
https://www.nzherald.co.nz/business/weaker-than-expected-inflation-unlikely-to-stop-rate-hikes/G6KZXJJN7NDXVCXXYPV3OMCBNQ/?utm_source=newsletter&utm_medium=nzh_email&utm_campaign=20230419_Premium_News_Briefing_Newsle tter&uuid=137d042e2cf04bf38a61358fbe6ffe3b

Interesting how some people still don't understand even after it's been painstakingly explained.

[bull....]

best markets this yr

crypto by a country mile
nasdaq esp semiconductors
gold
europe

still maintain nz negative yr again as it mean reverts

[Muse]

Headline inflation drops to 6.7%, a tad below local economist (Westpac, BNZ, ASB, ANZ, Kiwi) consensus of 7.1%. That's good.

Sadly non tradable inflation came in at 6.8%, inline with consensus of 6.8%. This is where the battle needs to be won.

[winner69]

Headline inflation drops to 6.7%, a tad below local economist (Westpac, BNZ, ASB, ANZ, Kiwi) consensus of 7.1%. That's good.

Sadly non tradable inflation came in at 6.8%, inline with consensus of 6.8%. This is where the battle needs to be won.


It’s coming down ….that’s the main thing and March qtr annualised it’s only 4.8%

Come June qtr headline rate will only be about 5%

Panic over

[Muse]

Yes and no.

Reported non-tradeable inflation rose from 1.5% in December to 1.7% in March 2023 (but still down from 2% QoQ in Sept.22).

Seasonally adjusted it continues to rise and is at a high point.

Where'd you get the 4.8% anyway? 1.7% QoQ annualised remains 6.8%.




QoQ NT
Raw
S.A.


Jun-20
0.0
0.3


Sep-20
0.6
0.4


Dec-20
0.7
0.7


Mar-21
0.7
0.8


Jun-21
1.2
1.4


Sep-21
1.8
1.5


Dec-21
1.5
1.5


Mar-22
1.5
1.6


Jun-22
1.4
1.6


Sep-22
2.0
1.7


Dec-22
1.5
1.6


Mar-23
1.7
1.7




Or were you looking at headline? Didn't look, rbnz rightly or wrongly tend to set their policy based on non tradeable and core inflation

[winner69]

FM …Stats NZ said quarterly inflation +1.2%

RB sometimes refer to the trimmed mean number (a core inflation measure) and that was 1.1%/1.2% for quarter ans annual 5.9%/6.1%

[bull....]

inflation looks pretty sticky to me , only really fell cause petrol declined but that is rising again now

[winner69]

inflation looks pretty sticky to me , only really fell cause petrol declined but that is rising again now

Seems we can’t blame Air NZ this time

[Muse]

Gotcha you were looking at headline CPI.
I suppose the point I was making is we are making no progress getting non-tradeable inflation down (best readily available proxy for core), it's still strong and in fact increase in March.
Non sure how influential headline CPI is...as you say RBNZ looks at various measures of core.
Who knows at the end of the day how central banks do things....what they ought to do, vs what they will do, etc.
FX market certainly seeing it as a bit of an inflation battle win...big drop in the kiwi to .615

[SailorRob]

Exceptional

https://www.oaktreecapital.com/insights/memo/lessons-from-silicon-valley-bank

[bull....]

All of a sudden, a capital gains tax is back on the political agenda


https://thespinoff.co.nz/business/20-04-2023/all-of-a-sudden-a-capital-gains-tax-is-back-on-the-political-agenda

looks like they might want to catch all those baby boomers coming up to retirement or who are in retirement

[BlackPeter]

All of a sudden, a capital gains tax is back on the political agenda


https://thespinoff.co.nz/business/20-04-2023/all-of-a-sudden-a-capital-gains-tax-is-back-on-the-political-agenda

looks like they might want to catch all those baby boomers coming up to retirement or who are in retirement

Might be a bad time for the government ... I assume the time of huge capital gains is over for a decade or two. Does this proposal come with a tax credit for capital losses? - this might be good :) - a contribution to the Golden Monday thread?

[Panda-NZ-]

A capital gains tax, but for non-residents?

Ie there will be less doomsday bunker buyers or "lifestyle" farmland purchases for those who only visit NZ two days every year.

[Balance]

A capital gains tax, but for non-residents?

Ie there will be less doomsday bunker buyers or "lifestyle" farmland purchases for those who only visit NZ two days every year.

panda-nz, the ignoramus peasant who wanted Ryman to load up with more debt to do a share buyback when it was close to default.

[Panda-NZ-]

Two reasons why it might be the favoured option :

A) Non-residents can't vote.
B) Progressive tax advocates can be happy that it may eventually "be expanded" one day. It will set the stage for further reforms.

[Balance]

Two reasons it might be a goer.

A) Non-residents can't vote.
B) Progressive tax advocates can be happy that it may eventually "be expanded" one day. It will set the stage for further reforms.

panda-nz, the ignoramus peasant who wanted Ryman to load up with more debt to do a share buyback when it was close to default.


NTA is over $7..

Should do a share repurchase, with some debt if necessary.

[Panda-NZ-]

panda-nz, the ignoramus peasant who wanted Ryman to load up with more debt to do a share buyback when it was close to default.

NTA $7 when share price is $5 is nowhere close to default..

Someone needs to teach you the basics brilliantly.

[Balance]

NTA $7 when share price is $5 is nowhere close to default..

Someone needs to teach you the basics brilliantly.

panda-nz, the ignoramus peasant who wanted Ryman to load up with more debt to do a share buyback when it was close to default.

Keep digging that hole. Soon you will hit the same depth as Andrew Little did.

[Daytr]

The toxic rhetoric on this thread is pretty off putting. Why not the one upmanship & ego at the door. I used to see a lot of the same BS in my banking days but generally the more successful, or mature at least, didn't bother with that sort of childish behavior.
Posters should be able to put out ideas or thoughts without being mocked. Sure challenge what they say as that's what we are here for, robust but friendly debate.
I would suggest quite a few don't bother interacting due to the behavior exhibited.

[causecelebre]

The toxic rhetoric on this thread is pretty off putting. Why not the one upmanship & ego at the door. I used to see a lot of the same BS in my banking days but generally the more successful, or mature at least, didn't bother with that sort of childish behavior.
Posters should be able to put out ideas or thoughts without being mocked. Sure challenge what they say as that's what we are here for, robust but friendly debate.
I would suggest quite a few don't bother interacting due to the behavior exhibited.

I agree. At best it’s a dick measuring contest. At worst it’s vitriolic and negative personal attacks. I try to skip posts of the worst offenders which is a shame because they would have interesting and informative posts if they weren’t being the worst of forum members

[bull....]

The fuel tax subsidy which has helped New Zealanders ease their costs at the petrol pump for almost a year will end in June, the Minister of Finance has confirmed

https://www.nzherald.co.nz/nz/grant-robertson-announces-fuel-tax-subsidy-will-end-in-june/HOBEB4W3QFHQPL7JUJYLGNMMMM/#:~:text=The%20fuel%20tax%20subsidy%20which,Minist er%20of%20Finance%20has%20confirmed.

[BlackPeter]

The fuel tax subsidy which has helped New Zealanders ease their costs at the petrol pump for almost a year will end in June, the Minister of Finance has confirmed

https://www.nzherald.co.nz/nz/grant-robertson-announces-fuel-tax-subsidy-will-end-in-june/HOBEB4W3QFHQPL7JUJYLGNMMMM/#:~:text=The%20fuel%20tax%20subsidy%20which,Minist er%20of%20Finance%20has%20confirmed.


Good - it was the most looney subsidy this government ever invented. They are piling up debts for the next generation in order to subsidize this generation to work their gas guzzlers still harder. What an idiocy!

[bull....]

Good - it was the most looney subsidy this government ever invented. They are piling up debts for the next generation in order to subsidize this generation to work their gas guzzlers still harder. What an idiocy!

probably freeing up money for some welfare handouts

[Panda-NZ-]

Good - it was the most looney subsidy this government ever invented. They are piling up debts for the next generation in order to subsidize this generation to work their gas guzzlers still harder. What an idiocy!

Shuld have gone to food - support NZ producers rather than Saudi Arabia.

[SailorRob]

The toxic rhetoric on this thread is pretty off putting. Why not the one upmanship & ego at the door. I used to see a lot of the same BS in my banking days but generally the more successful, or mature at least, didn't bother with that sort of childish behavior.
Posters should be able to put out ideas or thoughts without being mocked. Sure challenge what they say as that's what we are here for, robust but friendly debate.
I would suggest quite a few don't bother interacting due to the behavior exhibited.


Was some of the BS you saw in your banking days the commercial banks borrowing most of their money from the Reserve bank and lending it out on margin?

[Muse]

I fully agree with Daytr’s post.

Poor form, Sailor.

[Bjauck]

Shuld have gone to food - support NZ producers rather than Saudi Arabia. Yes governments over the years could have done a heap more to reduce reliance on imported private petrol driven transport supporting foreign industries and companies. New Auck housing developments are still being designed around the use of cars with poor local amenities and public transport. At least the fuel subsidy recognised current reality in NZ that many struggling families rely on petrol powered cars. Many didn’t have the luxury of working from or retiring at home.

Older and retired folk (who tend to have greater wealth) tend to use their vehicles less than working younger folk. And the older folk have spent their lives destroying the environment - mostly in blissful ignorance*. So I think the subsidy was justified.’’

*I regard myself as one of the oldies.

[SailorRob]

I fully agree with Daytr’s post.

Poor form, Sailor.


You're entitled to your opinion and can get the warm fuzzies from Daytrs post but he has spread misinformation on this site from a position of claimed expertise which is exceptionally dangerous to those who come here to learn.

With Bull for example, well anyone can see he's full of it, but someone coming along and saying 20 years international banking experience and then just posting absolute garbage and when called on it dodging and weaving. Not good enough.

His actions have not met his words.

[bull....]

'There’s cancelled orders everywhere' - Squeeze goes on rural economy

https://www.stuff.co.nz/waikato-times/news/131707398/theres-cancelled-orders-everywhere--squeeze-goes-on-rural-economy

[Daytr]

I fully agree with Daytr’s post.

Poor form, Sailor.

Well I have him on ignore for good reason
12 screens! 🤣

[Cottagestyles]

Well I have him on ignore for good reason
Moderators have unfortunately left the building on this site.

[alokdhir]

I fully agree with Daytr’s post.

Poor form, Sailor.

As always I agree with your thoughts ...Yes ...all ideas and opinions shud be welcome and received with gratitude ...irrespective of whether u like them or agree with them or not ....thats the true purpose of this forum .

Yes it has inhibited me from posting my 2 cents more regularly as some are just looking to make fun of others ...whether its the idea or language skills etc ...lol

Its not an English teaching forum but share trader forum ...hopefully people will be more welcoming of any post not only the ones which are articulated their expected way or ideas / opinions which suit them or fulfil their already inflated ego ...lol

[SailorRob]

As always I agree with your thoughts ...Yes ...all ideas and opinions shud be welcome and received with gratitude ...irrespective of whether u like them or agree with them or not ....thats the true purpose of this forum .

Yes it has inhibited me from posting my 2 cents more regularly as some are just looking to make fun of others ...whether its the idea or language skills etc ...lol

Its not an English teaching forum but share trader forum ...hopefully people will be more welcoming of any post not only the ones which are articulated their expected way or ideas / opinions which suit them or fulfil their already inflated ego ...lol


I'm glad it has inhibited you.

Anything of value is always appreciated even if delivered in Pidjin English.

There are exceptions but unless due to a disability, if one has not bothered to learn how to communicate properly in their native language it can be assumed they have not learned the art of investing or indeed trading as well as they could have.

That said, I was shown an email written by literally one of the richest men in NZ yesterday that Bull himself could have written.

The real danger lies in a well structured sentence written by a former professional banker that contains blatant misinformation, because those are the ones that will and should be believed without question.

[Daytr]

As always I agree with your thoughts ...Yes ...all ideas and opinions shud be welcome and received with gratitude ...irrespective of whether u like them or agree with them or not ....thats the true purpose of this forum .

Yes it has inhibited me from posting my 2 cents more regularly as some are just looking to make fun of others ...whether its the idea or language skills etc ...lol

Its not an English teaching forum but share trader forum ...hopefully people will be more welcoming of any post not only the ones which are articulated their expected way or ideas / opinions which suit them or fulfil their already inflated ego ...lol
That's a shame. My suggestion is just block those offenders.

[Habits]

Is the .AU market opening today... will find out shortly

[SailorRob]

Is the .AU market opening today... will find out shortly


Yes, closed tomorrow.

[Habits]

Yes, closed tomorrow.

I thought the Aussies may have made a long weekend official :D

Also are the nz and Australian sharemarkets open from 1pm tomorrow the same time as normal businesses reopen

[troyvdh]

I was always given to believe that share markets have historically ...well behaved /reacted in expectation of whats likely to happen in say 6 months time.If folk believe that inflation has indeed peaked...surely....then one can expect the market to perhaps be considerably positive...I could be wrong .

[SailorRob]

I was always given to believe that share markets have historically ...well behaved /reacted in expectation of whats likely to happen in say 6 months time.If folk believe that inflation has indeed peaked...surely....then one can expect the market to perhaps be considerably positive...I could be wrong .


Yes, the bond market and the equity markets are saying different things.

[dobby41]

I thought the Aussies may have made a long weekend official :D

Also are the nz and Australian sharemarkets open from 1pm tomorrow the same time as normal businesses reopen

No - it is a public holiday.

[Habits]

No - it is a public holiday.

Ok thanks dobby

[Habits]

Most stocks on my watchlist are green today. 26 out of 33. Its going to be a good time to be invested, building from a low base

[bull....]

biggest downside move we have had in us markets for a while maybe on FR Bank down 43% at the moment :scared:

[Habits]

biggest downside move we have had in us markets for a while maybe on FR Bank down 43% at the moment :scared:

Gone from 122 to 8 in a month. Fed reserve is on the case. I thought market was in holding while awaiting tech results

[Bobdn]

@Habits: MSFT and Google have reported and are up 4 per cent after hours. Gee, they're 9 per cent of the S&P 500. Onwards and upwards...

But that's so boring. All the excitement is in the OCA thread.

[winner69]

Black-Scholes Model celebrating 50 years with big conference in June

Black-Scholes made options trading respectable ….most thought options was gambling

[Baa_Baa]

Black-Scholes Model celebrating 50 years with big conference in June

Black-Scholes made options trading respectable ….most thought options was gambling

Options trading was a lot of fun, didn't even have to know much about Black-Scholes Model, only that they were derivatives of a real company and would trade in price along with the head share. I really liked long dated call options on producing gold miners at the time, and did very well. Nowadays, I can't be bothered staying up all night or trying to guess a limit buy or stop loss for when I'm asleep. Butterfly spread trades were particularly cool.

:)

[stoploss]

Black-Scholes Model celebrating 50 years with big conference in June

Black-Scholes made options trading respectable ….most thought options was gambling
Scholes was gambling at LTCM , needed a bailout !!!!

[bull....]

@Habits: MSFT and Google have reported and are up 4 per cent after hours. Gee, they're 9 per cent of the S&P 500. Onwards and upwards...

But that's so boring. All the excitement is in the OCA thread.

didnt help the tape today maybe because some of them gave no guidance

[Bobdn]

No, disappointing. Oil is crashing, also disappointing. My international dividend ETFs VYM and VYMI are both 10 per cent big oil. Love big oil.

[Onemootpoint]

No, disappointing. Oil is crashing, also disappointing. My international dividend ETFs VYM and VYMI are both 10 per cent big oil. Love big oil.

There was some talk on CNBC (guest contributor) that upcoming summer driving season in the northern hemisphere may see oil lift to $80-ish.

[Bobdn]

Yes, I think I saw that. Honestly, I think the break even for these big companies where they get to fund everything including dividends is $40 to $50 oil. So we've got plenty of headroom. I seem to recall Pioneer boss saying it's breakeven was $39. Holy cow!

Big day tomorrow. Exxon and Chevron. I'm no baller though, I have a slight tilt in that direction and nothing more.

[bull....]

nice day on US markets esp meta going gangbusters the second 2 bagger for bull in the last 6 mths

[alokdhir]

nice day on US markets esp meta going gangbusters the second 2 bagger for bull in the last 6 mths

Don't disclose in hindsight ...shud have disclosed your position or view when it was $ 90 ....it will have more creditability ....if I remember right ...I can be totally wrong as I am not professing I follow all your posts ...U were pretty negative about markets and tech when meta was below $ 100 ....lol :p

[bull....]

Don't disclose in hindsight ...shud have disclosed your position or view when it was $ 90 ....it will have more creditability ....if I remember right ...I can be totally wrong as I am not professing I follow all your posts ...U were pretty negative about markets and tech when meta was below $ 100 ....lol :p

not quite right bearish overall at time but i also said nasdaq looked at bottom in december for a bounce also say i told family to go hard meta as was way overdone downside , probably getting overdone soon though

and for you i also say on the thread of fph 20$ fph was good value to and it still looking good but as i say i didnt listen to my own opinion and missed that one as invested else where at time ... my bad need more money

actuall whole rall y in us market mainly nasdaq is from only few stocks

[Daytr]

Yes, I think I saw that. Honestly, I think the break even for these big companies where they get to fund everything including dividends is $40 to $50 oil. So we've got plenty of headroom. I seem to recall Pioneer boss saying it's breakeven was $39. Holy cow!

Big day tomorrow. Exxon and Chevron. I'm no baller though, I have a slight tilt in that direction and nothing more.
Hi Bobdn, it's really the marginal cost of production that's important as this is the first production to be cut if the price doesn't support the cost or risk associated. Fracking production is probably the most at risk and is the easiest to turn off & on. $80/bbl is probably what's required to support that marginal production.

[Bobdn]

Yes, ok the pure fracking needs more. But for the Exxons and Chevrons, they're still printing money with oil over say $60 USD I assume.

I don't know a great deal about it. Just surface knowledge. Loving the history of oil at the moment. Just about to finish the Oil Kings (published in 2011) "How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East" and my next book is The New Map by D. Yergin.

I have this fantasy that oil stocks will be like tobacco stocks, unloved for the next 20 years but making obscene profits. With dividend reinvestment into my oil heavy dividend funds, in 20 years, assuming I haven't died, I hope to come back onto this forum and declare victory.

[SailorRob]

nice day on US markets esp meta going gangbusters the second 2 bagger for bull in the last 6 mths


How much does that go towards all your losses.

[SailorRob]

nice day on US markets esp meta going gangbusters the second 2 bagger for bull in the last 6 mths


Unreal you still have to work a 60 hour week.

[bull....]

How much does that go towards all your losses.

yes everyone makes losses , i make plenty but the secret of course is in money management ie make sure your losses are small and your gains large. anyway got to get back to my quant scans for todays asx trades

[SailorRob]

yes everyone makes losses , i make plenty but the secret of course is in money management ie make sure your losses are small and your gains large. anyway got to get back to my quant scans for todays asx trades


Nice, what is a 'quant scan'?

[Daytr]

Yes, ok the pure fracking needs more. But for the Exxons and Chevrons, they're still printing money with oil over say $60 USD I assume.

I don't know a great deal about it. Just surface knowledge. Loving the history of oil at the moment. Just about to finish the Oil Kings (published in 2011) "How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East" and my next book is The New Map by D. Yergin.

I have this fantasy that oil stocks will be like tobacco stocks, unloved for the next 20 years but making obscene profits. With dividend reinvestment into my oil heavy dividend funds, in 20 years, assuming I haven't died, I hope to come back onto this forum and declare victory.

That last part you wrote might not be a fantasy. I haven't really studied the oil stocks. What sort of PE are they trading at.

[Bobdn]

Vanguard's energy ETF, VDE, which is dominated by Exxon and Chevron, has a P/E of 7.5.

Vanguard's VYM (US dividends) is 14 and VYMI, international, is 9.

[SailorRob]

Yes, ok the pure fracking needs more. But for the Exxons and Chevrons, they're still printing money with oil over say $60 USD I assume.

I don't know a great deal about it. Just surface knowledge. Loving the history of oil at the moment. Just about to finish the Oil Kings (published in 2011) "How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East" and my next book is The New Map by D. Yergin.

I have this fantasy that oil stocks will be like tobacco stocks, unloved for the next 20 years but making obscene profits. With dividend reinvestment into my oil heavy dividend funds, in 20 years, assuming I haven't died, I hope to come back onto this forum and declare victory.


That would be like coming back in 20 years and saying it's now 2043, I told you all 20 years ago that it would be 2043 in 20 years, and claiming victory.

Nothing to claim victory about, it's obvious.

[Bobdn]

Well, lets hope so. In actual fact, the S&P will probably out perform this tilt, which is fine too.

[SailorRob]

Well, lets hope so. In actual fact, the S&P will probably out perform this tilt, which is fine too.


I'm not so sure it will from here, particularly over the next 10 years. All depends on how long oil equities stay lower for your reinvestment of dividends.

For your consideration, WTI oil price averaged $71.76 from 2005 to 2010 and from 2010 to 2015 it averaged $91.80.

Think of how much every cost component has risen since then... Not to mention demand.

Oil is dirt cheap.

[Bobdn]

That's what I'm hoping too.

I just read this on Twitter from this guy called Eric Nuttal:

"Bernstein: even if EV's = 25% of total global car sales by 2025 and 50% in 2030, we will still consume the same amount of oil as we do today in 15 years (2038). Where exactly is the required production going to come from???"

Oil demand has got a long way to go. Don't write off oil.

But to be clear, I'm probably just a little above "market weight" if we're looking at the S&P 500 as a reference. The NZX50 has next to zero exposure to fossil fuels - plenty of "energy" but no black gold. So, because I own the NZX50, I've just added a bit here and there to make sure I'm not missing out.

My Australian dividend fund is helpful because of Woodside and the coal producers. And Kernel's Global 100 fund, which I adore, has a good amount - all the oil majors in good dollops. Plus I use it's infrastructure fund so I get a swag of energy exposure in that. Kinder Morgan, Enbridge, Cheniere. A ton of others. Not producers I guess but they do well when oil and gas is doing well.

VDE is a belts and braces, icing on the cake.

[SailorRob]

That's what I'm hoping too.

I just read this on Twitter from this guy called Eric Nuttal:

"Bernstein: even if EV's = 25% of total global car sales by 2025 and 50% in 2030, we will still consume the same amount of oil as we do today in 15 years (2038). Where exactly is the required production going to come from???"

Oil demand has got a long way to go. Don't write off oil.

But to be clear, I'm probably just a little above "market weight" if we're looking at the S&P 500 as a reference. The NZX50 has next to zero exposure to fossil fuels - plenty of "energy" but no black gold. So, because I own the NZX50, I've just added a bit here and there to make sure I'm not missing out.

My Australian dividend fund is helpful because of Woodside and the coal producers. And Kernel's Global 100 fund, which I adore, has a good amount - all the oil majors in good dollops. Plus I use it's infrastructure fund so I get a swag of energy exposure in that. Kinder Morgan, Enbridge, Cheniere. A ton of others. Not producers I guess but they do well when oil and gas is doing well.

VDE is a belts and braces, icing on the cake.


It sounds to me like you need to get yourself a good dose of the greatest fund in the world, BRK.

Your strategy is sound and will beat most people including most professionals but it won't touch BRK.

I doubt the Kernal fund will differ too much from the S&P500 which you could buy for ten times lower fees.

[BlackPeter]

It sounds to me like you need to get yourself a good dose of the greatest fund in the world, BRK.

Your strategy is sound and will beat most people including most professionals but it won't touch BRK.

I doubt the Kernal fund will differ too much from the S&P500 which you could buy for ten times lower fees.

BTW - its Kernel. Just interesting you mention the fees. It sounds like you are an expert in this field, knowing all the fund fees. The Kernel Global 100 charges 0.25% p.a. in fees.

Are you saying your fund charges really only 1/10th of that - i.e. 0.025%? ... and comparing apples with apples, they still would help you to fit into the NZ tax system without playing the FIF lottery?

This what you are saying?

[SailorRob]

BTW - its Kernel. Just interesting you mention the fees. It sounds like you are an expert in this field, knowing all the fund fees. The Kernel Global 100 charges 0.25% p.a. in fees.

Are you saying your fund charges really only 1/10th of that - i.e. 0.025%? ... and comparing apples with apples, they still would help you to fit into the NZ tax system without playing the FIF lottery?

This what you are saying?


My fund has zero fees.

The fund I was talking about, yes around 3 basis points. 0.25% is theft.

FIF is not a lottery and without studying the situation I can't comment on that aspect.

I am nothing of an expert, but in the space of less than 3 seconds I could see Kennel, sorry Kernel fees were very high compared to what you can pay on a proper fund.

[SailorRob]

We are a third of our way through the 2020's.

[BlackPeter]

We are a third of our way through the 2020's.

That's a scary thought :) - 2 more thirds to do and the decade after that brought last century only economical pain and a preparation for WW2;

[SailorRob]

That's a scary thought :) - 2 more thirds to do and the decade after that brought last century only economical pain and a preparation for WW2;


Think of the party we have coming before that though.

[BlackPeter]

Think of the party we have coming before that though.

True - let the twenties roar ...

[ronaldson]

First Republic Bank gone today ( Sunday US time )? Wall Street Journal has breaking news re FED seeking bids in an effort to resolve before Asian markets open.

[Daytr]

First Republic Bank gone today ( Sunday US time )? Wall Street Journal has breaking news re FED seeking bids in an effort to resolve before Asian markets open.
Absolute bargain at $3.50. The big banks are feasting like sharks on a boil up as these smaller banks gets undermined by lack of confidence.

I shorted the S&P500 a few days ago as similar to banks I think it will be the smaller caps that will be hurt by increased funding costs. Russell 2000 has underperformed the other indices lately as well.

[ronaldson]

WSJ notes that FRB share price was $122.50 on March 1 and fallen to $3.51 on April 28. Says JP Morgan and PNC Financial services have submitted bids by the deadline and Bank of America may have done so. Likely FDIC will seize assets later on Sunday US time.

WSJ says if so it will be the second largest bank failure in US history.

[Daytr]

One could argue this isn't a bank failure but purely a run on confidence as I don't think they were losing money, however the contagion effect to run to bigger is better has overrun them. This is is a consolidation & potentially a huge windfall to the purchaser. The analysis of their loan book will be interesting, however as there is a 30 year bond market in the US I would assume it was fully hedged. I haven't looked at this in detail, but it reminds me of the banking asset grab post 2008 where the big banks swallowed up smaller banks as the compliance & capital costs over ran them.

[Valuegrowth]

https://www.cnbc.com/2023/04/30/charlie-munger-reportedly-warns-of-trouble-for-the-us-commercial-property-market.html

[Valuegrowth]

https://www.youtube.com/watch?v=RKJIPUzo7P0

[Daytr]

I think the analysis from the 99 year old is better than the YouTube clip

[Valuegrowth]

I agree too.

[SailorRob]

One could argue this isn't a bank failure but purely a run on confidence as I don't think they were losing money, however the contagion effect to run to bigger is better has overrun them. This is is a consolidation & potentially a huge windfall to the purchaser. The analysis of their loan book will be interesting, however as there is a 30 year bond market in the US I would assume it was fully hedged. I haven't look at this in detail, but it reminds me of the banking asset grab post 2008 where the big banks swallowed up smaller banks as the compliance & capital costs over ran them.

God this guy is a muppet.

[ronaldson]

Yep, First Republic Bank is officially gone, acquired (mostly) by JP Morgan with all 84 branches to open on Monday US as JP Morgan, which has assumed all $92b in deposits and bought most assets including $173b in loans and $30b in securities. Estimated cost to FDIC is $13b (SVB was estimated at $20b and Signature Bank at $2.5b) to resolve. These are mindboggling numbers.

Hopefully some stability will now prevail - or is there more to follow?

[Daytr]

I agree too.


Yep, First Republic Bank is officially gone, acquired (mostly) by JP Morgan with all 84 branches to open on Monday US as JP Morgan, which has assumed all $92b in deposits and bought most assets including $173b in loans and $30b in securities. Estimated cost to FDIC is $13b (SVB was estimated at $20b and Signature Bank at $2.5b) to resolve. These are mindboggling numbers.

Hopefully some stability will now prevail - or is there more to follow?

And JP Morgan's share price is up 2.5%
Jamie Diamond is no mug.

[bull....]

bit yucky at the moment , regional bank jitters some of them down double digits
US sovereign debt risk highest ever ..... is the US going to default ?

http://www.worldgovernmentbonds.com/cds-historical-data/united-states/5-years/#:~:text=The%20United%20States%205%20Years%20Sover eign%20CDS%20reached%20a%20maximum,8.20%20(22%20Ju ne%202021).&text=ETF%20Investing%3A%20Learn%20the%20Best,Loans %2C%20an%20Essential%20...

[Rawz]

Small banks taking more hits. HGH might have pressure on it today

[bull....]

Small banks taking more hits. HGH might have pressure on it today

time to move to the big banks ? savings and loan crisis 2 ?

oil and copper getting pummeled lately ... world slowdown imminent , of course NZ leading the way. stagflation they say.
lets see what powell says tomorrow :scared:

[Daytr]

time to move to the big banks ? savings and loan crisis 2 ?

oil and copper getting pummeled lately ... world slowdown imminent , of course NZ leading the way. stagflation they say.
lets see what powell says tomorrow :scared:

And gold acting as a currency rather than commodity overnight with a nice bounce in fact outperforming most currencies.

[Muse]

The US debt limit reportedly has to be raised by early June. Suspect sentiment will be in the pita until its resolved. Otherwise….

[Balance]

Play the traders’ game :

Move ‘em up and sell ‘em down.

Then buy ‘em up and move ‘em up.

Meanwhile, the global economy keep a trucking on.

[JBmurc]

purchased good chunk of SNAS(short ETF NASDAQ) end of last week .. should be in the money today and if we continue to see weakness in the NASDAQ with the debt ceiling issues ..and really the bigger picture the higher rates affects on the ever increasing DEBT at some stage just the interest on the debt will be much harder to manage ..

more I look at the markets the mass lay offs , the more funds I want to shift to the short side for the US markets ... and invest more into Gold Producers

US Published National Debt

$43,263,412,281,359

https://www.truthinaccounting.org/about/our_national_debt?gclid=Cj0KCQjw6cKiBhD5ARIsAKXUdy bJ2Mw4bh071LyYSVEIv4kkj1-mH3hCoXBzlvLSn1dMnJPPQ6nm4jYaAurfEALw_wcB

[bull....]

And gold acting as a currency rather than commodity overnight with a nice bounce in fact outperforming most currencies.

yep flight to safety ... gold,bitcoin , bonds could easily all reverse on what powell says tomorrow morning

[Fortunecookie]

yep flight to safety ... gold,bitcoin , bonds could easily all reverse on what powell says tomorrow morning

https://markets.businessinsider.com/news/stocks/charlie-munger-warren-buffett-credit-crunch-banks-commercial-real-estate-2023-5


Even the man himself said it is scary out there.

[nztx]

Looks like the red crayons are real busy today ..

can't be another US bank shaking in the breeze surely, after the weekend picnic got done and dusted :)

[bull....]

Guess Orr be increasing rates for sure now next meeting after the unemployment figures and most likely the govt will blow out spending to buy votes in the budget therefore my guess a while back of 6% terminal rate might be close to the mark

Statistics New Zealand says the unemployment rate remained the same in the March quarter, while there were 22,000 jobs added, the labour force participation rate hit a new high and private sector ordinary hourly wage growth rose to 8.2%

https://www.interest.co.nz/business/121004/statistics-new-zealand-says-unemployment-rate-remained-same-march-quarter-while

[Daytr]

What employment stats don't tell you is how many people left NZ for Australia or other parts of the world.

[Valuegrowth]

https://finance.yahoo.com/news/mohamed-el-erian-warns-collateral-185316486.html#:~:text=Mohamed%20El%2DErian%20said %20JPMorgan's,in%20a%20Bloomberg%20op%2Ded.

[Daytr]

https://finance.yahoo.com/news/mohamed-el-erian-warns-collateral-185316486.html#:~:text=Mohamed%20El%2DErian%20said %20JPMorgan's,in%20a%20Bloomberg%20op%2Ded.

From what I have read their loan book was pretty safe as they specialized at lending to high wealth individuals at admittedly cheaper margins. I think Jamie Diamond is playing it down when he said it only adds minor value to their business. Secretly I think he was rubbing his talons together as a hawk does over roadkill & a free feed.

[Fortunecookie]

From what I have read their loan book was pretty safe as they specialized at lending to high wealth individuals at admittedly cheaper margins. I think Jamie Diamond is playing it down when he said it only adds minor value to their business. Secretly I think he was rubbing his talons together as a hawk does over roadkill & a free feed.

I was trying to figure out how much they paid for and perhaps how much it was valued at. There was definitely some concessions being made.

Apart from deposit holders not being guaranteed. I have read comments that they didn't manage their funding risk that well. So it all led to contagion (bank run). Scary to see that SP drop that fast.

[Daytr]

They paid 10.6Bln which all went to the Government as partial payout on the 'bailout'.
Not bad for a bank that was valued at $120bln only months ago. My sense is that it wasn't about their risk management but purely a run on confidence. But could be wrong on that. Jamie Diamond doesn't buy lame ducks.

[Fortunecookie]

They paid 10.6Bln which all went to the Government as partial payout on the 'bailout'.
Not bad for a bank that was valued at $120bln only months ago. My sense is that it wasn't about their risk management but purely a run on confidence. But could be wrong on that. Jamie Diamond doesn't buy lame ducks.

You are right this is a sweet deal. There is nothing wrong with the operation at all, if there was it won't be anymore. Basically the FDIC is plugging the funding gap. They get the loan book and they said it will generate a $500mill net profit p.a. I think this is an conservative fig. Plus you get the bank operation and if I recall some concessions for some future losses. Mr Diamond is no mug.

I do wonder does this mean will there be further consolidation in the US market.

[bull....]

Fed increases rates a quarter point and signals a potential end to hikes
https://www.cnbc.com/2023/05/03/fed-rate-decision-may-2023-.html

market down on the news , guess nz50 may be down again today

[Rawz]

HLG will drag the nz50 up :0

[bull....]

https://markets.businessinsider.com/news/stocks/charlie-munger-warren-buffett-credit-crunch-banks-commercial-real-estate-2023-5


Even the man himself said it is scary out there.

yep

Berkshire Hathaway, where Munger serves as vice chairman, has largely stayed on the fringe of the crisis despite its history of supporting American banks through times of turmoil. Munger, who is also Warren Buffett’s longtime investment partner, suggested that Berkshire’s restraint is partially due to risks that could emerge from banks’ numerous commercial property loans.
“A lot of real estate isn’t so good anymore,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There’s a lot of agony out there.”

makes you wonder if NZ property companies and banks will face issues in the future

[bull....]

utures tanking again on rumours another bank is about to go bust

[JBmurc]

yep

Berkshire Hathaway, where Munger serves as vice chairman, has largely stayed on the fringe of the crisis despite its history of supporting American banks through times of turmoil. Munger, who is also Warren Buffett’s longtime investment partner, suggested that Berkshire’s restraint is partially due to risks that could emerge from banks’ numerous commercial property loans.
“A lot of real estate isn’t so good anymore,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There’s a lot of agony out there.”

makes you wonder if NZ property companies and banks will face issues in the future

I think they will at the peak many NZ commercial properties(like RES) were selling on very low yields 3-5% ... then Tenants had lock-downs to deal with along with high inflation in costs ...

Now we have much higher rates of lending .. also much of NZ commercial property is sub 67% NBS(pretty much everything built pre 80's) and needs HUGE investment ..
That has only got more expensive ..often more costs than property is worth..

NZ Banks have gone septic to risk(COVID) ,,,and have always been hard to deal with around commercial property lending .. now with NZ RES falling in value right across the nation ,,thats not going help the environment for growth in commercial property..

How many investors would even want to invest in the sector now with much safer rates from bonds , term deposits ... I see SBS bank bond offering 7.5% for 10yrs

[bull....]

see pac west bank down 53% in after market , might be scary tomorrow night

[Fortunecookie]

utures tanking again on rumours another bank is about to go bust

That's something I have been thinking this morning. I had a look into the First Republic takeover abit more last night (after Daytr pointed it was bought for about $10b). It looks like a sweet deal. Because it was setup as a tender. I wonder if there it's abit collusion involved with the big banks in the US. Implying like you say more will be going bust. Why bid top dollar when you can signal to your competitors that they can go for the next one that will go bust. Such situations has happened, I can think of the nz auction of frequencies that involved the telecoms.

This whole thing about bank deposit guarantee only encourages deposits to go towards the banks with the guarantees.

[Fortunecookie]

I think they will at the peak many NZ commercial properties(like RES) were selling on very low yields 3-5% ... then Tenants had lock-downs to deal with along with high inflation in costs ...

Now we have much higher rates of lending .. also much of NZ commercial property is sub 67% NBS(pretty much everything built pre 80's) and needs HUGE investment ..
That has only got more expensive ..often more costs than property is worth..

NZ Banks have gone septic to risk(COVID) ,,,and have always been hard to deal with around commercial property lending .. now with NZ RES falling in value right across the nation ,,thats not going help the environment for growth in commercial property..

How many investors would even want to invest in the sector now with much safer rates from bonds , term deposits ... I see SBS bank bond offering 7.5% for 10yrs

I think there is a bigger risk at play but it is difficult to quantify as yet. That's to do with climate change. The RBNZ are responsible with managing this risk. Which is quite the opposite to the Feds, as they are not interested therefore not part of their mandate. You see it in some US states the insurers have stopped insuring some homes. So the state themselves have become a insurer of last resort. On the face of it, if a private insurer pulls out you know it is not economically viable. But thats the world we live in.

I do have an inkling that we follow the approach of those certain states. Perhaps an extension of the role of EQC. The market will need to recalibrate to incorporate those changes but at the same time make sure credit continues to flow.

[Habits]

I think they will at the peak many NZ commercial properties(like RES) were selling on very low yields 3-5% ... then Tenants had lock-downs to deal with along with high inflation in costs ...

Now we have much higher rates of lending .. also much of NZ commercial property is sub 67% NBS(pretty much everything built pre 80's) and needs HUGE investment ..
That has only got more expensive ..often more costs than property is worth..

NZ Banks have gone septic to risk(COVID) ,,,and have always been hard to deal with around commercial property lending .. now with NZ RES falling in value right across the nation ,,thats not going help the environment for growth in commercial property..

How many investors would even want to invest in the sector now with much safer rates from bonds , term deposits ... I see SBS bank bond offering 7.5% for 10yrs

Income growth over the longterm will account for higher CV wont it. TDs dont offer that and are going backwards after high inflation

[Panda-NZ-]

When you take the approach that worked so well for Russia (shock therapy) there's bound to be some broken things.

Should be easier on the rate hikes so people can actually adjust to it.

[Daytr]

When you take the approach that worked so well for Russia (shock therapy) there's bound to be some broken things.

Should be easier on the rate hikes so people can actually adjust to it.


I'm not so sure it will from here, particularly over the next 10 years. All depends on how long oil equities stay lower for your reinvestment of dividends.

For your consideration, WTI oil price averaged $71.76 from 2005 to 2010 and from 2010 to 2015 it averaged $91.80.

Think of how much every cost component has risen since then... Not to mention demand.

Oil is dirt cheap.

From the guy who said he can read any chart.
If oil was dirt cheap then, what is it now?
I have actually gone long this morning. I hopefully there is a short covering rally, but we will see.

Sorry to bring down the tone, but this guy takes the cake for slagging everyone else. 12 screens!🤣

[JBmurc]

Income growth over the longterm will account for higher CV wont it. TDs dont offer that and are going backwards after high inflation

Depends on many factors ..but have you ever tried to sell a commercial property aka maybe your tenant went belly up and you just want to exit ? the value of that property of course nose dives without tenants ... getting 7.5% might well look very solid once we head back into a deflation enviro...

[SailorRob]

From the guy who said he can read any chart.
If oil was dirt cheap then, what is it now?
I have actually gone long this morning. I hopefully there is a short covering rally, but we will see.

Sorry to bring down the tone, but this guy takes the cake for slagging everyone else. 12 screens!🤣

Can someone please tell him as I think he's blocked me.

[JBmurc]

Nz>>MoM
14571

NZ>>
14573



aus>>
14572

[nztx]

Red Crayons out again in force today too ..

[Daytr]

Red Crayons out again in force today too ..

A lot more money to be sucked out of the NZ economy yet. Talking to a mortgage broker the other day and he reckoned less than 50% of his book had rolled onto higher rates yet. And this is why the Reserve Bank should wait to see the impact of what they have already done. However my faith in Adrian Orr has been shot to pieces in the last few years.

[nztx]

A lot more money to be sacked out of the NZ economy yet. Talking to a mortgage broker the other day and he reckoned less than 50% of his book had rolled onto higher rates yet. And this is why the Reserve Bank should wait to see the impact of what they have already done. However my faith in Adrian Orr has been shot to pieces in the last few years.


The RBA in Aussie are in a similar 'maximum pain infliction' mode on vulnerable borrowers
across the ditch as well - with recent base interest lift

Probably considerable carnage on the way there too

[Daytr]

Yeah their mortgage market is quite different with a lot less fixing longer term.

[Daytr]

I think a few will have whiplash overnight. Fridays are always good for a short covering rally. Inspired by Apple & jobs Data. I wouldn't be surprised tosee the market reinterpret that jobs number as a negative due to the inflationary impact and hence more rate rises.
Swapping out my short S&P for long oil proved to be very profitable. Out of both for now, but thinking of reshorting US equities.

[bull....]

yep nice big rally last night been trading the range myself all week. be interesting if nzx can get any sort of bounce next week

[Valuegrowth]

Something to learn from great value investor. Sold 8 stocks and bought 2 stocks. Has sold off most of its holdings in semicondutor(TSM), cut its investment in U.S. Bancop(USB) by 91% and in Bank of New york Mellon(B) by 56%.

https://www.kiplinger.com/investing/stocks/stocks-warren-buffett-is-buying-and-selling

[Valuegrowth]

https://www.youtube.com/watch?v=GP1ZaOd4Dtw

[winner69]

Suppose many different interpretations of this chart

@TaviCosta on Twitter says -

As shown in the chart below, the ratio between tech stocks and the S&P 500 is now over 2 standard deviations above the historical mean.

During other times when this indicator also reached such high levels, the tech sector significantly underperformed in the following decade.

It's unlikely that this time will be any different.

[Fortunecookie]

Suppose many different interpretations of this chart

@TaviCosta on Twitter says -

As shown in the chart below, the ratio between tech stocks and the S&P 500 is now over 2 standard deviations above the historical mean.

During other times when this indicator also reached such high levels, the tech sector significantly underperformed in the following decade.

It's unlikely that this time will be any different.

Cant see the chart. But easy to see it's a lack of cheap money. When it currently doesn't make money and lack optimism, how does it get funded.

[Daytr]

Something to learn from great value investor. Sold 8 stocks and bought 2 stocks. Has sold off most of its holdings in semicondutor(TSM), cut its investment in U.S. Bancop(USB) by 91% and in Bank of New york Mellon(B) by 56%.

https://www.kiplinger.com/investing/stocks/stocks-warren-buffett-is-buying-and-selling

He did well to cut the banking stocks but TSM is up around 10% on average since Q4.
I wouldn't be surprised if he's cashing up a bit to buy into various stocks at lower levels.

[Daytr]

Suppose many different interpretations of this chart

@TaviCosta on Twitter says -

As shown in the chart below, the ratio between tech stocks and the S&P 500 is now over 2 standard deviations above the historical mean.

During other times when this indicator also reached such high levels, the tech sector significantly underperformed in the following decade.

It's unlikely that this time will be any different.

Looking back as a predictor of the future is a dangerous game in my view, particularly when it comes to the tech space. Always going to be high risk & volatile are but over time tech is going to grow to be part of all areas of the market with the development of AI, nano bots, advances in medicine etc. The list is endless. My prediction a few years ago is the NASDQ will be higher than the DOW at some point.

[Fortunecookie]

Looking back as a predictor of the future is a dangerous game in my view, particularly when it comes to the tech space. Always going to be high risk & volatile are but over time tech is going to grow to be part of all areas of the market with the development of AI, nano bots, advances in medicine etc. The list is endless. My prediction a few years ago is the NASDQ will be higher than the DOW at some point.

I am not saying it's all doom and gloom. But things go in cycles. Because of the higher finance rate, companies that are not generating a profit or adequate return will be punished more. Typically those are the tech stocks. Hence the volatility.

You can see it, companies are not pursuing growth and focusing on improving margin. I am starting to see evidence of standardising of goods and services across different industries.

No doubt innovation will continue. But at the moment companies arent prepared to support these endeavours at the same level as previously.

At some point tech will outperform in the future. The question is when.

[Habits]

Something to learn from great value investor. Sold 8 stocks and bought 2 stocks. Has sold off most of its holdings in semicondutor(TSM), cut its investment in U.S. Bancop(USB) by 91% and in Bank of New york Mellon(B) by 56%.

https://www.kiplinger.com/investing/stocks/stocks-warren-buffett-is-buying-and-selling

"Berkshire Hathaway Chairman and billionaire value investor Warren Buffett said that the conglomerate has sold the entirety of its equity position in the U.S. airline industry. The prior stake, worth north of $4 billion in December, included positions in United , American , Southwest and Delta Air Lines .2/05/2020"

"Why did Buffett sell airline stocks?

But last spring, the Omaha-based conglomerate sold these holdings for far less than the $7 billion to $8 billion it had paid for them, and Buffett called his decision to invest in air travel a “mistake,” arguing it could take years for airlines to fully recover from Covid-19.1/05/2021"

Buffett said that investing in air travel was a mistake. I would also add that divesting his air travel stocks was a huge mistake at the covid pivot point. One year later airlines had tripled in value. From that you can conclude that investors and instos don't follow Warren to the letter

[Bobdn]

@Winner, it's funny I was just reading that TaviCosta tweet about 15 minutes ago, and then I see your reference to it here.

Twitter is so addictive.

[Daytr]

I am not saying it's all doom and gloom. But things go in cycles. Because of the higher finance rate, companies that are not generating a profit or adequate return will be punished more. Typically those are the tech stocks. Hence the volatility.

You can see it, companies are not pursuing growth and focusing on improving margin. I am starting to see evidence of standardising of goods and services across different industries.

No doubt innovation will continue. But at the moment companies arent prepared to support these endeavours at the same level as previously.

At some point tech will outperform in the future. The question is when.


"Berkshire Hathaway Chairman and billionaire value investor Warren Buffett said that the conglomerate has sold the entirety of its equity position in the U.S. airline industry. The prior stake, worth north of $4 billion in December, included positions in United , American , Southwest and Delta Air Lines .2/05/2020"

"Why did Buffett sell airline stocks?

But last spring, the Omaha-based conglomerate sold these holdings for far less than the $7 billion to $8 billion it had paid for them, and Buffett called his decision to invest in air travel a “mistake,” arguing it could take years for airlines to fully recover from Covid-19.1/05/2021"

Buffett said that investing in air travel was a mistake. I would also add that divesting his air travel stocks was a huge mistake at the covid pivot point. One year later airlines had tripled in value. From that you can conclude that investors and instos don't follow Warren to the letter

Yep fair points. Tech reminds me of the mining industry, where you have the explorers & the producers.

[SailorRob]

"Berkshire Hathaway Chairman and billionaire value investor Warren Buffett said that the conglomerate has sold the entirety of its equity position in the U.S. airline industry. The prior stake, worth north of $4 billion in December, included positions in United , American , Southwest and Delta Air Lines .2/05/2020"

"Why did Buffett sell airline stocks?

But last spring, the Omaha-based conglomerate sold these holdings for far less than the $7 billion to $8 billion it had paid for them, and Buffett called his decision to invest in air travel a “mistake,” arguing it could take years for airlines to fully recover from Covid-19.1/05/2021"

Buffett said that investing in air travel was a mistake. I would also add that divesting his air travel stocks was a huge mistake at the covid pivot point. One year later airlines had tripled in value. From that you can conclude that investors and instos don't follow Warren to the letter


Not at all.

Process vs Outcome.

Be extremely worth your while spending a whole day studying this move alone, read all the transcripts and the 10Q's and the K.

Then write an essay with your findings, will improve you massively as an investor.

With this logic it was a massive mistake not to have bought ****coin and in hindsight it was.

[bull....]

Buffett annual meeting had some good nuggets

buffett admitting their earnings are likely to decline going forward
selling way more stocks first quarter than buying ie building up there cash position

which all makes sense

here's a shortened take of a good interview by daiio on what he thinks is a head too

Ray Dalio's Warning for The U.S. Economy and The Coming Crisis



https://www.youtube.com/watch?v=EWDNCKHhfls

[SailorRob]

Buffett annual meeting had some good nuggets

buffett admitting their earnings are likely to decline going forward
selling way more stocks first quarter than buying ie building up there cash position

which all makes sense

here's a shortened take of a good interview by daiio on what he thinks is a head too

Ray Dalio's Warning for The U.S. Economy and The Coming Crisis



https://www.youtube.com/watch?v=EWDNCKHhfls


Over what period was he talking about?

Give us a rough idea of the math required for earnings to decline while retaining 35 billion a year of equity within the operating business and a further 17 billion a year retained within the common stock portfolio, you can decrease the figures as you see fit.

What would ROE's have to fall to in order for earnings to decline in the medium term.

[bull....]

Over what period was he talking about?

Give us a rough idea of the math required for earnings to decline while retaining 35 billion a year of equity within the operating business and a further 17 billion a year retained within the common stock portfolio, you can decrease the figures as you see fit.

What would ROE's have to fall to in order for earnings to decline in the medium term.

of course he is talking about the yr ahead. i do not need to work out numbers as the statement is from the horses mouth so working out numbers is futile cause then your saying you know buffetts businersses better than him.

as far as the future beyond that goes buffett will update you again next annual meeting

another interesting comment was munger saying value investors will have to get used to earning less going forward

[SailorRob]

of course he is talking about the yr ahead. i do not need to work out numbers as the statement is from the horses mouth so working out numbers is futile cause then your saying you know buffetts businersses better than him.

as far as the future beyond that goes buffett will update you again next annual meeting

another interesting comment was munger saying value investors will have to get used to earning less going forward


And what did Buffett say in reply to Munger?

Yes he was talking about the year ahead, but what earnings was he talking about? Berkshire as a whole, or the operating earnings? How often inthe past has he said such things and overdelivered?

I don't doubt that operating earnings will decline off the sugar high, but lots on nuance there

[SailorRob]

Warren Buffett - 'I don't have the faintest idea what yields are going to do in the future'

What an idiot, doesn't he not know he can just log into Sharetrader and people there will tell him.

[JBmurc]

Robin williams on banking bail outs ... same joke works for the US treasury debt ceiling

https://www.youtube.com/watch?v=etQeFJ2lbbo

Janet Yellen: US treasury secretary warns of debt ceiling 'catastrophe'
https://www.bbc.com/news/business-65522169

[SailorRob]

Anyone out there have any idea how a leveraged overseas portfolio would be treated under FDR tax regime?

How would the leverage affect the tax calculation.

Cheers

[GTM 3442]

Where is the leverage levered. Within New Zealand or offshore?

[alokdhir]

Anyone out there have any idea how a leveraged overseas portfolio would be treated under FDR tax regime?

How would the leverage affect the tax calculation.

Cheers

IMHO ...Foreign equity are deemed to provide 5% dividend return even if they provide less ...so 5% income minus interest cost shud be final income of that portfolio for tax purposes ...most likely as margin lending rates are higher then 5% at present ...it shud result in loss for tax purposes ...mind u I am not tax expert.... just my thoughts ...

[SailorRob]

Where is the leverage levered. Within New Zealand or offshore?


Offshore, but if you know how each would be treated I'd be interested in hearing each perspective.

Thanks

[bull....]

The most important thing Warren Buffett said Saturday, and it isn’t good news for the economy




https://www.cnbc.com/2023/05/08/the-most-important-thing-warren-buffett-said-saturday-and-isnt-good-news-for-the-economy.html


“Nothing is sure tomorrow, nothing is sure next year, and nothing is ever sure, either in markets or in business forecasts, or in anything else,” Buffett said.

[Daytr]

People that resort to personally attacking others it's usually a reflection of themselves and that they have no sound basis to back up their position.
Honestly this sort of behavior was left behind at primary school. Someone needs to grow up.

[Bobdn]

https://twitter.com/GunjanJS/status/1655669486085611527?t=E81iHOkx1UPDZvJK1c59Lg&s=19

Yay for the NASDAQ lol. We did it!!! We lazily just bought USG/VUG in the distant past and then played video games and made many cups of tea and went for the occasional walk. All our hard work paid off!!!

[Valuegrowth]

https://www.youtube.com/watch?v=la0gXuzOGbE

[thegreatestben]

Or you can read his posts, disagree with them and move on with your life.

[BlackPeter]

I thought his last post was funny, if people don't participate in a thread because they are afraid of being criticised thats their problem. People just need to grow a thicker skin.

I strongly disagree, and I don't think its the fear of being criticised.

Some of the posters here tend to refer to various private parts and rear body cavities instead of making their arguments. They prefer as well to attack other posters instead of playing the ball. This is worst kindergarten bully behaviour - nothing useful or funny about that.

This behaviour is absolutely unnecessary and clearly killing any useful discussion ... and yes, while SR has at times as well useful contributions, he seems to have a tendency to allow parts of his body not related to his head to formulate his arguments.

All this has nothing to do with posters needing "to grow a thicker skin" - the issue is clearly that some posters are not able to contain themselves and stick to a minimum of respect and courtesy.

If people like mud fights, they should join them together with like minded people, but please - not here. This forum should allow constructive discussions about capital markets and be an open and safe place for everyone.

[Daytr]

Well said BlackPeter nailed it.

[Daytr]

Back to topic. Been short Russell 2000 for a few days & long Nat Gas for a bit longer. My Nat Gas trade is up about 10% in a week, Short trade is only marginally in the green.
With two big US events on the horizon in the next 48 hours, tempted just to take the win.

[bull....]

Inflation rate eases to 4.9% in April, less than expectations
https://www.cnbc.com/2023/05/10/cpi-inflation-april-2023.html

still trading within the micro range since end of march within the bigger range since nearly a yr ago

[alokdhir]

I strongly disagree, and I don't think its the fear of being criticised.

Some of the posters here tend to refer to various private parts and rear body cavities instead of making their arguments. They prefer as well to attack other posters instead of playing the ball. This is worst kindergarten bully behaviour - nothing useful or funny about that.

This behaviour is absolutely unnecessary and clearly killing any useful discussion ... and yes, while SR has at times as well useful contributions, he seems to have a tendency to allow parts of his body not related to his head to formulate his arguments.

All this has nothing to do with posters needing "to grow a thicker skin" - the issue is clearly that some posters are not able to contain themselves and stick to a minimum of respect and courtesy.

If people like mud fights, they should join them together with like minded people, but please - not here. This forum should allow constructive discussions about capital markets and be an open and safe place for everyone.

100% agree with u ...:t_up:

[Valuegrowth]

Good Morning Daytr
May I know what type of instrument do you use to short Russell 2000 and get long on Gas? Do you go with foreign broker? Thanks.

[Daytr]

Good Morning Daytr
May I know what type of instrument do you use to short Russell 2000 and get long on Gas? Do you go with foreign broker? Thanks.

I use CMC markets platform.
I will PM you if I can find how to allow messages which I think I turned off years ago and can't remember how I did it!

[SailorRob]

I use CMC markets platform.
I will PM you if I can find how to allow messages which I think I turned off years ago and can't remember how I did it!


And when you investigate CMC markets, they are by law forced to disclose the percentage of customers who don't lose money.

And you will find that percentage is very small.

What they don't have to disclose is the percentage of customers who not only make money, but make more than they would by passively holding an index fund. As that % is zero.

In a casino the hose always has the odds.

[SailorRob]

Industry Marketing Strategy #1: The field of a hundred funds blooming.

This one works as follows: a mutual fund complex launches 100 funds. Five have standout 1 to 3 year results, so the marketing apparatus sells the heck out of those to unsuspecting customers. When the inevitable reversion to the mean (mean being equal to market returns less fees) occurs, they find another five funds to market in the same fashion.
The hope is to always keep bringing in new customers, and to try to minimize the churn among the disappointed ones by keeping them within the mutual fund complex and selling them the new “fund of the year.” Hopefully you can see how this ends: customers make a return that’s equal to roughly market minus fees, and the mutual fund complex skims its 0.5% to 1% off the top for no value added. Where are the customer’s yachts, indeed.

Industry Marketing Strategy #2: Shooting star

A hot-shot hedge fund manager launches a modest-sized fund. He sits relatively quietly until he hits a stretch of 2-3 years of great returns. Perhaps he even invests in a way to take large risks to achieve the possibility of big gains that he can market. Perhaps not and he is simply waiting for positive randomness, it doesn’t matter.
Having hit the lucky streak, he goes on a marketing rampage. Of course, he supplements the amazing recent results with a narrative. Nothing sells like a story about the “special sauce” that he uses to produce these amazing results. The performance-chasing customers pile in, just in time for the reversion to the mean. The result is that on an asset-weighted basis his customers have a result ranging from terrible to mediocre, whereas the manager makes a killing for himself. Ouch.

Industry Marketing Strategy #3: Don’t think for yourself

This is done by marketing ninjas skilled in the black arts of behavioral persuasion. It usually involves some combination of the following:
Social Proof – “Did you know that [big name XYZ] invested with us?”
Scarcity – “This is only available for the next 2 months, closing the fund soon, we are so successful.”
Group Affinity – “Trust us, we are part of the same group.”
Reciprocity – “We like you, now like us back.”
Switch The Question – “Don’t answer whether you think we will do well with your investments, answer a different question, such as do you like us, are we well dressed and look the part, etc?”

The point of all of this is for you to stop using the rational part of your brain and to switch to the “reptilian” brain which uses short-cuts that favor the persuader to get the prospects to make quick decisions.
What do all of these methods have in common? The customer is the “mark” that exists primarily to provide wealth to the investment manager. They can’t be too smart or thorough in their decision making process, as these tactics work best on those chasing trailing performance and the easily persuadable who make impulsive decisions. Sadly, there seems to be no shortage of customers who fit these characteristics and fall for these tactics.

[causecelebre]

100% agree with u ...:t_up:

Welcome back to the thread! Miss your input and the balance you give to the bears

[alokdhir]

Welcome back to the thread! Miss your input and the balance you give to the bears

I thought now is the easy time for all to see where the markets will be in next few months and years ...no need to be " Perma Bull or Perma Bear " anymore ...even our dear friend Bull is making some bullish trades and buys ...lol :p

[Daytr]

Some of the posts on this thread remind me not to be a tiger as outlined in this fable. The grass is blue... Mind you I don't want to be a donkey either.
https://en.rattibha.com/thread/1417874742808223745

[SailorRob]

Some of the posts on this thread remind me not to be a tiger as outlined in this fable. The grass is blue... Mind you you don't want to be a donkey either.
https://en.rattibha.com/thread/1417874742808223745


Cash returns on capital are color blind.

[nztx]

might need a further packet of Red Crayons, the way markets are looking :)

[SailorRob]

might need a further packet of Red Crayons, the way markets are looking :)

Let's hope so.

The lower the prices the higher the returns.

Opportunity abounds everywhere.

[nztx]

Let's hope so.

The lower the prices the higher the returns.

Opportunity abounds everywhere.



The way Robbo's spending is going - Comrade Parker might be out with a proposal to see how much tax
he can shake loose out of the Sector - as a bit of Dividend RWT might not be quite enough :)

Even the Politicians like a juicy opportunity

in some camps such windfalls are expected to be shared around :)

[bull....]

Food prices were up 12.5% in the year to April 2023 - which is the highest annual rate of increase seen since 1987

https://www.interest.co.nz/personal-finance/121111/food-prices-were-125-year-april-2023-which-highest-annual-rate-increase

market down savagely on the food inflation

[SailorRob]

The way Robbo's spending is going - Comrade Parker might be out with a proposal to see how much tax
he can shake loose out of the Sector - as a bit of Dividend RWT might not be quite enough :)

Even the Politicians like a juicy opportunity

in some camps such windfalls are expected to be shared around :)

Yes indeed.

Being a NZ tax resident is a choice for me, so that's something I guess.

[Valuegrowth]

I get the feeling that Monday maybe not so hot...anyone care to comment.


Fortunately,we didn't experience a Black Monday like in 1987. Next we had a financial crisis in 2008. Remember how many financial companies went under water (went to receivership )in New Zealand? Many lost money in investing in stocks and property market .

Will there be another one?

Yes. If asset prices go up well above their sustainable level.

https://www.investopedia.com/articles/investing/082515/how-do-asset-bubbles-cause-recessions.asp

[Valuegrowth]

https://www.youtube.com/watch?v=VPfge79_7M0

[Daytr]

Copper smashed overnight. Copper is typically seen as the canary in the coal mine for global economic health.
Interesting times.

[BlackPeter]

Copper smashed overnight. Copper is typically seen as the canary in the coal mine for global economic health.
Interesting times.

Well, not sure about the times (copper related), but at least your choice of words is interesting ....

So - copper went down from USD 3.85 to USD 3.70, a shocking drop of 4%!

If we look at last years jitter (see chart), copper is well in the upper half of its natural jitter, and nothing extraordinary happened.

14582

If you call this quite normal jitter "Smash"- how would you call it then if something unusual happens in the markets?

[Daytr]

Yes I am quite happy with the wording I used. 4% in a day is big move in anyone's book including from someone who traded copper professionally. It also broke a reasonably big technical level which would have seen longs covering and shorts entering which would have exaggerated the move.

[SailorRob]

Yes I am quite happy with the wording I used. 4% in a day is big move in anyone's book including from someone who traded copper professionally. It also broke a reasonably big technical level which would have seen longs covering and shorts entering which would have exaggerated the move.

4% is nothing, look how many 4% moves there are in a year.

If you traded copper professionally and were good at it why did you stop.

[bull....]

Yes I am quite happy with the wording I used. 4% in a day is big move in anyone's book including from someone who traded copper professionally. It also broke a reasonably big technical level which would have seen longs covering and shorts entering which would have exaggerated the move.

15th april ( sat morning nz time but normal hrs off-shore)was the best spot to go short on the failed up side break from range trading , last nights plunge was failure to break back into the range from breakdown of the range ... anyway thats how i see it

[alokdhir]

https://www.stuff.co.nz/business/property/132018727/property-investors-facing-equivalent-of-105-interest-rate-investor-says

This leads to very little new investment in residential property ? New builds still will work old way ...so it encourages new build as an investment property ...but overall recent new landlords or additions will turn sour very soon ...50% interest deductibility already gone ...in another 2 all will go then all recent properties will become big cash flow negative ...shud have some effect on economy per se ...land lords are mostly middle income folks thus they in trouble will help RNBZ nail inflation faster ...this is additional increasing burden on their cash flows or money in hand ...this time higher rates plus this newer tax treatment of interest deductibility working in tandem ...shud reduce inflation faster ...Unless Bull has other spin on this ...lol

Now u cant leverage into rental market as mortgage paid is not an expense anymore ...so need full equity for better cash flows ...then maybe Sharemarket has come to equal footing and can offer better returns and growth then rental property with 100% equity

[Valuegrowth]

Copper has entered a bear market. I believe going forward copper along with over valued asset markets could have volatility as well as falling trend.
https://www.dailyfx.com/news/copper-prices-drop-on-weaker-chinese-data-demand-concerns-20230512.html


Copper smashed overnight. Copper is typically seen as the canary in the coal mine for global economic health.
Interesting times.

[Valuegrowth]

https://mcgillbusinessreview.com/articles/elevated-asset-prices-a-boom-a-bubble-and-then-a-bust

Very interesing article which was published in 2021.

Two schools of thoughts

The argument for equities in asset bubble territory Vs.The argument against a growing asset bubble

Why should we worry? Not because of inflation or recession.It’s because of over stretched asset prices.

[Daytr]

Well, not sure about the times (copper related), but at least your choice of words is interesting ....

So - copper went down from USD 3.85 to USD 3.70, a shocking drop of 4%!

If we look at last years jitter (see chart), copper is well in the upper half of its natural jitter, and nothing extraordinary happened.

14582

If you call this quite normal jitter "Smash"- how would you call it then if something unusual happens in the markets?

I hope that's not the charting tool you use BlackPeter.
Here is a more accurate reflection of the move in Copper on Thursday night.

14588

[Daytr]

https://mcgillbusinessreview.com/articles/elevated-asset-prices-a-boom-a-bubble-and-then-a-bust

Very interesing article which was published in 2021.

Two schools of thoughts

The argument for equities in asset bubble territory Vs.The argument against a growing asset bubble

Why should we worry? Not because of inflation or recession.It’s because of over stretched asset prices.

Interesting article looking back and in hindsight bullish argument was correct with stocks putting on another circa 20% from the time of the article.

Here's a current article and it highlights the FEDs tapering program which is running at $95Bln per month. It's an area I think that's under reported.

https://www.usbank.com/investing/financial-perspectives/market-news/federal-reserve-tapering-asset-purchases.html

[SailorRob]

Too much weights not enough speed work. What was the next bit again

[bull....]

stagflation ?

Services sector drop down 4% april :scared:


https://businessnz.org.nz/psi/services-sector-drop/

see bull's post quite a while back of OCR at 6% is gaining traction

Westpac economists are now picking the Reserve Bank (RBNZ) will need to raise the Official Cash Rate (OCR) to as high as 6% - which is a new high forecast among major bank economists.

https://www.interest.co.nz/personal-finance/121227/surging-inbound-migration-seen-adding-demand-new-zealand-economy-westpac

[Muse]

6% - horrifying if it comes to pass.

Shameful we have found ourselves in this position.

[Balance]

6% - horrifying if it comes to pass.

Shameful we have found ourselves in this position.

A government hell-bent on prolific wasteful spending (especially it's now only 5 months away from the election) and a Reserve Bank which allowed inflation to get out of control & which has only one weapon to rein in inflation - hardly a surprise!

[Rawz]

Outside of residential construction the NZ economy is too damn resilient. Until the unemployment rate starts to increase we will have more hammering from the RBNZ.

[alokdhir]

No one is paying attention to IRD / Tax hammering already built into the system year on year ...or people think its inconsequential ?

IMO that will help a lot in controlling big part of inflationary money supply ...money out of the hands of land lords and into tax kitty ...keeping in view almost all haves in NZ are landlords too !!

[SailorRob]

6% - horrifying if it comes to pass.

Shameful we have found ourselves in this position.

What is horrifying about it, Isn't ZIRP far worse?

[Balance]

Outside of residential construction the NZ economy is too damn resilient. Until the unemployment rate starts to increase we will have more hammering from the RBNZ.

Resilient because this Labour government is spending $1 billion more per week since they took office - that's a lot of money being pumped into the economy.

Note that NZ's current account deficit is now the worst since records began in 1988?

All that money gone into non productive imports and spending.

[bull....]

budget day tomorrow. will robinson be prudent or will he throw in some lollies

the market may not care when it comes to rates

“Running wider-for-longer fiscal deficits and adding further macroeconomic stimulus to an already out-of-balance economy is potentially problematic,” he said. “In this environment even a no-frills budget could look pretty frilly from an inflation-fighting perspective.”

https://www.bloomberg.com/news/articles/2023-05-16/new-zealand-budget-to-show-rising-debt-wider-deficits-as-economy-slows?srnd=premium-asia&leadSource=uverify%20wall

[SailorRob]

budget day tomorrow. will robinson be prudent or will he throw in some lollies

the market may not care when it comes to rates

“Running wider-for-longer fiscal deficits and adding further macroeconomic stimulus to an already out-of-balance economy is potentially problematic,” he said. “In this environment even a no-frills budget could look pretty frilly from an inflation-fighting perspective.”

https://www.bloomberg.com/news/articles/2023-05-16/new-zealand-budget-to-show-rising-debt-wider-deficits-as-economy-slows?srnd=premium-asia&leadSource=uverify%20wall


Who's that?

[bull....]

Who's that?

finance minister of NZ

[SailorRob]

finance minister of NZ

Oh Robertson.

[Baa_Baa]

Oh Robertson.

ha ha, I thought he meant Will Robinson, Lost in Space.

[causecelebre]

ha ha, I thought he meant Will Robinson, Lost in Space.

.....lol.....

[bull....]

second bank lifted there OCR peak

ANZ says higher official cash rate peak might be needed

It said it now expected the rate to peak at 5.75%, rather than 5.5% as previously predicted, which is also the Reserve Bank’s forecast peak
ANZ said, on the data alone, the Reserve Bank could justify a 6% peak but there were still downside risks

https://www.stuff.co.nz/business/money/300881595/anz-says-higher-official-cash-rate-peak-might-be-needed

see there saying cause of strong migration , potential property bottom

[alokdhir]

Maybe now is the time to look for long term growth stocks at bargain prices and not chase or be happy with yield players ...which is easier way but in long term growth stocks will easily outpace current yielders for absolute returns

Eg ...in 2014 MFT was $ 18 and HLG at $ 3.20 ...now even in downtrend MFT is $ 70 and HLG at $ 5.80 ...all can do the maths

[Daytr]

Hi Alokdhir, what are your picks re the growth stocks?

[alokdhir]

Hi Alokdhir, what are your picks re the growth stocks?

Basically large cap blue chips ...at present I think KFL offers great portfolio and at a great discount to NAV too ...With KFL u get growth stocks with option of making it either regular income or pure growth with DRP ...on top of it its at discount to intrinsic value which will cover the future fund charges ...at current rate its 8% discount to NAV ...that can cover fund charges for next 5-6 years of holding ...even if u dont get any value of few warrant issues in that time . In my personal and humble opinion its pure win win situation

PS : Tax advantages of KFL for all over 28% rate is added bonus

[Valuegrowth]

What happened to the shipping industry?

https://www.bloomberg.com/news/newsletters/2023-05-04/supply-chain-latest-global-shipping-slowdown

https://www.ft.com/content/c9808a10-a9d9-45ee-ac80-3da93172f290

[bull....]

NZ treasury reckons rates will stay higher for longer and houses to fall by another 4-5 %
economists saying the budget was not spending prudent as they hoped , may force RBNZ to hike rates .... our 6% call looks possible after the budget

[alokdhir]

NZ treasury reckons rates will stay higher for longer and houses to fall by another 4-5 %
economists saying the budget was not spending prudent as they hoped , may force RBNZ to hike rates .... our 6% call looks possible after the budget

Everything is possible but will it actually happen ...only time will tell ...even if OCR goes to 6% its not changing any usable rates big time ...maybe some small tinkering ...thats why no one bothers too much about that anymore . Longer part will also market not very sure part

BTW Petrol and Diesel prices in AKL started looking very close to pre covid levels ...$ 1.46 at Costco and Pak & Save ...very promising for inflation fight

[Daytr]

NZ treasury reckons rates will stay higher for longer and houses to fall by another 4-5 %
economists saying the budget was not spending prudent as they hoped , may force RBNZ to hike rates .... our 6% call looks possible after the budget

Tony Alexander put out yesterday that housing will rise by 5 - 10% in the next 12 months, driven by immigration..... Brought to you by OneRoof of course....

[bull....]

Tony Alexander put out yesterday that housing will rise by 5 - 10% in the next 12 months, driven by immigration..... Brought to you by OneRoof of course....

TA lol anyway mostly low paid immigrants i guess still have to fund a mtge just like everyone else

[alokdhir]

TA lol anyway mostly low paid immigrants i guess still have to fund a mtge just like everyone else

They are the one reducing labour shortage too which will release pressure on wages ...so it will work both ways ...immigration has both side stories ...not just inflationary side ...so it is good thing for economy to have more willing and harder working immigrants replacing Kiwis leaving for greener pastures ..

[Daytr]

TA lol anyway mostly low paid immigrants i guess still have to fund a mtge just like everyone else

Not that I always agree with TA, but not sure what the mix of immigrants will be. The Govt extended the family & partners qualifications so grand parents can join their family here etc.
Immigrants need a roof over their head no matter what, either rented or purchased so either way it absorbs housing stock.
The net swing is estimated to be about 50k increase from 2022 where net NZ lost people, to 2023.

As my mate said. TA couldn't pick his nose! 😅

[percy]

This week's The Secret Broker;
https://stockhead.cmail20.com/t/d-l-vlytluk-yupddjlly-u/

[Valuegrowth]

Rates are going up along with selected individual assets worldwide. But many others ( stocks, property, metals, grain, soft commodity, energy) are falling. With this adjustment(market equilibrium)inflation should come down by 2024. No need to play with interest rates.

[Muse]

Massive increases in wholesale interest rates in NZ this week.

90 day bank bill: from 5.58% on the 15th to 5.79% COB
1 yr swap: 5.51% to 6.0%
2 yr swap: 4.9% to 5.49%
5 yr swap: 4.23% to 4.61%
10yr gov: 4.05% to 4.41%

Implies OCR higher for longer and inversion signals increased chances of recession.

Horrifying, budget induced rises in wholesale interest rates.

Fingers crossed they prove a knee jerk reaction. However, for today anyway, it appears the market is starting to agree with Westpac's call that the OCR could reach 6% (ANZ by reference now 5.75%). Rates are volatile, but this is a big increase (!)

[SailorRob]

Massive increases in wholesale interest rates in NZ this week.

90 day bank bill: from 5.58% on the 15th to 5.79% COB
1 yr swap: 5.51% to 6.0%
2 yr swap: 4.9% to 5.49%
5 yr swap: 4.23% to 4.61%
10yr gov: 4.05% to 4.41%

Implies OCR higher for longer and inversion signals increased chances of recession.

Horrifying, budget induced rises in wholesale interest rates.

Fingers crossed they prove a knee jerk reaction. However, for today anyway, it appears the market is starting to agree with Westpac's call that the OCR could reach 6% (ANZ by reference now 5.75%). Rates are volatile, but this is a big increase (!)


How dare suppliers of credit move closer to zero return from more deeply negative returns!

[SailorRob]

Dalio

Spending more than one earns and financing it with debt, which we have been doing for a long time, is easy, pleasurable, and not sustainable. It’s not sustainable because increasing debt assets and liabilities faster than income eventually makes it impossible to simultaneously pay lender-creditors a high enough real (i.e., inflation-adjusted) interest rate to have them hold the debt assets without having that real interest rate too high for the borrower-debtors to be able to service their debts.

When debt assets and liabilities reach the point that the amount of debt sold is greater than the amount of debt that buyers want to buy, central banks are faced with a choice: they either have to let interest rates rise to balance the supply and demand, which is crushing to debtors and the economy, or they have to print money and buy the debt, which is inflationary and encourages holders of the debt to sell the debt, which makes this debt imbalance worse. In either case that creates a debt crisis that is like the runs on the banks that we have been seeing, but with government bonds being what is sold and the run on the bank being a run on the central bank. That is how all reserve currencies and big debt cycles have ended. From what I see, which I will cover in another post, we are approaching that tipping point in which the amount of debt sold by the government will be greater than the demand for it, which could lead to the central bank having to print money and buy bonds and a sale of government bonds that would put the central bank in that untenable position I just described.

[Habits]

Dalio

Spending more than one earns and financing it with debt, which we have been doing for a long time, is easy, pleasurable, and not sustainable. It’s not sustainable because increasing debt assets and liabilities faster than income eventually makes it impossible to simultaneously pay lender-creditors a high enough real (i.e., inflation-adjusted) interest rate to have them hold the debt assets without having that real interest rate too high for the borrower-debtors to be able to service their debts.

When debt assets and liabilities reach the point that the amount of debt sold is greater than the amount of debt that buyers want to buy, central banks are faced with a choice: they either have to let interest rates rise to balance the supply and demand, which is crushing to debtors and the economy, or they have to print money and buy the debt, which is inflationary and encourages holders of the debt to sell the debt, which makes this debt imbalance worse. In either case that creates a debt crisis that is like the runs on the banks that we have been seeing, but with government bonds being what is sold and the run on the bank being a run on the central bank. That is how all reserve currencies and big debt cycles have ended. From what I see, which I will cover in another post, we are approaching that tipping point in which the amount of debt sold by the government will be greater than the demand for it, which could lead to the central bank having to print money and buy bonds and a sale of government bonds that would put the central bank in that untenable position I just described.

The Panda country likes countries like us. They don't forgive the debt, we become the servants.

[Valuegrowth]

https://www.investopedia.com/articles/investing/082515/how-do-asset-bubbles-cause-recessions.asp#:~:text=An%20asset%20bubble%20occur s%20when,to%20justify%20the%20price%20spike.

Quoted from the above link.

How Asset Bubbles Can Lead to RecessionAn asset bubble occurs when the price of an asset, such as stocks, bonds (https://www.investopedia.com/terms/b/bond.asp), real estate, or commodities, rises at a rapid pace without underlying fundamentals (https://www.investopedia.com/terms/f/fundamentals.asp) to justify the price spike.

[Valuegrowth]

I believe it's time to become cautious on tech stocks. I find hardly any strong company trading below the PE ratio of 50. It’s ridiculous to have companies trading above the PE ratio of 1000. Could there be another tech or dot com crisis in this over crowded sector?https://markets.businessinsider.com/news/stocks/tech-stocks-svb-banking-crisis-rally-overvalued-markets-investing-sp500-2023-3#:~:text=Tech%20stocks%20are%20overvalued%20after ,the%20S%26P%20500's%204%25%20gain.

[SailorRob]

I believe it's time to become cautious on tech stocks. I find hardly any strong company trading below the PE ratio of 50. It’s ridiculous to have companies trading above the PE ratio of 1000. Could there be another tech or dot com crisis in this over crowded sector?https://markets.businessinsider.com/news/stocks/tech-stocks-svb-banking-crisis-rally-overvalued-markets-investing-sp500-2023-3#:~:text=Tech%20stocks%20are%20overvalued%20after ,the%20S%26P%20500's%204%25%20gain.

Whoever wrote that needs their head looking at. Can't find any strong company below a 50 PE?

Of all the nonsense I've ever read on sharetrader thst is up there.

[Valuegrowth]

Whoever wrote that needs their head looking at. Can't find any strong company below a 50 PE?

Of all the nonsense I've ever read on sharetrader thst is up there.
Sorry. It should be "can't find any strong Tech company below a 15 P/E".

https://www.currentmarketvaluation.com/models/price-earnings.php
https://www.currentmarketvaluation.com/models/buffett-indicator.php

[Valuegrowth]

https://ycharts.com/companies/ASXFY/pe_ratio

ASX PE Ratio:37.50 for May 19, 2023

If I am correct during the past 13 years , NZX's highest PE ratio was 38.46 and the lowest was 11.5.

[winner69]

BREAKING: White House says if the US defaults, the stock market is expected to decline by more than 45%.. ….from an outfit called Spectator

Big bargains on the way …….cash ready

[alokdhir]

BREAKING: White House says if the US defaults, the stock market is expected to decline by more than 45%.

Big bargains on the way …….cash ready

Almost negligible chance of that happening ...so why prepare for such an event !!

They need scare people to get their suitable deal ...which will happen few days before money finishes ...lol

[Valuegrowth]

However,I don't rule out kind of panic situation. At the end patient and disciplined investor will win.

BREAKING: White House says if the US defaults, the stock market is expected to decline by more than 45%.

Big bargains on the way …….cash ready
I don't think so. Only thing I expect is coming bear market after the longest bull market. Of course time to time there could be heavy sell-off, volatitity in all types of markets. Bull market will follow bear market. Bear market will follow bull market. This time is no different to me. Under the current situation,value investing makes sense. Rule number one: Never make lossess again.

[percy]

Value vs Growth,.
https://stockhead.cmail19.com/t/d-l-vlydro-yupddjlly-c/

[Ggcc]

BREAKING: White House says if the US defaults, the stock market is expected to decline by more than 45%.. ….from an outfit called Spectator

Big bargains on the way …….cash ready
Panic!!!!!!! Sell all your shares tomorrow…….. oh wait when was the last time they ever defaulted. Please remind me.

[SailorRob]

However,I don't rule out kind of panic situation. At the end patient and disciplined investor will win.

I don't think so. Only thing I expect is coming bear market after the longest bull market. Of course time to time there could be heavy sell-off, volatitity in all types of markets. Bull market will follow bear market. Bear market will follow bull market. This time is no different to me. Under the current situation,value investing makes sense. Rule number one: Never make lossess again.


Meanwhile on a place called planet Earth in Q1 of 2023;

As of quarter-end, if our portfolio were viewed as one see-through company, based on sell-side consensusestimates (or when unavailable our own estimates), our portfolio would be trading at a 1-year-forward P/Emultiple of 7.6x and a 3-year forward P/E multiple of 5.2x.10,11 This implies a ~21% net income CAGR andassumes no share repurchases over that period. I am optimistic about the prospects of our currentportfolio, particularly the margin of safety that I believe is embedded in our see-through multiple.

Here I was thinking we are in a generational bear with many hundreds of quality companies that have had 10 years wiped of their share prices not to mention 50%.

[SailorRob]

Sorry. It should be "can't find any strong Tech company below a 15 P/E".

https://www.currentmarketvaluation.com/models/price-earnings.php
https://www.currentmarketvaluation.com/models/buffett-indicator.php


And run me through the math of why we should find them?

[alokdhir]

https://www.squirrel.co.nz/blogs/housing-market/job-done-why-the-monetary-policy-tightening-cycle-is-over?utm_source=outbrain&utm_medium=article&utm_campaign=why-the-money-tighting-cycle-is-over&utm_term=money-re-marketing&dicbo=v4-91J9cri-1131155066

Other side of the story

IMO ...we will have another 25-50bips increase ...but thats actually inconsequential to real rates ...markets have already done it ...But will Banks raise usable rates for masses ...fearing more business loss ...so overall theme that we are done is easier to see ...rates topped shud encourage equity investment in next few months

RV stocks big reversal is showing early signs of that

[winner69]

https://www.squirrel.co.nz/blogs/housing-market/job-done-why-the-monetary-policy-tightening-cycle-is-over?utm_source=outbrain&utm_medium=article&utm_campaign=why-the-money-tighting-cycle-is-over&utm_term=money-re-marketing&dicbo=v4-91J9cri-1131155066

Other side of the story

IMO ...we will have another 25-50bips increase ...but thats actually inconsequential to real rates ...markets have already done it ...But will Banks raise usable rates for masses ...fearing more business loss ...so overall theme that we are done is easier to see ...rates topped shud encourage equity investment in next few months

RV stocks big reversal is showing early signs of that

Good to see you back into happy / cheery / positive mode alokdhir after appearing to be down in the dumps of late.

[alokdhir]

Good to see you back into happy / cheery / positive mode alokdhir after appearing to be down in the dumps of late.

Never want to be a " Sour Pusses " as referred by our dear friend on other site ....lol :D

Thanks for your encouragement as ever ...U r not only very informative poster but a perfect gentlemanly one too ...:t_up:

[alokdhir]

https://www.stuff.co.nz/business/132055816/investors-pay-66-million-more-tax-as-mortgage-interest-deductibility-phased-out

This side of inflation control is not fully appreciated by markets ...

Also for first time in NZ history stocks are becoming more attractive then rental property ...

[bull....]

https://www.squirrel.co.nz/blogs/housing-market/job-done-why-the-monetary-policy-tightening-cycle-is-over?utm_source=outbrain&utm_medium=article&utm_campaign=why-the-money-tighting-cycle-is-over&utm_term=money-re-marketing&dicbo=v4-91J9cri-1131155066

Other side of the story

IMO ...we will have another 25-50bips increase ...but thats actually inconsequential to real rates ...markets have already done it ...But will Banks raise usable rates for masses ...fearing more business loss ...so overall theme that we are done is easier to see ...rates topped shud encourage equity investment in next few months

RV stocks big reversal is showing early signs of that

yep agree 25 - 50 increase this wednesday
markets had big move up in rates after budget pricing in higher OCR so be surprising if ORR didnt raise OCR due to higher migration/increase in budget spending/cyclone spending

and yes if US defaults that will bring about a end to the rate rising very quickly :) and probably QE again

[alokdhir]

yep agree 25 - 50 increase this wednesday
markets had big move up in rates after budget pricing in higher OCR so be surprising if ORR didnt raise OCR due to higher migration/increase in budget spending/cyclone spending

and yes if US defaults that will bring about a end to the rate rising very quickly :) and probably QE again

US DEFAULT will be like financial nuclear war ...so 99.9% wont happen ...as cant happen ...but ...lol

[SailorRob]

https://www.stuff.co.nz/business/132055816/investors-pay-66-million-more-tax-as-mortgage-interest-deductibility-phased-out

This side of inflation control is not fully appreciated by markets ...

Also for first time in NZ history stocks are becoming more attractive then rental property ...


Isn't that money that is taken with one hand spent more aggressively and more inflationary with the other.

[alokdhir]

Isn't that money that is taken with one hand spent more aggressively and more inflationary with the other.

Then it shud be neutral effect ...but all justifying raising rates to 6% on extra Govt spending !!!

Maybe whats Govt doing is wealth redistribution ...taking where its extra to spend where its needed more ...maybe its good

[SailorRob]

Then it shud be neutral effect ...but all justifying raising rates to 6% on extra Govt spending !!!

Maybe whats Govt doing is wealth redistribution ...taking where its extra to spend where its needed more ...maybe its good


Doubt neutral.

That money left in the hands of those it was taken from would perhaps be somewhat used to increase productive capacity, invested wisely.

In the hands of the state it will be wasted and used to decrease productive capacity and spent on KFC and fuel.

[Bjauck]

https://www.stuff.co.nz/business/132055816/investors-pay-66-million-more-tax-as-mortgage-interest-deductibility-phased-out

This side of inflation control is not fully appreciated by markets ...

Also for first time in NZ history stocks are becoming more attractive then rental property ... The 1980’s until the 1987 were a boomtime in NZ shares. Then many were scared off it as they realised it had been a house of cads.

[Joshuatree]

Thanks Percy ,a good read.I have a mix of growth and value from nanocap to largecap which has made investing simpler with ample reward.

[Daytr]

Most home loan borrowers are yet to roll onto the new rates. This will continue to increase over the next 18 months.
Orr said at the last meeting that banks hadn't passed on the previous rate rise, so here's another 50bp.
That says to me he wasn't wanting to go 50bps last time but the banks forced his hand.
This time around the banks are doing the opposite and factoring in 50bps.
My guess is that Reserve Bank will either go into holding pattern to see the impact of what they have already done or go 25bps.

[Daytr]

The debt ceing has been raised something like 78 times in 60 years. Soon to be 79.

[alokdhir]

Doubt neutral.

That money left in the hands of those it was taken from would perhaps be somewhat used to increase productive capacity, invested wisely.

In the hands of the state it will be wasted and used to decrease productive capacity and spent on KFC and fuel.

I am not sure ...as land lords kept becoming bigger as it became fashionable to say how many rental properties u have ..etc

KFC and fuel is also productive ...money comes to economy ...but I reckon socialism is never acceptable in ingrained capitalist economies ....but slowly slowly it will be more acceptable ....mind u I am not labour voter ...lest u think so ...lol

[SailorRob]

I am not sure ...as land lords kept becoming bigger as it became fashionable to say how many rental properties u have ..etc

KFC and fuel is also productive ...money comes to economy ...but I reckon socialism is never acceptable in ingrained capitalist economies ....but slowly slowly it will be more acceptable ....mind u I am not labour voter ...lest u think so ...lol

If it was spent on a new chicken farm or offshore rig then perhaps.

Money will come to the economy if the government buys every molecule of fuel in the country and sets fire to it. Does not mean it's productive.

If we ban all earth moving equipment tomorrow and replace with teams of men with shovels, way more jobs to go around and way more money getting poured into wages.

Doesn't mean it's productive.

Labour says school lunches are great as provide jobs.

OK then why stop with school lunches, why not feed the whole country.

Then start on seagulls. Imagine the jobs it would create.

[Sideshow Bob]

If it was spent on a new chicken farm or offshore rig then perhaps.

Money will come to the economy if the government buys every molecule of fuel in the country and sets fire to it. Does not mean it's productive.

If we ban all earth moving equipment tomorrow and replace with teams of men with shovels, way more jobs to go around and way more money getting poured into wages.

Doesn't mean it's productive.

Labour says school lunches are great as provide jobs.

OK then why stop with school lunches, why not feed the whole country.

Then start on seagulls. Imagine the jobs it would create.

Bit like in the budget when they said one of the factors helping NZ avoid recession was the Cyclone Gabrielle rebuild.

Almost implying that it was positive to have a natural disaster.

[SailorRob]

Bit like in the budget when they said one of the factors helping NZ avoid recession was the Cyclone Gabrielle rebuild.

Almost implying that it was positive to have a natural disaster.

Not almost implying, that's exactly what they are saying.

Same with Christchurch!

I've got an idea then, let's move the population of another of our major cities away for a couple of days and nuke it.

Will be huge benefit to the economy.

[causecelebre]

https://www.stuff.co.nz/business/132055816/investors-pay-66-million-more-tax-as-mortgage-interest-deductibility-phased-out

This side of inflation control is not fully appreciated by markets ...

Also for first time in NZ history stocks are becoming more attractive then rental property ...

Yes, anecdotally i've heard many investors are only just coming to realise the actual effect of this. Its come as a rude shock to many even though this has been in the works for some time

[Panda-NZ-]

Will be huge benefit to the economy.

I'm not entirely a believer in the broken window fallacy.

But something like a war would of course be incredibly destructive even for the winner (see the UK).

[winner69]

Not almost implying, that's exactly what they are saying.

Same with Christchurch!

I've got an idea then, let's move the population of another of our major cities away for a couple of days and nuke it.

Will be huge benefit to the economy.

NZ economy (GDP) didn't exactly boom in the years after the Chch quakes ...... even though politically the government loved the talk of a 'rock star economy'

[SailorRob]

I'm not entirely a believer in the broken window fallacy.

But something like a war would of course be incredibly destructive even for the winner (see the UK).

Yes I think I was being sarcastic.

[SailorRob]

NZ economy (GDP) didn't exactly boom in the years after the Chch quakes ...... even though politically the government loved the talk of a 'rock star economy'

Burn down your house and rebuild it, insurance or not, and see if you 'boom'.

You're right... May seem like a boom locally but it's all smoke and mirrors.

[Panda-NZ-]

NZ economy (GDP) didn't exactly boom in the years after the Chch quakes ...... even though politically the government loved the talk of a 'rock star economy'

It could have been worse without the quake though.