Later, we are told it is a multitude of small, short-term issues, of which panic-buying fuel is but the latest, and once we're through we'll be in global-Britain times enjoying our prosperity, power and independence to the max.
But will we? As it feels as though the situation is
worsening, with bad surprises flying in every week. And for the causes,
don't look local, because these are global supply chain problems. Of
course.
working conditions, pay, red tape, laziness and over-sensitivities, many drivers quitting because of the lockdowns, not training up new HGV operators, and not women, Brexit causing many to return home, giving a shortage of 100,000 drivers. That's a lot and you do wonder what the RHA has been doing - all asleep in their cabs!
We are talking about logistics for retail food and fuel, but that's not all. What we are talking about is shipping costs, and gas price rises and a drop in sterling, we're concerned about inflation and interest rates, tax rises both 2.5% NI (yes, 2.5%) and local authority tax rises, and ultimately how all this joins up to the medium and long term as concerns the EU FTA, the break-up of the kingdom, and beyond that to recession, debt-collapse, climate change, migrations, the rise of China.
We can imagine low interest rates and high inflation, followed by high interest rates and recession. If high-wage, capital is going to replace labour and put those low-wage often immigrant, workers on the dole, at taxpayer expense.
It's a lot for Boris to think about (we are getting into a cult figure status).
Can we see what's happening through this glare of more and more short-term problems? Saunders is interesting
https://www.telegraph.co.uk/business/2021/10/09/brace-interest-rate-rises-warns-bank-england-rate-setter/?li_source=LI&li_medium=liftigniter-rhr.
Oil prices have reached a three year
high, $80 a barrel, and climbing thanks to output disruptions and this
high demand. Traditional oil companies are selling out and investing in
green, adding to supply problems and green is much more expensive.
Germany is now back to relying on coal and on Putin!
Then there's the construction sector where more than one in three businesses can't get the materials, goods and services they need within the UK. How will a young person rehab the flat they've just bought? What effect on the target of 300,000 housing starts?
The gas surge closed two of
the UK’s big industrial fertiliser plants in a completely unexpected and
inflationary surprise, showing graphically how everything is connected
to everything and everywhere there are knife-edges,resulting in more
govt takeover in the "market" economy and state aid and yet more
borrowing.
Food prices and staples. Commodities. Is this the start of a new supercycle?
So now we have inflation at 4 per cent for the short-term, plus a possible base rate rise early next year, possibly even this year 2021. America same same. Plus if we enter the land of 5% inflation there will be the threat to stock markets, not just imminent tapering.
Still, no significant upturn in unemployment nor substantial corporate distress. Only inflation, supply difficulties that threaten the economic recovery (which is already faltering).
And what about the jobs of those coming off furlough? Will they want to back to work? Will employers have work for them? Given the worsening outlook.
Only
worries and questions. No real answers. Yet everyone is talking of
recession. And the Prince of Norway offers the UK help with food and
fuel. That's quite humiliating.
Sort out the short term, the central bank needs to say no interest rate rises medium term, but the long term is surely out of the hands of management or politicians.
Clive Woolley - I replied to you last comment on the BAE (22nd sept) thread, albeit a bit belatedly, so I have copied my reply here:
Clive - looks correct to me and certainly the final figure is very much in the right area - I may sound vague here, but the TSS moves every day a little with the share price of course.
I use data which gives the net total assets from which I deduct the intangibles, same result your way so that is fine.
This is obviously a screening exercise and there are other factors that you must consider, often more subjective:
1. Look for anything odd in the balance sheet, things that don't quite stack up, TI Fluid systems for example, as discussed yesterday, the balance sheet and P&L look like they are from different businesses.
2. Watch out for a big debt or liability build up behind an apparently strong TSS - a variation on point 1. But also an absolute red flag.
3. Look at the ten year data, if you look at the ten year tangible equity build up for LGEN and BWY, it is a thing of great beauty like a marvelous piece of art, a balance sheet masterpiece.
4. There needs to be a continuity to the equity build up - that is why Aviva and M&G although reasonable buys I think, are not in the same league as LGEN, within their broad sector, due to the greater uncertainty of future earnings and equity build up for Aviva and M&G.
5. Sometimes when a business has undertaken a cash draining expansion, this can suppress the TSS and mask the opportunity. Forterra for example, with their new brick plant, to produce next year, Covid came as spend was peaking, they had to issue just over 6% shares as a precautionary measure last year and the development spend has obviously held back the divi. But even with the expansion impact, the TSS is still over 7%, so I don't use such circumstances to ignore the all important TSS metric, but I can make allowance under some circumstances if this metric is held back a little by sound expansion spend.