Dawnay Day Carpathian Share Discussion Threads

[aleman] 19/8/2008 12:03

I have found Ambrose's commentary tends to be very pro-US authorities (Fed/Treasury) and often wrong. It is the first time I have seen Lombard Street Research publish any such numbers - where was their publicity when their M3 was running up rapidly? Nowandfutures have published John Williams reconstruction weekly for free public consumption even before the run up of the last couple of years which has set off the recent spike in US CPI and a realistic street rate of over 10% (and possibly set to fall back a little). They present rather different figures.





In terms of the lower chart, which I have more trust in, having followed it for so long, there is a short period of seasonal stagnation which is slightly greater than last year and feeding into a slight fall in annual growth. This could be a top forming. The trouble is this chart is reconstructed from government numbers which have to be taken at face value, even if they represent positive values ascribed to banking assets that the market would have written down by now. How realistic are they and how much lower would growth be if some of the assets were written off? Would they regain their value if enough money was printed to get the housing market and various derivatives markets going again?

At the end of the day, the lower chart has proven very useful lead indicator of what has happened to prices on the street so I will continue to give it some credence. I have read a considerable amount of one-sided rubbish from Ambrose which means I don't give much weight to what he says but he is useful as he seems to have some kind of link to what the US Fed are thinking. Despite the high rate of M3 growth, there is still a real fear of deflation by some commentators because the US banking system has had its assets completely wiped out and is now running on fresh reserves borrowed from the Fed. The best indicator of potential deflation is the strong dollar and weak gold and silver prices at the same time that investors are having trouble getting hold of physical gold and silver. Is deflationery destruction of $s in the banking system lifting its value so that gold and silver fall in comparison despite strong demand for them (and of course other commodities fall in price in terms of scarcer $s)? But when do street prices start to fall?


I think there could be some truth in the general trend Ambrose is highlighting and think he is part of regime that is trying to massage market psychology to accommodate another US rate cut without a run on the $. Managing market psychology is very difficult when you are printing excessive amounts of money to keep deflation caused by a collapsing pile of recklessly manufactured derivatives under control. The $ has little chance of finding the safe ground in the middle on its own so huge amount of spin has to be called upon to manage market sentiment to keep the economy working reasonably normally. If you can't get the market to accept your view, and don't have enough resources to move the market the way you want with intervention (the $'s recent rise has coincided with a record week of purchases of $-paper by foreign central banks and sudden margin calls on hedge funds commodities positions which amount to $ puts), you can spread so much disinformation that they become nervous about taking positions which might undermine the banking system and the $. Unfortunately, I find it difficult to forecast what is happening in the US because there is now so much conflicting information. I wish I had Ambrose's conviction, although not his reputation.

Interesting that broad money is a mainstream topic now, don't you think?

[lord gnome] 19/8/2008 08:29

One for our resident monetarist.

[hectorp] 18/8/2008 17:46

oh well then, looks OK in Czech.
H.

[hectorp] 17/8/2008 18:54

I agree it will be very interesting. Though I can't help but think they have taken contrarianism in their Far east and Eastern European ventures, quite far!

H.

[jonwig] 17/8/2008 15:50

Candover targets Eastern Europe:



So what?

Well, retail is a favourite target for private equity businesses (positive cash flows, ability to service debt), so it will be interesting to see what deals are done.

Downside for real estate? Non-performing stores closed down, leases not renewed.

So will it be expansion or asset consolidation?

[hectorp] 17/8/2008 13:00

williebiz, I am pretty sure you did say your were going to buy at 60p a month or two back. If I got that wrong I appollogize unreservedly - here and now. So surely this should conclude the event.

However reading back my last two posts, your calling me a liar and a cheat is entirely out of proportion. I have to ask that you withdraw these terms.
If you don't feel inclined to, you'll be filtered. Which means we can't swap an useful future trading interests.

[david77] 17/8/2008 12:06

Gilts are tipped in the latest MoneyWeek

[lord gnome] 17/8/2008 11:43

In which case, gilts could be a good investment in a bear market. If rates fall from 5% to 3.5%, I make that a 40% potential capital gain.

[aleman] 16/8/2008 14:58

In today's FT's currency wrap up, it quotes Manuel Oliveri of UBS saying that the ECB will cut base rate by 0.75% next year. Also, the high profile Lex column says Sterling swaps suggest UK base rate will fall to 4.25% next year, with interdealer boker, Tullet Prebon suggesting a further fall to 3.5% in 2010.

[grahamg8] 16/8/2008 09:13

Aleman you are correct that lower growth in Europe will eventually lead to falling interest rates which makes DDC debt cheaper to finance. There is another positive which is that pricing of commercial property is based on rental yield. The yield required by investors is linked to the cost of finance, so lower interest rates mean lower rental yield espectations, and when you have an existing rental stream that can only mean NAV must rise. Eventually the share price rises to match the NAV. The downside is of course that lower economic activity leads to void periods and existing tenants seeking lower rents. But cash is still flowing East and this possibility seems unlikely. The current share price represents fear which in time will abate.

[williebiz] 15/8/2008 20:08

I object, sir.

[hectorp] 15/8/2008 20:03

Yes Aleman your last post makes much sense,
I travel a fair bit in th Med countries and they are a lot weaker viz Germany, even France however is weak, Germany as you suggest should not be worse than US.
I tend to go with the view that the Euro will be stretched by the diverse situations of the members.

Ps if the Euro can fall 10% viz the sterling next two weeks I will have a less expensive holiday in Greece .. a country I love but which attracted me in 1980 for its cheapness.. now its nearly on a par with the UK. Unless the Euro falls or DDC makes me a few K next year no vacation next year.

[kimboy2] 15/8/2008 17:27

i think that there are a few things workimg in our direction. For example since the new year by about 13% which means what was worth £190.5m at 31/12/07 will, ceteris paribus, be worth £216m.

It all helps.

[lord gnome] 15/8/2008 16:49

Interesting conspiracy theory Aleman (post 2031). FWIW I agree. I wouldn't take any numbers provided by this government at face value. We are already in recession and just waiting for our numbers to confirm it. How the hell we can be doing better than the Germans I just don't know - and as for the Spanish managing +1%? It just doesn't add up.

[aleman] 15/8/2008 12:22

The slowdown in Europe could be good news for DDC. Euribor rates have been drifting down a touch in recent days. The poor GDP numbers might accelerate this so that DDC pay less on their debt in future. It could bring Euro weakness so that debt is devalued compared to our assets in stronger currencies in the East. All these extra earnings might then translate even higher in the weak £. Everything appears to be going in the right direction although Eastern currencies could fall sharply after recent gains if their economies also slow.

Don't forget that vulture funds have been set up specifically to buy into Europe and this may be a good time for them to move before rate cuts feed into higher prices.

[aleman] 15/8/2008 10:51

I was very surprised at German GDP. Unemployment has been falling yet GDP is reported lower than the UK where unemployment has been rising and lower than the US where all sorts of awful corporate and economic news has been reported. To be quite blunt, I think some folks are telling porkies, but that would most likely be the US and UK. US national numbers are improving just in time for the election even though corporate news continues to deteriorate, and housing and car sales have been plummeting even faster of late. I would still not put any of my money anywhere near the US and remain comfortable with East Europe despite the German disappointment. The oddest thing of all is how all the Euro countries are producing similar numbers despite very different housing markets, car sales, lending and banking crisis effects. It is all very suspicious.The assumption this year was that interest rate effects would produce very different effects on the various housing markets which would put huge pressure on the Euro currency union yet it is just not appearing in official numbers despite differing reports on the ground.

[hectorp] 15/8/2008 08:33

Yes ATLS looks very decent and its rising NAV ( mostly Warsaw property, Hilton etc) is a useful pointer for our next results on DDC I would expect.

However there is a cloud arriving in the guise of German recession reported yesterday. GErmany could affect her neighbours Czech and Poland.

[cnx] 15/8/2008 02:05

recent interims from ATLS are sound and there is an air of confidence for the future

[hectorp] 14/8/2008 23:56

Well W, you did say you were a buyer at 60p I distinctly remember it.
- 30p- pipe dream, I believe.
Good bye
H.

[williebiz] 14/8/2008 20:11

I am sorry H but I cannot and will not lie, I have not yet bought DDC nor did I ever say so, if I inadvertently intimated such, I apologise.

I am interested in the DDC story but obviously more interested @ 30p than higher.

Good luck

[hectorp] 14/8/2008 20:06

come on, W, you bought at 60p a couple of months ago as you posted then. you cant change your view like that.

Apart from that this is an E-European play - what happens in Germany may not be the case everywhere.

[williebiz] 14/8/2008 19:14

Don't believe the positive stuff, myself. Europe in bad economic times. Property NAVs cheated and too high, DDC bought at the top of the bubble.

I've been right so far.

Will form a bottom somewhere but closer to 30p IMV than 50p

[hectorp] 14/8/2008 19:05

Some talk of Eurozone recession today, eg Germany. :-(

[hectorp] 13/8/2008 12:01

Yes, and good to see considerable confidence , Funds and individuals starting to buying into relative bargains in European property, such as the German one today ( in CAL) CAL up nearly 10% .

graham8 good to see the dividend looks safer on your estimate. I never expected to see my account receiving 15% divi next year but on the other hand why not.