Raven Prop P Discussion Threads

[kenny] 26/3/2021 10:46

The consensus in current commentary is that we will have inflation. To read the majority of articles, you would get the impression that we are going to have roaring inflation like the 1970’s.

While this commentary gives the above impression, very few state an actual projected rate of inflation. One that did, very recently, talked about inflation potentially reaching 2% in the UK by the end of this year.

Let’s accept that it does reach 2% by the end of this year because people, like me, once released from lockdown, will pay any price for things like a pint in the pub or a foreign holiday. This they refer to as pent-up demand creating inflation.

However, I have yet to see any commentator suggest a reason why this inflation will be sustained going forward e.g., in 2022, 2023 or beyond. Indeed, most just talk in a general sense about inflation arriving but give no commentary about whether it is going to be sustainable or a one-off adjustment due to the effects of lockdowns.

Until someone can clearly state cogent reasons for sustainable inflation being possible over the next few years, I do not regard a one-off blip upwards as a cause for assuming inflation in now something that central bankers will need to address in any meaningful way.

[cc2014] 26/3/2021 09:28

Whilst it's approximately true we are prining as much money as we are borrowing that's only this year. There's all the other money from all the years before Covid we have interest to pay on as well

(where the interst bill is actually falling at the moment as one bond expires it is replaced with another one at a lower rate. The issue starts appears when the rate for new bonds starts becoming more than the rate on the expiring bonds and then the chancellor is somehow going to have to find a way to explain to the public that he needs to tax us more and more to pay a larger and larger interest bill)

[renewed1] 26/3/2021 09:03

Given we have and are purchasing most of the debt we issue....if interest rates go up what we pay out comes back in....the magic money tree ...so seems to me Suni can do pretty well what he likes with the rates.

[pogue] 26/3/2021 08:52

Saying you wont raise interest rates and not raising interest rates when inflation is rampant are two completely different things. Plenty of words from governments about no rate rises but we dont have inflation so they can say what they want.
Meanwhile fixed interest investment rates rise as inflation rises regardless as the purchasing power of money becomes less.

[cc2014] 26/3/2021 08:39

So, I agree UK cannot afford it's debt if interest rates go up too much. And I agree they will let inflation run hot.

And in the end I do expect rates to rise but not significantly. A trip from 0.1% to 0.25% just puts the public on notice of what's coming. Then a further rise to 0.5%.

Perhaps after that they reverse say 20% of the QE and then move to 1.0%. Normalisation they might call it.


But the thing no-one addresses in these articles is tax and this in the end is what I think will keep inflation from getting overexited in the long term. Sure, we will see 3% inflation for maybe 3 years, maybe even 4% but all the extra taxes pull inflation down because it reduces disposable income.

The challenge for the government is how to do this against what is likely to be significant demands for wage inflation. And there we run into social issues because people won't want 10 years of tax rises and 10 years of low wage growth.


Edit: Not that it bothers me either way with regard to RAVP. Even if we get rising interest rates which means I lose 3% of my capital every year in perpetuity, I'll still be making a very decent return.
(which is actually the problem with low interest rates in that I'm investing my capital in Russia rather than the UK, thus creating no jobs in the UK. Not exactly a great long term macroeconomic policy)

[pogue] 25/3/2021 13:16

Kenny13 Oct '20 - 01:15 - 713 of 888
On the other hand, negative interest rates are expected in the UK in the current quarter. Inflation and in turn interest rates are expected to stay low/negative for many years.

So glad you are coming round to my way of thinking that inflation will rise. Taken you a few months to work it out though.
LOL

[kenny] 25/3/2021 13:02

An interesting article, not least because it agrees with my view (!) that the UK, along with other highly indebted nations, cannot afford to raise interest rates.

If inflation appears, they are more likely to raise their inflation target - as the US has, in effect, done by stating they will let inflation run "hot" for an extended period in order to ensure that employment/growth is firmly established.

You may need a subscription to The Telegraph to read.

"Britain has too much debt to handle higher interest rates"

[montyhedge] 24/3/2021 11:26

Pay day 31st March, reinvesting into 12% Pref, has Buffet said dividend compounding eighth wonder of the world.

[flyfisher] 23/3/2021 07:43

Just how long should it take to produce a prospectus.

[gfrae] 22/3/2021 08:43

The Russian economy appears to be coping relatively well. GDP fall was relatively modest, debt levels under control (thanks partly to Western sanctions !), now the governor of the Russian Central bank has sensibly raised rates to steer off inflationary pressures.

[8w] 20/3/2021 12:26

You would have thought so.... also a signal that Russian economy is ticking along nicely?

[montyhedge] 19/3/2021 22:00

Does that mean a stronger rouble and better for profits ?

[kenny] 19/3/2021 15:07

Russia increases the key rate by 25 b.p to 4.50% p.a.

[zangdook] 18/3/2021 15:00

If you have some already and you know you're getting more cheap, you might sell in anticipation.
There's a noticeable fall in the ords today.

[2akop] 18/3/2021 14:56

Unlikely any ex-Invesco shares being flipped, as my understanding is these will be bought by the Company and management once the transaction is approved by shareholders and that has not happened yet.

[cc2014] 17/3/2021 12:29

Not sure it means much. Either:
1. Someone selling a few because bond yields rising
2. Some of the ex-Invesco holding being flipped which was pretty invetible and I'm surprised we haven't seen more of it.
3. Someone didn't like the results

Either way the weak holders have sold out and the shares have passed to someone paying around 114p who will have more committment to holding them long term.

[stun12] 17/3/2021 12:09

Indeed. 900k at what looks like mid-market at the time. Quite a few lumps went through on the 16th too, all at close to the offered side.

[my retirement fund] 16/3/2021 16:53

Anyone notice that massive trade yesterday?

[montyhedge] 16/3/2021 12:14

Good note.https://www.equitydevelopment.co.uk/research/attractive-outlook-for-warehouse-provider

[montyhedge] 15/3/2021 11:40

Yes strong underlying business like you said, the most important thing. Just bought another Russian company Fix Price the Russian Poundland, must be mad, lol.

[igbertsponk] 15/3/2021 10:09

Results out. Big kick from the exchange. Big plus from the Prefs (thanks Woodford!).
Occupancy good, so hopefully long term decent prospects and should be resilient for the Prefs.

[cc2014] 15/3/2021 10:02

Underlying results much better than I expected but overall loss even worse than my most pessimistic view by around £20m.

Overall loss due of course to exchange rates.


I'll take that. I'd rather have a strong underlying business.

[kenny] 02/3/2021 16:57

No idea but they are probably still preparing the legal documents.

Results for 2020 are due on 15 March - which will show a massive loss due to depreciation of the rouble against sterling. I am guessing, and I stress it is only a guess, that the results will come first.

In the interim, it is bizarre that RAVP is going down in the context of the ordinaries going up.