Thu 9 Jan 2025 - Paul Scott's Small/Mid Cap Value Report

Free: CNS, BOOT, HWG, SFOR, CRTA, CHRT, SNWS, UTG, IPX, AVON, HFG Premium: MKS, TSCO, GRG, BME, HAT, SHI, MER, FSG

Good morning from Paul & Dave! Today’s report is now finished.

Mid-morning musical interlude, from my sister-in-law Lauren, who thought readers here might appreciate some calming harp music (especially shareholders in B&M, Greggs, and M&S), take it away Lauren!

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Rising gilt yields on UK Govt debt seem to be unsettling the market this week. This is being presented by the mainstream media as a failure of UK Govt policy. However, as mentioned in my podcast yesterday, I checked other countries, and whilst the UK is one of the worst, Govt bond yields have risen by a roughly similar amount in many other countries.

Here’s a table sorted by the monthly move in yields, with my thanks to TradingEconomics.com (an excellent reference site for economic data) -

Obviously the UK 10-year gilt always has a higher yield than Eurozone countries, but it’s the monthly move highlighted above that surprises me. This clearly shows an international move in Govt bond yields, of which the UK is slightly higher than other advanced economies, and almost the same change (and level) as USA.

Will we see intervention in the markets from Govts, central banks, etc.?

It’s not my area of expertise, but I like to monitor and try to understand what’s going on, so if we have any specialists in this area, please do share your expertise in the comments section.

My REITs, which I perhaps foolishly thought were the lowest risk part of my portfolio, are now showing losses. Although they are also paying generous & sustainable divis of 7-10%, which mops up a lot of the problems.

I’m wondering if Trump might try to do a fresh load of QE to force down interest rates? After all, major economies that issue their own currency can manipulate interest rates to any level they want, at least in the short term - as we saw from the 2008 to 2022 zero interest rate era. But QE only seems to work when all the major currencies are doing it simultaneously, then there’s nothing for a domestic currency to sell off against.

Political pressure, internationally, to go back to zero interest rates could become very strong, as Western Govts realise they can’t afford to pay the interest bill on rising Govt debt (which isn’t really debt, if you issue your own currency, arguably, as MMT points out).

All food for thought, I’m just bouncing ideas around, and am keen to hear yours.

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My Podcasts

Splitting my podcasts into two - the shorter, free version, then the longer premium version has caused a problem for some members, sorry about that.

Currently they go out through two channels -

• Substack (by email, or the app), which will automatically feed you either the free or the paid version, detecting if you’re a paying subscriber or not.

• Acast - which publishes to Apple, Spotify, etc, which is just the free version.

Clearly that’s a nuisance for premium members, so I’ve been working out how to issue my podcasts in a better way, and have now sorted this out.

Premium subscribers will need to find my new podcasts on Apple and Spotify, and subscribe to the new channel that I’ve just set up this morning, which is published through Substack. You will then see a padlock symbol, which you can click on and connect your podcasts to your Substack account, so that it knows you’re a premium subscriber. I’ve just done it myself, and it’s dead easy.

Hence if you wouldn’t mind signing up (through Apple podcasts or Spotify) for my new podcast channel - pictures below show which is the old, and which is the new channel -

(sorry about the infantile red writing below, writing with a mouse is similar to the illegible signatures we give delivery drivers on those handheld devices they point at us!)

Spotify

Apple podcasts

Profuse apologies for the hassle of this, but it should be a quick & easy fix, to ensure you receive the premium content automatically in future, if you’re a premium member.

Or alternatively, just listen through Substack itself, which already does this, or click on the “play” symbol in my substack emails alerting you to each new podcast post.

Please let me know how you get on. I get emails every day from people struggling in some way or other with things, and have managed to get them all sorted so far.

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Warm welcomes to more premium subscribers, many thanks to -

BarryH, AlanJ, Neil, CliveM, WillS, and a particular welcome to PJM who is in Australia, and commented that he likes my podcasts for “good leads”. That’s the idea, so thank you PJM!

Incidentally, I’m delighted with all the new sign-ups, and am wondering how you found me here? As I’ve not done any advertising at all. I know early subscribers followed me over from Stockopedia (who are now just copying the format I invented for morning articles, which seems wasteful duplication, but that’s up to them), plus CockneyRebel’s substack provided loads of new members here, thanks to them, and thanks to Rich for recommending me.

Aside from that, I wonder are Substack themselves recommending me to their existing members? All the new sign-ups must be coming from somewhere, I’m just curious how you found me? So if there’s something I’m missing, do post a comment to let me know! Anyway, getting loads of subscribers is a high quality query to have!

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The RNS is about to fire up, so I’ll get a fresh coffee, and get cracking!

This is now the finished version (at 14:32) -

Free content above this line.

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