John Hjorth

elliott, I think both Fairfax Africa Holdings Corp. and Fairfax India Holdings Corp. are two Fairfax investments, that both have the potential to become repetitions of the original long term Fairfax story itself - which - long term - is an amazing one. If that actually happens - perhaps over the next one or two decades - it would be transformational to Fairfax itself, being big contributers to bringing Fairfax to the next level. There is an enormous abundance of capital some other places, and there is so much to do both places [Africa & India]. However for this really to work out, the companies need to get it right in the first place, to build a good track record - to be able to attract new capital to grow, thereby creating a fly-wheel effect. - - - o 0 o - - - Atlas Mara : "Why Africa?". [Old stuff from the 2014 Annual Report that you may have read already because you already have studied Atlas Mara - I personally think this still applies to great extent]. IMF - World Economic and Financial Surveys - Regional Economic Outlook - Sub-Saharan Africa - Sub-Saharan Africa Regional Economic Outlook: Recovery Amid Elevated Uncertainty [April 2019]. - - - o 0 o - - - elliott, I seldom post in the Fairfax part of CoBF. FFH is a fairly small position for me, now for some years actually. I have no intentions to reduce or sell my position, exactly because of Fairfax India Holdings and Fairfax Africa Holdings. I just try to shut up and learn more about FFH by avid reading FFH stuff here on CoBF. Well, here I failed on that - I hope that at least one of the links is of avail to you.

That's an interesting thought, Spekulatius, I've just got an invitation from SPKSJF.CPH to a shareholder dialogue meeting in the beginning of September here in Odense, which I'll attend with Lady of the House. I will try to ask that question, if it will be possible [to ask it].

Thanks SHDL, Again, expressions and/or opinions [all speculative and/or subjective], not in any way backed by data.

Thanks for the reply, RumeNumberOne, You're severely misinformed here, or un-informed here, RuleNumberOne. You have my full respect for opening this topic however. Personally, I'm ignorant in this space particiulary discussed here.

The day you tell us which European banks you're short I'll start considering brewing a reply to you, which most likely will be to absolutely no avail.

I'm carrying your post in the WFC topic over here, for commentary, RuleNumberOne, You're certainly up to something right here, RuleNumberOne, This post is only about Danish conditions. The answer to your question here is : They don't [buy these bonds with negative yields]. The outcome has been that the Danish banks are literally swimming in cash - some of them are almost drowning in it. The more conservative the bank is run, more worse it gets. I have read somewhere, that the Danish banks holds retail [household] deposits of ~DKK 900 B. What does a Danish bank do with all its cash, when it gets "punished" by Danmarks Nationalbank [The Danish FED] with an interest rate of minus 0.65 percent if it deposits its liquidity there, when it can't expand its loan underwriting/loan book because of very strict lending policies surveyed by the relentless and pretty brutal Danish FSA with inspections of the loan book, giving orders and fines and such when things aren't done OK? -Furthermore the actual demand for credit from Danish households has been languishing for many years - in general, the Danes have been paying down their debt, and accumulating funds for a rainy day. The banks only alternative is to buy bonds. So there are large bond positions on the balance sheets of Danish banks - to varying degrees. To at least get some yield from these bonds, the banks have to buy bonds with at least some duration. That again requires capital buffers to withstand [sudden?] rate spikes in the bond market, or else the bank may be forced to reduce its balance sheet [by selling bonds] at the exact wrong time [the price bottom]. - - - o 0 o - - - Some data: So far, I haven't been able to find some data from what I consider a reliable primary source for Danish retail [household] deposits in banks, that I'm sure of, and understand with precision. So here comes a rough, quick & dirty estimate of that figure: Source: Danske Bank A/S Factbook Q1 2019. Deposits [section 1.7.2 at page 11] : Retail : DKK 208.0 B Wealth Management : DKK 70.9 B Total : DKK 278.9 B Market share [section 4.1 at page 41] : Retail : 28.5 percent, Thus : Total retail [household] deposits in Danish banks ~ DKK 278.9 B / 28.5 percent ~ DKK 978 B - - - o 0 o - - - An extreme example of a Danish bank in this situation : Fynske Bank A/S [ticker : FYNBK.CPH] : [source : 2019Q1 10-K]. Equity : DKK 1,053 M Loan book : DKK 3,255 M Deposits : DKK 5,406 M Bonds : DKK 2,495 M. Some days I really can't decide if this bank is a bond portfolio with a bank glued to the bond portfolio, or "just" a bank with a big bond portfolio. - - - o 0 o - - - The above cash deposits estimate has to be judged relative to total mortgage loans in the Danish mortgage institutions of DKK 1,609 B in Danish homes and recreational homes, plus second layer house financing provided by the banks to households. What matters for the financial stability of the whole system is naturally how these assets and liabilities are distributed among the citizens of the nation.

Finanswatch [July 11th 2019] : Nationalbanken [<- The Danish FED, John] about low interest rates : Not the fault of the central banks. Danmarks Nationalbank [June 27th 2019] : Analysis - The natural real interest rate in Denmark has declined. Personally, I consider this at least a decent stab at getting to an explanation of this phenomen. It also reminds me of a post recently by Cigarbutt about the long term development in interest rates. It's not all negatives. The analysis implies, that it - among other things - has to do with high savings rates in the Danish households after the GFC [please note here : at a total level]. Consumption folly [perhaps even for borrowed money] hasn't really arrived here - at least yet.

Christ, that reads absolutely terrible, gfp, I hope your family and you are safe.

Carried to here from the "1999 again?" topic: You need to understand the Danish mortgage system. It's not financed by deposits, but by mortgage bonds, ref. also what kab60 has mentioned before in this topic. Here is link to the 2018 financials for Realkredit Danmark A/S. Realkredit Danmark A/S is a wholly owned subsidiary of Danske Bank A/S. As a mortgage institution, Realkredit Danmark A/S is separately regulated, while the bank is separately regulated as bank. Please take a look at page 2 - I'll translate for you : Realkredit Danmark A/S generated a profit for 2018 of DKK 4.649 B [included in the group profit for Danske Bank A/S for 2018] "Realkreditudlån" : Mortgage loans [for YE2018 : DKK 796.045 B] "Udstedte realkreditobligationer" : Issued mortgage bonds [for YE2018 : DKK 809.091 B] - - - o 0 o - - - Wikipedia : Mortgage industry of Denmark. Edit: Finance Denmark : The Danish Mortgage Model.

Thank you for starting this topic, longinvestor, Actually, it's a bit weird, that we haven't really discussed this Berkshire investment in depth earlier. I have started tinkering with numbers for it, to calculate - over the ownership period - how much it has actually contributed to Berkshire group equity. I'm a bit lazy at the moment - I think it's vacation mode that's setting in - so it'll take some time before I post something about it here in this topic - what I already can say is that the numbers, compared to the initial investment - are no less than mind-boggling. - - - o 0 o - - - With regard to capital allocation, we have to remember : 1. The "Constellation case" [2008] [No, not CSU.TO, but Constellation Energy!] - It ended up as a no-go [,if one can call "Consists of a breakup fee of USD 175 million and and profit on our investment of USD 917 million" a "no-go"], 2. The "Oncor case" [2017], & 3. Among Danes, there is a saying [in Danish here] : "Alle gode gange tre!". That translates word-by-word to : "All good times three!", meaning : "Third time may the time of luck!". Also in this industry, in future, there will be players, who confuse trading with speculation, and/or who will eventually end with screwing up their balance sheet. I would not be surprised later to observe, that the next large Berkshire acquisition would be related to BHE.

Agreed, Liberty, Peace.

Naturally SHDL is right that it's a data point with regard to sentiment. I suppose my post came out as an acid burp from an grumpy old man. I apologize for that. What I actually meant was that I'm 100 times more interested in how SHDL thinks about that particular data point than Mr. Fisher's opinion. Based on a supplementary question from RuleNumberOne SHDL elaborated shortly in post #134. [And personally, I agree with SHDL on that stance.] So I suppose all is good. - - - o 0 o - - - My post may also be severely biased by the fact that Mr. Fisher is very promotional here in Denmark with ads, trying to collect AUM, which I consider really annoying. That should really not be mixed into a reply to SHDL, naturally. That article on USA Today that SHDL linked to represent a stance and investment approach, that is a special type of market timing, that I personally speculate has no support among CoBF members. But naturally, still a data point.

It’s a data point on market sentiment, John, which is a big part of what this thread is about. Publications like USA Today are useful for that if nothing else. SHDL, OK, but then you need to add some kind of personal comment to your linking. Otherwise, you just bring market sentiment to CoBF.

I have issues with that you just posted that, SHLD, This is CoBF.

Board of Governors of the Federal Reserve System [Released July 5th 2019] : Monetary Policy Report. Please note on the front cover, top right: "For use at 11:00 a.m. EDT July 5, 2019" - Incidental, huh? [same day as the job report - just a bit later.] This report will be presented by Mr. Powell before the Senate Banking Committee as a testimony called "Semiannual Monetary Policy Report to the Congress" on Thursday July 11th 2019 at 10:00 AM. Summary [p. 1] : It's exactly the same message as it basically has been for a long time from the FED. -And no talk about rate cuts.

My wife's family has a farm in Montgomery county, IN. They got their corn in but many others in Montgomery County could not. I was there July 3 and it was knee high, so will be ok. Passed many farms that were soy. It reads a lot like Danish farming, actually [ : - ) ], Finally I also got the grasp of where the phrase "To bet the farm" comes from. Personally, I'm a believer, that all this tariff stuff will go away eventually by getting settled. I simply can't believe in - so globalized that the whole world is today - that we are at the beginning of an era affected by protectionism. POTUS however must not insult or push too hard on Chinese leadership, or else the whole thing will end in deadlock. To me, it's mind-boggling that tariffs now have imposed US farming subsidies. To me, that's just so a non-american way to do things. - - - o 0 o - - - It's just amazing to think about that there are negative second-order effects from this tariff situation to Berkshire because Berkshire is so vast. - - - o 0 o - - - Perhaps I'm wrong. I just can't help being long term optimistic for the future. If I was French, I think "optimist" would be spelled hoptimist, [with a mute "h"] [ ; - ) ].

Wall Street Journal [July 4th 2019] : Farmers Built a Soybean Export Empire Around China. Now They’re Fighting to Save It. From the article :

Happy 4th to all!, And hereby also a special greetings to Sanjeev, turning the sharp corner of 50! -Enjoy your day! - I hope you'll be spoiled!

Scorpioncapital, I [naturally] can't quantify it, but I suppose it'll be unpleasant for somebody - perhaps very. If I knew how to play it, I would certainly do. But I don't.

European Banking Authority : EBA Basel assessment sees impact driven by large banks [July 2nd 2019].

RuleNumberOne, Please stop spamming this topic with what I consider rubbish [at least in your last post here in this topic - naturally links to articles about what's discussed are OK]. This topic is actually started by what I consider one of the most successful & competent investors here on CoBF with regard to banks, who wants to discuss. Pushback is always good. But please keep it fact based. That said, your pushback has actually been massage to my own home bias, as a Danish citizen. I appreciate your energy to post links to relevant stuff. Time for me to lookup some IMF country reports and start reading again. Thank you.

Pulled out all available cash in my fathers account again today. Sold a bit less than one third of my fathers position in SAN today [at a loss]. It appears the account won't stay under the set goal/max. exposure, set now more than 5 years ago. I will drag out the cash [for good], when it's available after two days, if things don't fall back again. ... Sold a bit more SAN today.

Thank you for your posts, Dynamic & longinvestor, By an unforced error, - and I apologize for that - I posted the Siemens Gamesa News Announcement here - I actually don't know where my head was, when I was posting it here in the "general news" topic instead of the recently started "Berkshire Hathaway Energy" topic. Let's continue talk about it there instead of here.

Siemens Gamesa News Release : Siemens Gamesa awarded the largest repowering order to date in North America by MidAmerican Energy [July 2nd 2019].

I'm sorry for double posting here in this topic. Now back to Viking's starting post here, ref. the quote above. I think it's important here to distinguish with regard to geographical areas. [For my part : Between US banks and European banks - I own both.] US Banks : There seem to be a general sentiment as of now, that US interest rates will be lowered [also here on CoBF - at least partially] - perhaps even so the steering interest rates may end up near zero, or even negative. With regard to that, I'm in the same camp as Jurgis [posted by Jurgis somewhere else here on CoBF recently] : Why should the FED lower interest rates, when USA is running at low, but still a fairly steady & positive clip, combined with a public deficit? [i don't get it, but then again : What do I know.] European Banks: I can here only speak as Danish citizen, what I can say is that the pressure on Net Interest Margin in Danish banks is very real, and as a Danish bank customer, I can feel & see it as being very real. The consequences are already here and visible : The reach for non-interest earnings in Danish banks has become more aggressive, and to me it has already crossed the line of sound, healthy, prudent & most of all : honest banking. [To me "honest banking" is in the interest the customer, not the bank.] I'll document it here, with anecdotal stuff, based on personal experiences and documentation. Stuff about Danske Bank however will go to the topic I started about Danske Bank A/S in the Investment Ideas forum today. - - - o 0 o - - - This naturally matters for investing in both US Banks & European Banks. I may be wrong about the future development of US interest rates, and what's going here may be relevant for a judgement about what will happen with the behavior of the US Banks.