Credit deflation and the reflation cycle to come (part 2)

[Thorn]

27 minutes ago, Yellow_Reduced_Sticker said:

Just started catching up on this GREAT thread...

Only on page 75 AND just pissing myself laughing with some of these posts... just BRILLIANT!

There is just NO-WHERE ... where you get this caliber of underground investment information, intertwined with frugality on the entire web! 

There it is that gives me the Big Business Idea we’ve been waiting for to get the thread members teeth into.

Picture the scene. After the next Bust. Porsches being Sold to Buy Food. Landlords shunned. Debt Deflation changing everything.

and we emerge to sell the product everybody needs and wants that defines the New Times. 

Forget your Burberrys and your Louis Vuittons. This is what people will want to be seen in to show off how they are thriving in the new age.

we should make Dosbods Aftershave. 

Just needs a good catchphrase.

[sancho panza]

LSL Acadata was released a day or two back.Leicester is the leading light of HPI nationally apparently.Can only imagine it's buyers who don't live here.....

Will post a proper update later when on my desktop

https://www.lslps.co.uk/news-and-media/market-intelligence/house-price-index/england-and-wales-house-price-index

 

'Peter Williams, Chairman of Acadata and John Tindale, Acadata housing analyst comment:  
House Prices October 2019
The market is effectively marking time. Average house prices in October rose by £812, or 0.3%, in the month to reach £300,556. This was the second month in a row in which prices have risen slightly, although this increase was still not sufficient to reverse the average price fall of some £1,600, or -0.5% over the last twelve months. This was also the ninth month in this calendar year in which the annual rate of growth has been negative.   
 

Annual & Monthly Price Trends On an annual basis, London prices in September 2019 rose by £767, or +0.1%. Although relatively minor, it marks the first month in the last thirteen in which the annual rate for London has been positive. Overall, more of London’s 33 boroughs have seen prices fall over the last twelve months (28 compared to 25 last month), suggesting only a few of the London boroughs are seeing any turnaround. 

 

Looking at the unitary authority areas on an individual basis, Merthyr Tydfil - for the fourth month running - has the highest annual rate of change in prices, at +10.2%. It also had the second-lowest number of transactions per month of all the 109 unitary authority/county areas in England & Wales, and house prices there are relatively low. It is therefore subject to large movements in average house prices, particularly when expressed in percentage terms.

At the other end of the scale, the local authority area with the largest fall in average prices over the year is Milton Keynes, down by -5.9%. The prices of all property types, except for Terraces, have fallen over the last twelve months in Milton Keynes, with the largest fall occurring in semi-detached properties, down from an average £295k in September 2018 to £272k one year later

 

In September, Leicester has retained its number one position, for the third month running, albeit with a lower rate of 4.5% compared to the August rate of 6.3% - the highest seen in the Table. All property types in Leicester, except flats, have seen increases in their average prices over the last twelve months, with semidetached properties - the second most frequently sold property type after terraces - increasing in value from an average £200k in September 2018 to £213k one year later.

[sancho panza]

1 hour ago, Cattle Prod said:

Me too. I'm just in a busy travel season, but check in when I can. Ive added a little more oil stock over earnungs season ( markets didnt react to some good earnings reports) but I'm about full. There is blood on the streets so I'm happy to be positioned (outside the shale patch of course, former darling Chesapeake has been crucified as I suspected would happen). Some UK oilies holding up nicely because of one thing - positive cashflow. No matter how negative sentiment gets, the market will not overly punish cold hard cash and a solid production performance 

Have to say we're buying the dips on this one.Old Man Panza used to work for them.

Only question I have is, are we going to test Iraq war lows????

 

[sancho panza]

8 hours ago, Thorn said:

There it is that gives me the Big Business Idea we’ve been waiting for to get the thread members teeth into.

Picture the scene. After the next Bust. Porsches being Sold to Buy Food. Landlords shunned. Debt Deflation changing everything.

and we emerge to sell the product everybody needs and wants that defines the New Times. 

Forget your Burberrys and your Louis Vuittons. This is what people will want to be seen in to show off how they are thriving in the new age.

we should make Dosbods Aftershave. 

Just needs a good catchphrase.

Lard

 

[MrXxxx]

9 hours ago, Yellow_Reduced_Sticker said:

I've JUST bought no doubt that the bottom will DROP out of the housing market VERY SOON lol!

Be interesting to know if they do, as I was looking at that `neck of the woods` and all I have heard is prices increase better than national average...let's hope the `YRS effect` starts to happen :-)...

...as for the pleasant yrs adventure, I am not surprised, Waitrose bargain hunters are a different breed, more genteel you know! :-) :-) :-)

[MrXxxx]

8 hours ago, Thorn said:

There it is that gives me the Big Business Idea we’ve been waiting for to get the thread members teeth into.

Picture the scene. After the next Bust. Porsches being Sold to Buy Food. Landlords shunned. Debt Deflation changing everything.

and we emerge to sell the product everybody needs and wants that defines the New Times. 

Forget your Burberrys and your Louis Vuittons. This is what people will want to be seen in to show off how they are thriving in the new age.

we should make Dosbods Aftershave. 

Just needs a good catchphrase.

"Tightarse, for the man who doesn't have to try too hard...and yes sweetheart, the first rounds on you!" :-) :-) :-)

[MrXxxx]

32 minutes ago, sancho panza said:

ooking at the unitary authority areas on an individual basis, Merthyr Tydfil - for the fourth month running - has the highest annual rate of change in prices, at +10.2%

But 10% of `bugger all` is bugger all...I wouldn't say the prices are cheap in The Valleys but they make the North East look like PCL!

[CVG]

9 hours ago, Tdog said:

Now im not looking for direct advice but if anyone wishes to give an opinion on what i intend buying in the coming months please feel free to comment.

By the end of this tax year i should have about £70k in my SIPP (i didnt have a SIPP/pension in Feb 2018) ... with most of it in cash and circa 18k currently invested.

Now i dont have the time  to research individual stocks and track them, so will look to ETF's where possible, and have chosen sectors with help from this forum!

Whats in yellow is what i own and the orange is what i'm thinking of buying with the percentage/total sum to invest.

Waiting for it all to crash then to jump in, if not then havent yet worked on a plan B!

Bit of a gambler hence the weight towards gold/silver/commodities. 

I believe there are a few others like me who are heavily in cash so be good to hear from others in a similar situation.

 

That looks quite well diversified. At some point I'd put a small allocation into emerging markets. Japan is also thought to be very cheap right now but I haven't checked recently. I'd rather be invested there than be overweight in the the FAANGs in the USA.

Generally, I'd go for a larger allocation (20%) to Cash (Short Term Gilts Fund) so that I was better positioned to take advantage of any sudden drops. It looks like you would only have 2K to put in if bargains arose.

[DoINeedOne]

Vape Ban Is Now On Hold As Trump Caves

Last week, Market Crumbs asked the question "Could Vape Users Sway The Presidential Election?" The post detailed how the "vape lobby," with the #WeVapeWeVote hashtag, appears to be prepared to vote for any candidate other than President Donald Trump should he follow through with any sort of ban or regulations on vaping.

Another issue, which also would directly affect Trump's reelection chances, is the number of mom-and-pop vape stores that would be affected by such legislation. Trump's campaign manager even reportedly warned him that his plan could backfire as his supporters who use e-cigarettes could abandon him if he follows through with a ban.

The post closed saying "He could always resort to his strategy of delaying, which has thus far worked well in the trade negotiations with China." 

Well, that's exactly what he's done. Trump has decided to not act on e-cigarettes because of possible job losses and voter pushback. Trump reportedly decided not to sign the one-page "decision memo" while on board a flight a few weeks ago. His concerns reportedly had to do with job losses and angry voters hurting his reelection chances. 

"President Trump and this administration are committed to responsibly protecting the health of children," said White House spokesman Judd Deere. "At this time, we are in an ongoing rulemaking process, and I will not speculate on the final outcome."  

Trump "allies working for the vaping industry" told Trump's inner circle that battleground state polling of his voters showed the issue costing him support. Tony Abboud, the executive director of the group that commissioned the poll, said "Bans don’t work. They never have."

First Lady Melania Trump and Trump's daughter, Ivanka, apparently were the ones advocating for the ban all along. "He didn’t know much about the issue and was just doing it for Melania and Ivanka," said a senior administration official who spoke on the condition of anonymity.

Not everyone is pleased Trump backtracked, particularly Scott Gottlieb, who oversaw the U.S. Food and Drug Administration through a part of Juul's meteoric rise in popularity. Gottlieb called Trump's move a "Pyrrhic victory" for the vaping industry. He wants action now, saying "Bottom line: There are reasonable steps to dramatically limit access and appeal to kids we can take now that won’t foreclose opportunities for adults or shutter adult vape shops."

Where the administration goes from here is not clear. It appears unlikely a decision will be made before the election, which is now less than a year away. Trump ended up using the same playbook as the trade war, which is overpromising only to end up delaying. The only question is, if this was driven by fears of voter revolt, why does he continue to focus on the stock market, which is surely not benefitting a large majority of the voters he'll need to win a reelection? 

[Ma2]

16 hours ago, Thorn said:

 

we should make Dosbods Aftershave. 

Just needs a good catchphrase.

‘60% of the time it works all the time!’

 

[Agent ZigZag]

20 minutes ago, Cattle Prod said:

The oil investment market is pretty irrational, who knows? Exxon is the biggest because (a) best engineers (b) they are strict with project financial hurdles. They will ignore great geology if the terms are not good enough (Mexico) or walk away when not profitable any more. They guard their money. You won't lose yours, no matter what happens.

Had my finger on the buy button today to start a position. Bottled it or was greedy not sure which so sat on my hands instead. Will have a look again tomorrow, but thanks for the little snippet of info on Exxon

[JMD]

18 hours ago, Tdog said:

Now im not looking for direct advice but if anyone wishes to give an opinion on what i intend buying in the coming months please feel free to comment.

By the end of this tax year i should have about £70k in my SIPP (i didnt have a SIPP/pension in Feb 2018) ... with most of it in cash and circa 18k currently invested.

Now i dont have the time  to research individual stocks and track them, so will look to ETF's where possible, and have chosen sectors with help from this forum!

Whats in yellow is what i own and the orange is what i'm thinking of buying with the percentage/total sum to invest.

Waiting for it all to crash then to jump in, if not then havent yet worked on a plan B!

Bit of a gambler hence the weight towards gold/silver/commodities. 

I believe there are a few others like me who are heavily in cash so be good to hear from others in a similar situation.

 

I agree with CVG's earlier comments to you regarding holding a good cash reserve and also about utilising EM's. Personally I think its best to be bit cautious with EM funds/etfs, the indexes they use often mean you get overweight positions not only toward individual countries, but also in companies. e.g. I considered using Hermes Global EM as it 'only' used a 16% allocation toward China (I wanted wide global exposure, especially in so called frontier markets) - however that 16% was mainly in just two companies - 8% Tencent and 5% Alibaba!

Because of these issues, I have decided to mix things up a bit and allocate just 'half' into EM funds/etf's, etc. and the 'other half' into the 10 cheapest valued stock exchanges (by buying the country index fund). The site below will help me do this and I will rebalance yearly, it needn't be onerous task as really it is mainly a mechanical process. Probably will just use the lowest cape values, though the site also provides other metrics.

https://www.starcapital.de/en/research/stock-market-valuation/

 

Be interested in what others think? I believe this has been back-tested to 1980 and shown to have returned 14%/annum. Unfortunately i can't find an etf that does this automatically for me, which is a shame as it would save time/work... in fact I would have thought this was a prime candidate for the type of 'factor investing' (smart beta) funds that are now popular (Vanguard, etc).   

[DurhamBorn]

26 minutes ago, JMD said:

I agree with CVG's earlier comments to you regarding holding a good cash reserve and also about utilising EM's. Personally I think its best to be bit cautious with EM funds/etfs, the indexes they use often mean you get overweight positions not only toward individual countries, but also in companies. e.g. I considered using Hermes Global EM as it 'only' used a 16% allocation toward China (I wanted wide global exposure, especially in so called frontier markets) - however that 16% was mainly in just two companies - 8% Tencent and 5% Alibaba!

Because of these issues, I have decided to mix things up a bit and allocate just 'half' into EM funds/etf's, etc. and the 'other half' into the 10 cheapest valued stock exchanges (by buying the country index fund). The site below will help me do this and I will rebalance yearly, it needn't be onerous task as really it is mainly a mechanical process. Probably will just use the lowest cape values, though the site also provides other metrics.

https://www.starcapital.de/en/research/stock-market-valuation/

 

Be interested in what others think? I believe this has been back-tested to 1980 and shown to have returned 14%/annum. Unfortunately i can't find an etf that does this automatically for me, which is a shame as it would save time/work... in fact I would have thought this was a prime candidate for the type of 'factor investing' (smart beta) funds that are now popular (Vanguard, etc).   

Its a very decent way to do things.Kaplan does similar towards countries.It made it a lot more difficult though when they removed access to US funds as there was much greater choice in their index funds,though i havent really looked into whats available to UK investors.Might be worth listing all the country trackers/funds for people if anyone can be bothered sometime.

[Yellow_Reduced_Sticker]

On 02/11/2019 at 23:21, Harley said:

Nice comments on logging, pizzas, etc.  Funny old world.  Been busy at it but maybe not really so far from this thread.  Illustrates how broad we have to think about capital, assets, money, etc. 

Sure, the financial investing side is important but I also feel my other "investment" work is as relevant.  I have financial investments but equally important is building other capital like my log stores, allotment, shelter belt, insulated house, outhouses, fencing, knowledge, skills, tools, servicing abilities, etc.

As per my investment strategy, it's nice being as close to the source of things as possible, whether that's growing food, securing fuel, fixing your own stuff, or making your own A1 pizzas and the like! I'll probably die before I finish but it's a great road to travel.

Anyways, I really should get back to this financial malarkey for a bit.

 

Yeah the logging comments brought back memories to the 70's, as a kid used to love the open fire, however living in a town we didn't have much way in the form of logs, the old man would go down the local tip on his push-bike and bring back old doors and axe 'em up! Oh boy did we have a sparkling banging fire!

 

The bungalow I've bought has had the chimney taken out, i have lovely new central heating - but really want a log fire, surely nothing to do with saving moolah on my part?!

 

Saw this YT video and i reckon i could build this on the side of me bungalow...

 

@DurhamBorn

 

Some hilarious posts about metal detecting, getting FREE porno mags fags etc!

 

EVER thought about doing STAND UP?

 

Seriously i reckon ya could do it at your local mens working clubs and just under the TAX FREE moolah threshold!

 

BTW, how far is Blackhall Colliery from you?

 

Maybe you should visit and do ya metal detecting there... check this link out:

 

"Police praise residents who keep handing in mystery bundles of cash!"

 

[sancho panza]

7 hours ago, Tdog said:

Mr Wimpys boss floggs £4 million worth of shares.

https://www.telegraph.co.uk/business/2019/11/20/taylor-wimpey-boss-pete-redfern-flogs-nearly-4m-shares/

End of HTB after the election has to be on the cards no matter who wins.

Pidgeley-one of the shrewdest property cookies out there-has been flogging BKG stock since £37 a year or so back.

[sancho panza]

As ever,I'm with him on the thesis,jsut wondering when this debt bubble will break

https://moneymaven.io/mishtalk/economics/250-trillion-in-global-debt-how-can-that-be-paid-back-1HQuJ9aFxEKQpURgUiq51A/

To get a $1 rise in GDP it takes about a $3 rise in debt.

Things keep pointing back to 1971.

I have written about the importance of 1971 many times, most recently in Nixon Shock, the Reserve Currency Curse, and a Pending Dollar Crisis

Dollar Crisis

A reader asked the other day what I meant by "dollar crisis".

What I meant to say was "currency crisis" and the above title is now changed.

Since the dollar is still rising (thanks to European, Japanese, and Chinese tactics), It may take even bigger US deficits before something major breaks.

On that score, both political parties in the US are poised to deliver increasing deficits as far as the eye can see.

Meanwhile, negative interest rates are destroying the European banks. For discussion of this important issue, please see In Search of the Effective Lower Bound.

 

Currency Crisis Awaits

I expect an uncontrolled collapse of a major currency, debt market, or bank system that cannot be funded. It is hard to say where it starts but I doubt it starts in the US.

Chinese and European banks are in far worse shape than US banks. European banks are getting hammered by negative rates.

Japan still struggles with decades of Abenomics.

The Fed and Central Banks brought this on by refusing to let zombie banks and corporations go under and insisting on cramming more debt into a global financial system choking on debt.

But this all has its roots in 1971. Central banks are the enablers, but Nixon Shock set things off.

A currency crisis awaits but the timing and conditions of the crisis are not knowable. It can start anywhere but I suspect the EU, Japan, or China as opposed to the US.

Ponder even paying the interest on $250 trillion, let alone the principal. What interest rate will it take?

Meanwhile, please reflect on gold.

Gold is Not a Function of the US Dollar Nor is Gold an Inflation Hedge

In the link below I post charts that make a mockery of the claim gold is some sort of inflation hedge or tied to movements in the US dollar.

But if Gold is Not a Function of the US Dollar Nor is Gold an Inflation Hedge, what is it?

Here's the answer.

Addendum

My friend Pater Tenebrarum at the Acting Man Blog just pinged me with this pertinent thought: "The answer is of course: It won't be paid back. And since every debt is someone else's asset, you can imagine what that ultimately means. A great many people are a lot less wealthy than they think. It is all phantom wealth that can disappear in an eyeblink."

Mike "Mish" Shedlock

[MrXxxx]

16 hours ago, Ma2 said:

On 19/11/2019 at 22:39, Thorn said:

we should make Dosbods Aftershave. 

Just needs a good catchphrase.

‘60% of the time it works all the time!’

Sounds like my investing `career`...I have been standing on the sidelines waiting fot the drop/to go in, whilst watching the rest of you `making out like bandits`! :-)

[Yellow_Reduced_Sticker]

"Centrica sheds another 107,000 household accounts and hikes cost savings"

British Gas owner Centrica has revealed it lost another 107,000 household accounts, as it also upped its annual cost savings by £50 million.

But the UK’s biggest gas and electricity supplier said it had eased the rate of customer losses, which were lower than the first half of the year, when it shed 178,000 accounts.

The group also said it now expects annual cost savings of £300 million from the previous target of £250 million, while it is trimming planned investment spend by £100 million to about £800 million.

Centrica is already axing up to 2,000 jobs over 2019 as part of overall aims to save £1 billion by 2022, but gave assurances that the increased cost savings this year will not lead to further staff cuts.

It confirmed annual results will be skewed towards the second half of the year, with the result dependent on weather and wholesale energy prices.

It added that while UK household supply accounts fell in recent trading, this was offset by stronger demand for services and homes solutions, leaving total consumer accounts 136,000 higher in the four months to October.

Many of Britain’s big suppliers have been hit by increased competition from smaller players as households switch providers.

Centrica’s outgoing chief executive Iain Conn, who recently announced plans to step down next year, said: “Our performance has been solid so far in the second half of the year and we remain on track to achieve our full-year targets.

“I am encouraged by further growth in customer accounts and the recovery of business energy supply margins in North America, while we also continue to drive material levels of efficiency and maintain capital discipline.”

The figures come just a week after Centrica won a court battle with the energy regulator over the way the energy price cap had been calculated.

Centrica had claimed the rules cost the business £70 million in the first three months of 2019, following the cap’s implementation.

In its latest trading update, Centrica said the decision means Ofgem will now be obliged to “reconsider” the allowance for the first quarter of 2019.

The legal challenge, which was supported by Npower, SSE, EDF, Eon and Scottish Power, could also now result in officials reassessing how the cap is totted up at the next recalculation in February.

...maybe we've turned a corner as CNA shares UP 3p to 76p this morning, how many here gonna moan should of bought when they were 65p HA-ha

ALSO...RMG results in, freaking hell, DOWN 13% ...GREAT i'll be able to buy more TARGET PRICE £1.92P

EDIT: F***ING hell RMG now DOWN 18%  -40P (£1.90) ...someone tell where the BOTTOM is?!

"Royal Mail falls behind on turnaround plan; posts first half profit"

UK's Royal Mail <RMG.L>, which is embroiled in a dispute with its largest union, on Thursday said its transformation plan to expand its parcels business internationally was behind schedule, even as it posted a first-half operating profit.

The former British postal monopoly, which had announced a five-year turnaround drive in May, said it was investing more ahead of the general election and Christmas, which would impact productivity for the rest of the year.

Shares of the FTSE 250 company dropped 11% in early trade.

Overall operating profit for the six months ended Sept. 29 benefited from higher parcel volumes and came in at 61 million pounds, compared with a loss of 4 million pounds last year.

The company, which targets high growth over the next few years from its ground-based parcel network — GLS, said the division posted a near 17% jump in adjusted operating profit including acquisitions, bolstered mainly by markets in Germany, France and Italy.

However, London-based Royal Mail, which temporarily staved off a postal strike by the Communications Workers Union (CWU), said it expects further margin pressure in UKPIL next year, with lower productivity as a threat of potential strike remains.

The company, which was fined 50 million pounds ($64.62 million) in 2018 by regulator Ofcom, reported a wider operating loss of 25 million pounds in first half at its core UK parcels, international and letter division due to a provision for the fine.

 

 

[Majorpain]

2 hours ago, sancho panza said:

As ever,I'm with him on the thesis,jsut wondering when this debt bubble will break

Central banks can keep things on an even keel with the money printing, but what they cant do is change peoples expectations that every 10 or so years there is a recession, it becomes a self fulfilling prophesy as people cut spending/businesses investment!  It will happen when it happens, its very difficult to predict the economic choices of millions of people, especially with cheap credit (epic malinvestment) being poured down their throats which make up 70-80% or so of western economies.

http://www.constructionenquirer.com/2019/11/21/insurance-cover-crisis-intensifies-across-construction/

On the plus side insurers still have some concept of risk, fallout from Grenfell is still strong in the mind.

[Loki]

Centrica up today, dividend related i assume?

[Don Coglione]

31 minutes ago, Loki said:

Centrica up today, dividend related i assume?

Is it not down to the fact that they claim to be a bit less shit than they have been for the last few years?!

[kibuc]

Anyone holding Endeavour Silver here? They've just announced suspension of mining operations at El Cubo. Produced 2.6mil oz silver and 25k oz gold in 2018. Simply put, they ran out of ore that's worth digging up at current prices.

[VeryMeanReversion]

5 hours ago, sancho panza said:

"The answer is of course: It won't be paid back. And since every debt is someone else's asset, you can imagine what that ultimately means. A great many people are a lot less wealthy than they think. It is all phantom wealth that can disappear in an eyeblink."

I had that realisation around 10 years ago. Money = Debt = A promise to be broken.

Everyone has forgotten that a $/£ used to mean something.  I find it funny that a £10 note says it is a promise.... to give you another one.

Since then, my aims is to have 50% of assets as debt-free property and 50% as investments such as boring divi payers (*) and metals, all held as tax-efficiently as possible. I keep very little in cash (i.e. someone else's debt), just enough as a float.

Maybe that's why I always seem broke whilst my assets are increasing faster than my net salary every year. Not long now to FIRE.

*Disclaimer - I have some £ in Woodford Patient capital and aim to buy some more. Stupid is as stupid does...

 

[stockton]

23 minutes ago, kibuc said:

Anyone holding Endeavour Silver here? They've just announced suspension of mining operations at El Cubo. Produced 2.6mil oz silver and 25k oz gold in 2018. Simply put, they ran out of ore that's worth digging up at current prices.

Yes, it was my only miner that didnt "rubber band".  Will be watching the price closely...

Thanks for the heads up

[janch]

5 hours ago, MrXxxx said:

Sounds like my investing `career`...I have been standing on the sidelines waiting fot the drop/to go in, whilst watching the rest of you `making out like bandits`! :-)

I'm in but I'm still "underwater"  so I'm definitely not making out like a bandit so far