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

[Festival]

10 hours ago, InLikeFlynn said:

Not mad at all. I've been looking at our investments in a similar way. I favour investment trusts but until recently only held a few, thinking that would offer all the diversification I need however I have broadened our holdings to mitigate against an individual IT failing. Similarly my SIPP and ISA are with different providers: I will start another SIPP once my current one exceeds the £85k limit. I don't hold ETFs. 

Thanks inLikeFlynn - glad to know i'm not alone in splitting the SIPP after £85k and separating the providers of SIPPs and ISAs.

Notwithstanding splitting and staying within limits something I saw on AJ Bell worried me a bit. It says that FSCS does not cover shares and equities in a SIPP as they are not authorised by the FCA. Most funds and collectives however are authorised and those that are authorised by FCA are covered by FSCS. I intend to ask more about this when I arrange the transfer so hopefully will be able to clarify what this means in a week or two. I don't know if anyone has co,me across this restriction before and knows what investment categories are and arent covered by FSCS?

Festival

 

[TheCountOfNowhere]

53 minutes ago, DurhamBorn said:

In dis-inflation things get cheaper from the start of the chain,but people dont pass on the savings to the next part ,so the people close to the consumer gain the most.In reflation things get more expensive from the start of the chain and those close to the consumer cant pass that increase on as quick.

 

 

Iv been looking at woodlands,really fancy buying one,interesting on the caravan thing.

Cant find the thing I was thinking about, there is a mention of 5 Hectares here but that's applied to agricultural land.

https://www.woodlands.co.uk/owning-a-wood/woodlands-and-planning-legislation/

Ignore me, I must be going mad.

[Sasquatch]

1 hour ago, DurhamBorn said:

Iv been trying to work out the best way to buy a small bit,like you say an acre,but struggling to find out where to buy etc.

This is up in your neck of the woods. Awful lot of money though. £27,000 for 0.4 acre. Maybe they think the fishing rights would be lucrative?

https://www.rightmove.co.uk/commercial-property-for-sale/property-59676153.html

[JMD]

Very interesting site, that puts 'our' government house-arrest policy and its trashing of the economy, into perspective...

http://inproportion2.talkigy.com/

Most sobering fact for me: Asian flu killed 80,00 in the UK back in 1969, yet no panic-policy was enacted. Also, that particular epidemic took over 2-months to land on our shores, and yet still there were no panic measures put in place.

I post this not because covid19 is so fascinating (its not), but because as I and others have alluded to from the beginning, there is 'something' more going on here than a flu outbreak... perhaps sinister/perhaps not, perhaps merely a sign of our catastrophising times, or an example of our ineffective political leadership, along with our alarmingly nodding donkey press and exceedingly accommodating opposition parties. Whatever it is thats going on, it points to great changes ahead, new forms of leadership and new far reaching policies. All things predicted by this great blog of course. 

[Hardhat]

As I think I've mentioned somewhere before, I have family with land and they are looking to build on it.

Land is a great investment if you buy and hold. Also great if you want to grow trees, etc. Minimal maintenance if you plant the right species in the right area and don't get a serious drought in the first 5 years. Personally I also love woodland so would be happy to buy woodland or land to plant woodland on (if I had money to spare, this is what I'd like to do with it).

However building on a plot is much more of a hassle. Things like driveway access, utility connections (sewage, electric, gas, internet) etc etc, plus all the council rubber stamps needed, architect fees etc, will soon start to build up. Ever watched "Grand Designs?". There's a reason they always go over budget, and it's not just because they're pretentious.

Not to say it isn't worth it, it's just not the cheapest way you can get somewhere to live. There are also very interesting "Kit" houses, like the German Huf Haus, that might bring build time and expensive "unknown unknowns" down considerably.

Still, a good deal on a parcel of land, freehold, is a great investment imo.

Also, getting some land and using it to grow / produce something is the foundation of economies worldwide. If you're looking to decomplexify your investments, there's not much more basic you can go 

[Majorpain]

@Cattle Prod

https://www.zerohedge.com/energy/oil-spikes-saudi-output-headlines

You were right, Saudi's blinked first.  1M barrels a day cut, lowest production since 2002.

[PaulParanoia]

47 minutes ago, JMD said:

Very interesting site, that puts 'our' government house-arrest policy and its trashing of the economy, into perspective...

http://inproportion2.talkigy.com/

Most sobering fact for me: Asian flu killed 80,00 in the UK back in 1969, yet no panic-policy was enacted. Also, that particular epidemic took over 2-months to land on our shores, and yet still there were no panic measures put in place.

It's good to see they have updated the site.  The graphs were starting to look a bit out of date on there.  The updated version is not as convincing as the previous version of the site.  I see they have started to combine England and Wales to get a 'good' graph.  They are also having to compare Covid to Hong Kong Flu from 1969, instead of the last ten flu seasons.  Their graphs no longer support the 'slam dunk' convincing argument which they used to.

I still agree with their overall message though.

[Starsend]

Just been done over by CMC who I've had a spread betting account with for many years. Only ever used occasionally.

Went long on WTI Cash a week or two ago. Only a small bet which is currently underwater. They changed the annual holding cost from the usual single digit interest rate to 225% overnight and pegged the instrument to the December contract (completely different). They sent out an email which was basically gibberish. Lots of other people complaining.

I'm only a couple of hundred pounds down and I'd normally forget it and leave it until it turns a profit but the holding costs seem designed to force you to close the position at a loss or ensure that CMC don't lose out if/when the prices bounces.

With CMC they are effectively taking the other side of the trade and also setting pricing/holding costs etc so it seems clear that you're going to get all sorts of monkey business with them.

Decided to close my account with them but would really like a more honest platform I can use where you don't get the dishonest behaviour. Does anybody have any recommendations? Do you get the same bullshit with a CFD account?

 

 

[DurhamBorn]

19 minutes ago, Starsend said:

Just been done over by CMC who I've had a spread betting account with for many years. Only ever used occasionally.

Went long on WTI Cash a week or two ago. Only a small bet which is currently underwater. They changed the annual holding cost from the usual single digit interest rate to 225% overnight and pegged the instrument to the December contract (completely different). They sent out an email which was basically gibberish. Lots of other people complaining.

I'm only a couple of hundred pounds down and I'd normally forget it and leave it until it turns a profit but the holding costs seem designed to force you to close the position at a loss or ensure that CMC don't lose out if/when the prices bounces.

With CMC they are effectively taking the other side of the trade and also setting pricing/holding costs etc so it seems clear that you're going to get all sorts of monkey business with them.

Decided to close my account with them but would really like a more honest platform I can use where you don't get the dishonest behaviour. Does anybody have any recommendations? Do you get the same bullshit with a CFD account?

 

 

I use to use Cityindex,but very very rare i short anything now,and i never trade long with leverage at all.Looks like they are trying to force people out of the trades,maybe they have big liability if oil run higher by December

[JMD]

1 hour ago, PaulParanoia said:

It's good to see they have updated the site.  The graphs were starting to look a bit out of date on there.  The updated version is not as convincing as the previous version of the site.  I see they have started to combine England and Wales to get a 'good' graph.  They are also having to compare Covid to Hong Kong Flu from 1969, instead of the last ten flu seasons.  Their graphs no longer support the 'slam dunk' convincing argument which they used to.

I still agree with their overall message though.

PaulParanoia, sorry but I am unsure what point you are making (is it the lies, damn lies, etc mantra?).

I would add that of course comparisons and statistics are refined/changed to help prove ones own theory. But their central 'argument' remains - that current policy is a complete overreaction and that the measures enacted will cause more harm than the disease itself.

But which (whose?) 'numbers' are the most relevant? Keep it simple I say. The ONS own stats show that under 65 year olds represent 'only' 7% of deaths, and of those under 65's, the majority suffered from co-morbidities, the detailed figures are yet to be released. And of course 'dying with' and 'dying of' CV19 may be two totally different things. Also, contrast the immediate much publicised deaths, with as yet uncounted future deaths (all experts predict these) due to withheld treatments or reduced NHS funding (due to recession/more austerity), and the true scope of this self inflicted tragedy begins to reveal itself.    

Too be clear its not about (economic) wealth vs health for me. For example, from the outset I wanted the old and other vulnerable should be protected 100% (mobilise the armed forces even, isn't it continually referred to as a war), and after all we did know the risk groups from the start. But really, most of this carry-on couldn't be made up. First, we had the Scottish health adviser forced out for contravening own pandemic rules. Then our own chief virologist, Neal Ferguson (Imperial college model), and architect of the virus-spread model (this was the 'worst case' scenario model; e.g. the alternative Cambridge model was far less 'exagerated') and adopted by our government, but couldn't even obey his own rules and resigned last week. I ask, do these experts even believe their own theories, the evidence to me says not.

[Starsend]

26 minutes ago, DurhamBorn said:

I use to use Cityindex,but very very rare i short anything now,and i never trade long with leverage at all.Looks like they are trying to force people out of the trades,maybe they have big liability if oil run higher by December

Thanks DB, I'll take a look at CityIndex. Yes, I think they've fecked up and probably stood to lose a lot of money so they think they can jack up holding costs and change the price to track something different. Mental.

[BadAlchemy]

I bought about 4 acres of broadleaf (coppice) woodland several years ago, partly as a way of getting some of my hard earned cash out of the banking ponzi but also because my wife and I had been interested in the idea for some time. If you like the outdoors and are the practical, self sufficient sort (most people on this thread, I'm guessing) then you can certainly look after a small woodland. Excellent fun and gives you a real connection to nature that cannot be surpassed.

I got mine from the woodlands.co.uk site. In the southeast, prices were about £10K per acre. In less 'rip-off' parts of the country they could be as little as £5K per acre. Best to get something local to you (no more than 20 miles away?) otherwise the travelling to/from it could become a drag and you might lose interest. You'll probably want to avoid any which are designated as 'sites of special scientific interest' or have any tree protection orders on them which might restrict what you can do with it or obligate you to manage it in some particular way. With mine there is no obligation on me to actively manage or coppice the woodland, except for maintaining a 400 metre long stretch of fence (which I recently repaired/replaced for a minimal cost of £300 and a couple of weeks work... should be good now for at least 10 years) and keeping a drainage channel/ditch clear so water can run off from the neighbouring farmer's field (I just dig out autumn leaf fall and strim back any overgrowth once every year or two). Simple.

Other than that I just cut down a couple of trees each year for firewood and sometimes a storm will bring one or two down so I can cut those up instead. I probably save only about £200 a year on heating bills (someone with a more heat efficient home and multiple woodburners rather than a single open fire place would do better than I do). I spend that saved £200 on public liability insurance so the cost of ownership is net zero. Some people may not bother with the public insurance but I don't risk it.. I believe you are liable even if a trespasser injures themselves on your own private land... FFS!

You'll definitely need some basic tools (£1K to £2K outlay for decent kit that lasts) such as chainsaw, brushcutter... possibly a petrol fence post drill and a 'Tirfor' winch for pulling down hung up trees or trees which fall onto your neighbour's land. Get yourself proper PPE of course and just teach yourself everything. It's easy and great fun.

You are allowed to fell up to 5 cubic metres of trees per calendar quarter without a felling license which is more than enough if all you want is firewood to heat your own home.
Make sure you get the sporting/shooting rights on the land when you buy it. My vendor held back at first.. he used to charge people to shoot in his woodland and I think he thought he'd somehow be able to carry on doing that after he sold it to me. Either that or he didn't trust that I wouldn't accidently shoot one of his horses or something! I insisted and got the rights added. Country folk and farmers are crafty buggers you've got to watch them...

I have not heard of there being a right to stay in a caravan indefinitely based on the size of the land. I believe it was that you are allowed to live on the land for no more than a month out of each year... we can't have people escaping the property and council tax ponzis now can we.

As a bonus, during this lockdown, I have found that firewood and timber are designated as an 'essential supply chain' so I've been driving to my woods to bring back firewood that I cut before the lockdown started ( have got a 'letter of comfort' about it in case I got stopped by police). Really useful and helped save my sanity!

Sorry to go off-topic and don't know if any of this is useful but as a few here were talking about it....

[DurhamBorn]

Very interesting @BadAlchemy .I love nature so im really interested in getting some so that i can simply get it as good as i can for wildlife.I agree on having the insurance,couple of hundred quid is worth it,and it actually comes in handy,you can use it to have market stalls etc.A great inflation hedge you can enjoy sounds perfect.

 

[Agent ZigZag]

The forum is like reading the Field to farm book at the moment. I like this out of the box thinking and information people have on such matters. keep it up everyone as there is always something new to learn.

[Jesus Wept]

https://www.prnewswire.com/news-releases/central-florida-homeowners-sue-the-mosaic-company-over-radiation-health-risks-from-phosphate-mining-301055050.html
 

The Mosaic Company -10% today.

I’ve been following this one as major player in the potash industry. 
 

*** Many players in this sector are down 5%+ today. Did I miss something? 
 

It is a volatile stock and often up 7-8% then drops a fair bit today. Not seen double digit drops on a ‘normal’ trading day mind.

Connected to this....? Potential huge liabilities? Potentially awkward image issues going forward? 

[Jesus Wept]

Further digging.....

Maybe an opportunity to ladder in? looks like good harvests for farmers means bumper yields which means low prices - so less money for fertiliser.... 

https://www.fool.com/amp/investing/2020/05/11/why-mosaic-stock-just-dropped-10.aspx

What happened

Last week, shares of fertilizer giant The Mosaic Company (NYSE:MOS) got a boost when analysts at Scotiabank called a bottom on phosphorus and potassium prices, predicted a 50% profit on the stock, and rated Mosaic shares as outperform.

Today, Mosaic shares are down 10% as of 10:45 a.m. EDT as another, even more famous, analyst decides to take the opposite side of that trade.

So what?

In Scotiabank's opinion, phosphorus and potassium are selling for trough-level prices right now. But if markets "stabilize," according to TheFly.com, and prices return to even a bit less than what they were in 2019, Scotiabank thinks Mosaic stock could return to $18 a share -- more than a 50% gain from today's price of less than $11 a share.

But not so fast, says Bank of America, which argues that after an "optimistic start" to the year, price trends in fertilizer have "reversed significantly." As a result, Bank of America's outlook on Mosaic stock went from buy to underperform.

As BofA explains, farmers in the U.S. have planted a record amount of corn -- but demand for corn-derived ethanol to mix with gasoline is falling along with demand for gasoline. At the same time, Brazil is producing record amounts of soybeans.

Now what

That may sound good for agricultural industry companies like Mosaic, but in the perverse economics of the ag industry, good harvests usually mean bad prices for the crops harvested. That means less money for farmers with which to buy fertilizer for next year, and less incentive to buy it as well.

In this environment, Bank of America believes that Mosaic stock will be a money-losing trade, and advises investors to sell it. Right now, it seems investors are going to do just tha

[Bricormortis]

Saudis feeling the pressure. VAT rate triples.

https://uk.reuters.com/article/us-health-coronavirus-saudi-economy/saudi-triples-vat-rate-in-austerity-push-to-counter-oil-slump-virus-idUKKBN22N05M

[janch]

We haven't talked about transports recently.  I guess at the moment they're not in a good position but in Shares magazine Go Ahead GOG are tipped as a good one for the future.  It seems the contract doesn't depend on passenger numbers.

Disclosure I own some

A STOCK FOR A LOW GROWTH ENVIRONMENTIn a low growth and persistently low interest rate world, earnings growth of any kind will probably trade at a premium, while defensive earnings unrelated to the growth in the economy will also be sought.Around 90% of Go-Ahead’s (GOG) revenues are derived from contracts where there is no management contract rather than the old one which saw the franchise operator’s revenue primarily generated through passenger fares.Around 90% of Go-Ahead’s revenues are now derived from contracted markets where there is no direct revenue risk from changes in travel demand.The company has been cutting costs and has suspended the dividend. It has £110m of cash and £134m of unutilised facilities, with net debt of £306m.The Government has provided £167m of funding to bus operators for at least 12 weeks. When the lockdown ends and business eventually goes back to relative normality, Go-Ahead will be in a good position to reinstate dividends, which have grown around 4% a year over the last five years and provided an average yield of 5%.direct revenue risk from changes in underlying travel demand. The transport company was recently awarded a new contract to keep running the Southeastern rail franchise which runs to October 2021.

[PaulParanoia]

1 hour ago, JMD said:

2 hours ago, PaulParanoia said:

Their graphs no longer support the 'slam dunk' convincing argument which they used to.

I still agree with their overall message though.

PaulParanoia, sorry but I am unsure what point you are making (is it the lies, damn lies, etc mantra?).

The earlier version of InProportion2 had graphs which (to me) clearly showed that Covid was no worse than seasonal flu when compared to the last 5 to 10 flu seasons.  IMO, they were making a 'slam dunk', water tight argument that lock downs are an overreaction which any one looking at them with a logical mind would clearly agree with.

If you updated those same graphs with the latest data, you'd now see that Covid is worse than previously quoted flu seasons.  As such, the site owners have started comparing Covid to the Hong Kong Flu instead of the last 5 to 10 years.  While I still agree with their conclusions, the evidence based on the new set of graphs is simply not as strong as it was with the old set.  This doesn't invalidate their argument or say they are doing the 'lies, damn lies and statistics' thing, but simply reflects the evolving situation.   

Note: I fully agree that lock downs are an over reaction. 

[Castlevania]

2 hours ago, Starsend said:

Just been done over by CMC who I've had a spread betting account with for many years. Only ever used occasionally.

Went long on WTI Cash a week or two ago. Only a small bet which is currently underwater. They changed the annual holding cost from the usual single digit interest rate to 225% overnight and pegged the instrument to the December contract (completely different). They sent out an email which was basically gibberish. Lots of other people complaining.

I'm only a couple of hundred pounds down and I'd normally forget it and leave it until it turns a profit but the holding costs seem designed to force you to close the position at a loss or ensure that CMC don't lose out if/when the prices bounces.

With CMC they are effectively taking the other side of the trade and also setting pricing/holding costs etc so it seems clear that you're going to get all sorts of monkey business with them.

Decided to close my account with them but would really like a more honest platform I can use where you don't get the dishonest behaviour. Does anybody have any recommendations? Do you get the same bullshit with a CFD account?

 

 

If too many people take the same bet and they can’t hedge in the underlying market they usually increase the “funding” (in inverted commas because it’s completely made up) charge quite considerably. When bit coin was going to the moon the funding charges were similar. The flip side is that if you go short then they’ll pass on most of that to you. The idea is to reduce their exposure by either getting people to close out their positions or getting people to take the other side of the bet.

[DurhamBorn]

@Vendetta love these short term buy and sell advice from brokers.Macro tourists the lot of them Mosaic might 10x or more by the end of a reflation and im not selling any before 2028.China has just signed a potash deal with Belarus that is low and that will by why Mosaic is down,however Russia are saying at that price China can sing and they might not supply and that it means supply will lead to a shortage ,as it will in a few years,just as inflation starts to run as well.Perfect.

https://www.mining.com/uralkali-slams-potash-deal-between-belarus-and-china/

https://www.uralkali.com/press_center/press_releases/item43121/

These people buy or sell think the long term is 6 months.The big wins from this sector will come to those who hold for the cycle.If the prices stay down or go lower il be directing divis to get more.

[Jesus Wept]

8 minutes ago, DurhamBorn said:

@Vendetta love these short term buy and sell advice from brokers.Macro tourists the lot of them Mosaic might 10x or more by the end of a reflation and im not selling any before 2028.China has just signed a potash deal with Belarus that is low and that will by why Mosaic is down,however Russia are saying at that price China can sing and they might not supply and that it means supply will lead to a shortage ,as it will in a few years,just as inflation starts to run as well.Perfect.

https://www.mining.com/uralkali-slams-potash-deal-between-belarus-and-china/

https://www.uralkali.com/press_center/press_releases/item43121/

These people buy or sell think the long term is 6 months.The big wins from this sector will come to those who hold for the cycle.If they prices stay down or go lower il be directing divis to get more.

I agree. 5 year hold minimum.

-10% on opening - an opportunity to buy. 

-7% now - so buyers taking the opportunity.

Apart from NDR and SDF fo you favour any other companies in the potash/fertiliser sector? AAL & VALE have the large cap and a wider exposure to metals as well. 

 

 

[DurhamBorn]

26 minutes ago, Vendetta said:

I agree. 5 year hold minimum.

-10% on opening - an opportunity to buy. 

-7% now - so buyers taking the opportunity.

Apart from NDR and SDF fo you favour any other companies in the potash/fertiliser sector? AAL & VALE have the large cap and a wider exposure to metals as well. 

 

 

Not really,its a difficult sector to get a big spread in.I own a few K+S but their balance sheet is a mess.BHP have a fantastic future mine,huge prospect,but they are on a go slow building it.

[Jesus Wept]

47 minutes ago, DurhamBorn said:

Not really,its a difficult sector to get a big spread in.I own a few K+S but their balance sheet is a mess.BHP have a fantastic future mine,huge prospect,but they are on a go slow building it.

Potash Producers on my watch list:

 

A few ‘junior’ potash explorers:

[DurhamBorn]

59 minutes ago, Cattle Prod said:

Just in from Hargreaves, Government has said "we won't penalise you if you want to blow your LISA, and we kind of hope you do"

 

Understandable that they want some easy liquidity, but what's next, more pension freedoms?

I hope they move the pension age down to 50 for draw down.Before this they wanted to keep people working as long as they could and were looking to increase the age to 58 from 55.I guess now like you say they would rather get spending into the economy and younger people back in work.They could link it to adding NI to income tax so pensioners pay it as well.