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


spunko

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ThoughtCriminal
1 hour ago, TheCountOfNowhere said:

I've had an interesting weekend...

Spoke to 1 (small, 30 staff ) business owner yesterday and they said, invoices all being paid on time, staff coming off furlough as they are too busy and need people back, everything looking rosy.

Spoke to 1 CEO type, same story, invoices being paid, plenty money about, sales are tough though as the cash rich are demand discounts...cash is king they said !!!

And 1 retired captain of industry, 100% convinced no real recession, V recovery is locked in, everything is fine though Airlines will struggle.

Interesting to hear, no one is talking about depression, just a false recession.

Anyone care to agree/disagree ?

My business is demolition, soft strip and asbestos removal and we’ve been taking on jobs throughout lockdown like crazy, it’s getting even busier now: both domestic and commercial. 

 

I firmly believe this is pent up demand from lockdown. The elastic band is stretching but it’s going to snap back with a vengeance in a couple of months. 
 

As DB often reminds us: leads and lags. 

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1 hour ago, M S E Refugee said:

Once the furlough ends we will see the carnage,my wife's company are making redundancies and are happy for their employees to receive the furlough money for the next few months then pay them off.

My sons company are looking to lay off/reduce the salary of those staff who are not 100 percent fee earning in anticipation of the furlough ending in October. Mid size Uk accounting firm. 
 

Once the dust settles I think we will see a working population of c 25 million so 5 million or so unemployed. I would have said that 8 sectors or so of the 28 in the ftse will be permanently reduced. You would have thought that taxes can’t easily go up on the working population so taxes on pensions and property are the obvious targets if they want to recoup some of the hit. And another  £ devaluation as per the 2008 playbook.

 

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21 hours ago, Sasquatch said:

If that comes to pass then I will be minted. At the same time it also suggests that the world will be knee deep in the smelly stuff. I don't want that either for me or my family and friends. Quite terrifying really.

Knee deep in inflation.Glad to see David now sees $300 not $200,as iv seen $300 for quite a while.Hes an expert on liquidity from the CBs,i expect him seeing $25 silver during the bust is because the Fed is already fully engaged.I think that more likely than $15.I dont think a market bust is taking everything down for long.Reflation areas  should see shallower drops and quicker rebounds.

If silver does do $300 other commods will be flying higher as well.I love silver,but no need to just pack silver miners,though they have the potential to make life changing amounts.

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sancho panza
4 hours ago, TheCountOfNowhere said:

I've had an interesting weekend...

Spoke to 1 (small, 30 staff ) business owner yesterday and they said, invoices all being paid on time, staff coming off furlough as they are too busy and need people back, everything looking rosy.

Spoke to 1 CEO type, same story, invoices being paid, plenty money about, sales are tough though as the cash rich are demand discounts...cash is king they said !!!

And 1 retired captain of industry, 100% convinced no real recession, V recovery is locked in, everything is fine though Airlines will struggle.

Interesting to hear, no one is talking about depression, just a false recession.

Anyone care to agree/disagree ?

Interesting comment from jim Rogers,very early on says

'the crash will come when noone's looking'

wise words

3 hours ago, Barnsey said:

Yeah talks now underway for bigger firms in anticipation of having to fork out part of the wage bill as of August, some will likely see how the next few months go before perhaps making a decision. Seems this generous furlough scheme has boosted the savings accounts of many well, especially given greatly reduced outgoings. Mad.

Rolls Royce situation deterirorating as they've contracted work out to subbies they're going to have to pay over next few years no matter what.

1500 of the best jobs in Derby gone,6000 out of 9000 worldwide going be in UK.

The impact of these job losses will be felt across the Mids.

https://www.theguardian.com/business/2020/jun/03/rolls-royce-locations-uk-job-losses-derby-redundancy

The Rolls-Royce chief executive, Warren East, suggested last month that about two-thirds of the 9,000 job cuts would fall in the UK, with another 3,000 redundancies expected in 2021.

Before the job cuts were announced, Rolls-Royce employed 52,000 staff globally. As well as making and servicing commercial jet engines, it also makes fighter jet and ship engines in addition to reactors for nuclear submarines. However, it said there would be no job losses at its defence business.

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sancho panza
4 hours ago, M S E Refugee said:

Once the furlough ends we will see the carnage,my wife's company are making redundancies and are happy for their employees to receive the furlough money for the next few months then pay them off.

Retail looks proper fubar.Govt won't respond wucikly enough with fiscal aid.

https://wolfstreet.com/2020/06/14/after-years-of-breakneck-growth-europes-fashion-industry-faces-nightmare/

'Most European brick-and-mortar clothing stores have been open for three or four weeks, yet sales continue to languish. In April, when all but the essential brick-and-mortar stores were shut, sales of clothing and accessories slumped by 50% in the UK and 67.4% in France, the home of fashion. In Spain, revenues in the sector plunged by 80.5%, according to data published by the trade association Acotex.

But even in May, when stores in most Spanish cities reopened, revenues in the sector fell 72% year over year and are down 45% year to date. Those figures include booming online sales.

“The textile and accessories trade is in a very delicate spot, requiring urgent and specific measures for the sector,” warned Acotex. In other words, government help and money. Otherwise, the trade association said, there will soon be a wave of bankruptcies and closings.'

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Talking Monkey
1 hour ago, DurhamBorn said:

Knee deep in inflation.Glad to see David now sees $300 not $200,as iv seen $300 for quite a while.Hes an expert on liquidity from the CBs,i expect him seeing $25 silver during the bust is because the Fed is already fully engaged.I think that more likely than $15.I dont think a market bust is taking everything down for long.Reflation areas  should see shallower drops and quicker rebounds.

If silver does do $300 other commods will be flying higher as well.I love silver,but no need to just pack silver miners,though they have the potential to make life changing amounts.

Other than Oil, Silver and Gold what others would you say are worth having a look at DB

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M S E Refugee
3 minutes ago, sancho panza said:

Retail looks proper fubar.Govt won't respond wucikly enough with fiscal aid.

https://wolfstreet.com/2020/06/14/after-years-of-breakneck-growth-europes-fashion-industry-faces-nightmare/

'Most European brick-and-mortar clothing stores have been open for three or four weeks, yet sales continue to languish. In April, when all but the essential brick-and-mortar stores were shut, sales of clothing and accessories slumped by 50% in the UK and 67.4% in France, the home of fashion. In Spain, revenues in the sector plunged by 80.5%, according to data published by the trade association Acotex.

But even in May, when stores in most Spanish cities reopened, revenues in the sector fell 72% year over year and are down 45% year to date. Those figures include booming online sales.

“The textile and accessories trade is in a very delicate spot, requiring urgent and specific measures for the sector,” warned Acotex. In other words, government help and money. Otherwise, the trade association said, there will soon be a wave of bankruptcies and closings.'

My Wife works in retail and it will be a miracle if she doesn't get made redundant this year.

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7 hours ago, sancho panza said:

.....she was initally very against it....

Careful!  I've fired pretty much everything that goes bang from a 105mm down.  Also #3 Skill at Arms.  Was at a range day a few weeks ago and was totally lost on handling after a few years off.  Total surprise!

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27 minutes ago, sancho panza said:

Retail looks proper fubar.Govt won't respond wucikly enough with fiscal aid.

https://wolfstreet.com/2020/06/14/after-years-of-breakneck-growth-europes-fashion-industry-faces-nightmare/

'Most European brick-and-mortar clothing stores have been open for three or four weeks, yet sales continue to languish. In April, when all but the essential brick-and-mortar stores were shut, sales of clothing and accessories slumped by 50% in the UK and 67.4% in France, the home of fashion. In Spain, revenues in the sector plunged by 80.5%, according to data published by the trade association Acotex.

But even in May, when stores in most Spanish cities reopened, revenues in the sector fell 72% year over year and are down 45% year to date. Those figures include booming online sales.

“The textile and accessories trade is in a very delicate spot, requiring urgent and specific measures for the sector,” warned Acotex. In other words, government help and money. Otherwise, the trade association said, there will soon be a wave of bankruptcies and closings.'

Been watching Youtube videos from Primark and Wetherspoons about the steps they have taken for once they reopen.  OK, never been a fan of shopping or such spending but forget it! 

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2 minutes ago, Harley said:

Been watching Youtube videos from Primark and Wetherspoons about the steps they have taken for once they reopen.  OK, never been a fan of shopping or such spending but forget it! 

If they want to rescue the retail economy the first thing that needs to go is this horseshit "One in one out" 2m queuing like a lemming.  Until them I'm on basic survival rations only.

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Chewing Grass
6 minutes ago, Loki said:

If they want to rescue the retail economy the first thing that needs to go is this horseshit "One in one out" 2m queuing like a lemming.  Until them I'm on basic survival rations only.

Retail is dead until the Pubs reopen.

All I see near me is empty buses driving around and people queuing up to go into DIY shops.

I have got totally used to not visiting any shops other than the supermarket (once a week) and petrol station (twice in 3 months) all the other bits and pieces for fixing stuff and personal amusement have been dropped on my doorstep.

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57 minutes ago, sancho panza said:

Interesting comment from jim Rogers,very early on says

'the crash will come when noone's looking'

wise words

.......

I've really enjoyed watching/listening to the macro strategists over the last few weeks.  Quiet a few.  Maybe I should have been more focused on the markets (tbd!) but I now have a clearer vision for my investing roadmap (i.e. journey not straight to end state) as a result.  Not all agree and not all come across as flippant (e.g. Jim Rogers certainly isn't on a rare longer interview) but there is a broad consensus at a more detailed level and some of the take aways don't conflict so nothing contentious or to "lose".  This thread scores quite well.  And the recent quick drops have reminded me this ain't over so game still on!  My biggest take away?  They've mostly all relocated geographically! 

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23 minutes ago, Harley said:

Been watching Youtube videos from Primark and Wetherspoons about the steps they have taken for once they reopen.  OK, never been a fan of shopping or such spending but forget it! 

We walked past our local Primark last week. They were having some kind of training session outside the shopfront with blue ribbons stretched between the 10 or so workers (presumably 2m long) whilst be urged on by the young shop manager who looked like he'd only just starting shaving. It was like watching some weird cultish religious ceremony.

There are now blue lines all over the pavement outside....and probably electrified fences inside. I will not find out as I've never been inside a Primark and will not be starting now. 

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28 minutes ago, Chewing Grass said:

I have got totally used to not visiting any shops other than the supermarket (once a week) and petrol station (twice in 3 months) all the other bits and pieces for fixing stuff and personal amusement have been dropped on my doorstep.

We haven't been in a shop since mid February, apart from the pharmacy (thrice), dentist (once), and petrol station (once).  We prepped before and still am.  Everything (really) needed has been delivered, increasingly not Amazon (or eBay) as going direct is now often cheaper.  Delivery is now more rapid than before!  We have no desire to go again and as for discretionary stuff like restaurants, rip-off (especially compared to the home sourced "bella" stuff)!

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6 minutes ago, Sasquatch said:

I will not find out as I've never been inside a Primark and will not be starting now. 

That'll depend on your attention to this thread and portfolio performance!

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Chewing Grass
7 minutes ago, Sasquatch said:

We walked past our local Primark last week. They were having some kind of training session outside the shopfront with blue ribbons stretched between the 10 or so workers (presumably 2m long) whilst be urged on by the young shop manager who looked like he'd only just starting shaving. It was like watching some weird cultish religious ceremony.

There are now blue lines all over the pavement outside....and probably electrified fences inside. I will not find out as I've never been inside a Primark and will not be starting now. 

Just had a root on Primark, the Home Bargains of clothing.

Primark parent company ABF’s financial director John Bason told Retail Week this week that going online was still “not a priority” and Primark would be as relevant as ever to shoppers through its reopened bricks-and-mortar stores.

I smell a Woolies moment coming in August.

Could never work out why a food company would really be interested in owning a clothes retailer.

https://www.retail-week.com/fashion/analysis-can-primark-afford-not-to-sell-online/7034978.article?authent=1

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1 hour ago, sancho panza said:

'the crash will come when noone's looking'

Just imagine being positioned more or less correctly for that "whatever" event rather than being the deer in the headlights or running like mad to cover.  Must be a worthwhile objective for which we've had a dry run (although nothing is quite the same).  And not limited to the financial intricacies (asset classes, institutions, instruments, locations, regulations, financialisation, etc) but also the physiological, physical, etc challenges.  I will always hedge (e.g. balanced portfolio) in case I'm wrong but be ready to act if clearly not. 

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22 minutes ago, Chewing Grass said:

Just had a root on Primark, the Home Bargains of clothing.

Primark parent company ABF’s financial director John Bason told Retail Week this week that going online was still “not a priority” and Primark would be as relevant as ever to shoppers through its reopened bricks-and-mortar stores.

I smell a Woolies moment coming in August.

Could never work out why a food company would really be interested in owning a clothes retailer.

https://www.retail-week.com/fashion/analysis-can-primark-afford-not-to-sell-online/7034978.article?authent=1

Diversification and money.  Not sure how much of a food company they are now!  Their published(?) battered strategy pre-CV was to expand geographically (Europe, US, etc) rather than via channels like on-line (but never say never).  Their real challenges seemed to me to be running out of cheap places to have their stuff made and designing in even cheaper costs of production.  Increases in raw material and transportation costs (lower weighting of production costs) could scupper them.  They are however apparently very agile at "turning" temporarily hot items around.  And then people love to shop and the stuff they currently have was not made to last!  Be an interesting one to watch.

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4 hours ago, Festival said:

My sons company are looking to lay off/reduce the salary of those staff who are not 100 percent fee earning in anticipation of the furlough ending in October. Mid size Uk accounting firm. 
 

Once the dust settles I think we will see a working population of c 25 million so 5 million or so unemployed. I would have said that 8 sectors or so of the 28 in the ftse will be permanently reduced. You would have thought that taxes can’t easily go up on the working population so taxes on pensions and property are the obvious targets if they want to recoup some of the hit. And another  £ devaluation as per the 2008 playbook.

 

Tax is going up in the form of inflation so the people paying it will be those who's income and savings dont go up with it.Think gilts,bonds,cash,etc.Over the 10 year cycle i expect people owning bonds today to lose around 70% to 80% in real terms.

Council tax will be a tax that hits hard though as it tends to be inflation linked,though im also expecting massive push back from the public against council tax.

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1 hour ago, Talking Monkey said:

Other than Oil, Silver and Gold what others would you say are worth having a look at DB

Potash and telcos mostly.

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8 hours ago, Chewing Grass said:

Primark parent company ABF’s financial director John Bason told Retail Week this week that going online was still “not a priority” and Primark would be as relevant as ever to shoppers through its reopened bricks-and-mortar stores.

Ok, I'm no industry/retail giant but with such a lack of insight I wonder why he's their FD?...1. Prior to Coronavirus more people were shopping online, 2. Post lockdown more people have got into the habit of shopping online, 3. Whether its Coronavirus or another pathogen in the future we will have more disruption to physical retail shopping.

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12 hours ago, Festival said:

You would have thought that taxes can’t easily go up on the working population so taxes on pensions and property are the obvious targets if they want to recoup some of the hit.

Hence why they have propped up house prices at all costs?...as a tax target home owners are sitting ducks as a) everyone needs a home, b) you can avoid paying it as you've on the LR database, and c) it takes at least four months to become fully deinvested if you want to get out.

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Fully Detached
9 hours ago, M S E Refugee said:

My Wife works in retail and it will be a miracle if she doesn't get made redundant this year.

Same here - she had already been told she would lose her job at some point this year before the lockdown. The furlough has just bought her a few months longer. I am 95% convinced now that this whole thing was used as a way to put money directly into consumer's pockets - furlough with no commutiung costs or ability to spend, mortgage holidays etc.

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Fully Detached
11 minutes ago, MrXxxx said:

Hence why they have propped up house prices at all costs?...as a tax target home owners are sitting ducks as a) everyone needs a home, b) you can avoid paying it as you've on the LR database, and c) it takes at least four months to become fully deinvested if you want to get out.

Problem with any sort of housing or wealth tax is that a lot of people have assets but no cash to pay the tax bill with. You can't force someone to sell their home to pay a 2% tax on it. Second homes maybe...

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3 minutes ago, Fully Detached said:

Problem with any sort of housing or wealth tax is that a lot of people have assets but no cash to pay the tax bill with. You can't force someone to sell their home to pay a 2% tax on it. Second homes maybe...

People always have money, its what they choose to spend it on...if its through direct taxation they won't have a choice.

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