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

[M S E Refugee]

11 minutes ago, JMD said:

Sasquatch, when you say 'allows access to gold bullion' do you mean buying gold etf's/etc's - or are you talking something more like holding physical gold in a storage facility?  

I think you can store it in Bullionvault through James Hay.

[dgul]

44 minutes ago, The Idiocrat said:

Is there any money in mining after the Halving at current crypto prices and hardware/energy costs? Argo (miner) share price down 50% in last 3 months and they’re supposed to be one of the most efficient (I don’t own any, on my watch list).

There's always money in mining if you can get mining systems at cost and/or electricity cheaper than everyone else.  Clearly, a casual person in the UK is hard pushed to meet either of those requirements.

The dream of 'mining companies' is that shareholders provide the capital for investment and they do the mining efficiently.  I'd imagine that in reality it is just a money transfer mechanism*.

[* This isn't quite fair -- they might have purchasing power to get a good deal from ASIC miner suppliers, and might operate in places with cheaper electricity.  Nonetheless, it isn't clear why they should give a significantly better ROI than buying an Antminer, say.]

[Personally, I believe that the whole crypto space has become infested with people manipulating prices, from the Tether printing stuff to Far Eastern mining conglomerates.  Not something I'm touching, other than I happen to have a Skycoin miner in the attic, mining merrily, and I can't be bothered to go up there to switch it off.]

[stop_the_craziness]

15 hours ago, sancho panza said:

 

Ahhh, that cheeky spike in March 2016 from The Great BTL Stamp Duty Stampede  That was when I first started to look to buy a house after splitting with my ex and I thought "Why has the world gone mental all of a sudden?" ...............and then I discovered ToS

[Heart's Ease]

On 01/07/2020 at 16:28, Loki said:

Now that is interesting and something I hadn't thought of.  Who else was it I was chatting to about the Freegold/Euro comments? Petrodollar demise by the back door? Fascinating geopolitics potential. 

It was me and @JMD and, yes that made me raise an eyebrow.

@jmd - I still intend to come back to you on points you raised. 

[Castlevania]

2 hours ago, stop_the_craziness said:

Ahhh, that cheeky spike in March 2016 from The Great BTL Stamp Duty Stampede  That was when I first started to look to buy a house after splitting with my ex and I thought "Why has the world gone mental all of a sudden?" ...............and then I discovered ToS

Ah. So that’s what that was. It was confusing me. I remember the open days where 30+ people would turn up in early 2014 so that people could buy with a mortgage pre MMR rules, but that’s only a small bump on the chart.

[Sasquatch]

5 hours ago, JMD said:

Sasquatch, when you say 'allows access to gold bullion' do you mean buying gold etf's/etc's - or are you talking something more like holding physical gold in a storage facility?  

Vaulted gold via bullionvault (or similar). Mine is with bullionvault. Only gold allowed through a SIPP, not silver or platinum. I've gone for it big time. 50% of my SIPP is in gold bullion, the other 50% in stocks (50% miners, 50% reflation). I don't think I could have moved further away from my previous IFA's recommendations if I'd tried!  

[Transistor Man]

UK tax-payer takes 45%/ $500 million stake in bankrupt satellite internet, and SpaceX Starlink rival, OneWeb. 

[The Idiocrat]

2 hours ago, Sasquatch said:

Vaulted gold via bullionvault (or similar). Mine is with bullionvault. Only gold allowed through a SIPP, not silver or platinum. I've gone for it big time. 50% of my SIPP is in gold bullion, the other 50% in stocks (50% miners, 50% reflation). I don't think I could have moved further away from my previous IFA's recommendations if I'd tried!  

I had a look at my girlfriend’s investments, which an IFA takes care of, as she’d asked me to, and I thought I might learn something from it - it was the same, complete opposite to what I’m doing (or what many in this thread are doing). There were a lot of funds, at least 20, which I suspect were the ones that paid the IFA the most commission. No PM’s at all. I’ve asked her to show me her next IFA report for the current quarter (ie. post Covid from April), and see if he’s changed anything. I suspect not, other than more commission-paying ones.

[Option5]

13 minutes ago, The Idiocrat said:

I had a look at my girlfriend’s investments, 

Is that an innuendo,?

[The Idiocrat]

21 minutes ago, Option5 said:

Is that an innuendo,?

What goes up, may come down!

[Option5]

1 minute ago, The Idiocrat said:

What goes up, may come down!

Might, not may 

Unless it's an aircraft.

Are you paraphrasing David Gunson?

[sancho panza]

3 hours ago, Transistor Man said:

UK tax-payer takes 45%/ $500 million stake in bankrupt satellite internet, and SpaceX Starlink rival, OneWeb. 

TM,is there a layman's expalantion/view on what went on .I saw a piece on FIn Viz about it but hadn't heard of the players.

[Transistor Man]

36 minutes ago, sancho panza said:

TM,is there a layman's expalantion/view on what went on .I saw a piece on FIn Viz about it but hadn't heard of the players.

I think this ft article is unrestricted.

https://www.ft.com/content/01e4d379-ac2d-4ca3-9724-b0a982d1fa4f

The UK has gone space-heavy the last couple of years. There’s been loads of space investment on my work site. This takes it to another level.

(Uk Space includes comms and autonomous vehicles. E.g. Project Darwin )

could the UK implement something almost as good as Galileo satellite navigation, on the cheap using this technology? I would guess it’s possible.

[DurhamBorn]

1 hour ago, The Idiocrat said:

I had a look at my girlfriend’s investments, which an IFA takes care of, as she’d asked me to, and I thought I might learn something from it - it was the same, complete opposite to what I’m doing (or what many in this thread are doing). There were a lot of funds, at least 20, which I suspect were the ones that paid the IFA the most commission. No PM’s at all. I’ve asked her to show me her next IFA report for the current quarter (ie. post Covid from April), and see if he’s changed anything. I suspect not, other than more commission-paying ones.

IFAs are salesmen/women now who simply put together a 40/60 type portfolio similar to a Vanguard lifestyle fund and charge 2% fees.The 40/60 funds aim for around 6% so a 2% fee structure is 33% of the expected growth.Compound that over 30 years and its eye watering.

[The Idiocrat]

2 minutes ago, DurhamBorn said:

IFAs are salesmen/women now who simply put together a 40/60 type portfolio similar to a Vanguard lifestyle fund and charge 2% fees.The 40/60 funds aim for around 6% so a 2% fee structure is 33% of the expected growth.Compound that over 30 years and its eye watering.

Yes, I was looking through the long list of funds and thinking "just stick it in Vanguard". I'm going to have a closer look at it come next report. She's a tidy sum invested so she's missing out on a fair bit, especially compounded as you say. I suspect the IFA is making a killing off well-off divorcees! The report looks very professional but shows nothing on fees or long term growth! 

[sancho panza]

9 minutes ago, DurhamBorn said:

IFAs are salesmen/women now who simply put together a 40/60 type portfolio similar to a Vanguard lifestyle fund and charge 2% fees.The 40/60 funds aim for around 6% so a 2% fee structure is 33% of the expected growth.Compound that over 30 years and its eye watering.

if the average yield on your stosck is 3% and you bonds4%.........yeah it's the bulk of the compounding gone up in smoke.DB have you seen this space thing TM was on about?

[DurhamBorn]

29 minutes ago, sancho panza said:

if the average yield on your stosck is 3% and you bonds4%.........yeah it's the bulk of the compounding gone up in smoke.DB have you seen this space thing TM was on about?

Yes,really interesting and really chimes with the thread.Government investing direct into the economy.Interesting its 50/50 with India as well.I need to understand these new space telcos more to see if they affect the normal telcos.

[DurhamBorn]

36 minutes ago, The Idiocrat said:

Yes, I was looking through the long list of funds and thinking "just stick it in Vanguard". I'm going to have a closer look at it come next report. She's a tidy sum invested so she's missing out on a fair bit, especially compounded as you say. I suspect the IFA is making a killing off well-off divorcees! The report looks very professional but shows nothing on fees or long term growth! 

They are,all shiny etc and show a nice steady 4% growth mostly because they go into Vanguard style set ups.They tend to take 2% fees or even 2.2% including fund fees so a third of the growth.My worry for people is the size of the bond side might mean those funds fall inflation adjusted quite a lot over the cycle and then those fees do real damage.People in drawdown in a 20/80 fund might do even worse,3% falls a year,2% fees and 5% drawdown means a pretty much empty pension after 10 years.

[Transistor Man]

 

New interview with David Hunter. Worth a listen

[JMD]

5 hours ago, Sasquatch said:

Vaulted gold via bullionvault (or similar). Mine is with bullionvault. Only gold allowed through a SIPP, not silver or platinum. I've gone for it big time. 50% of my SIPP is in gold bullion, the other 50% in stocks (50% miners, 50% reflation). I don't think I could have moved further away from my previous IFA's recommendations if I'd tried!  

Interesting sipp option. Thanks, I shall def. keep it in mind.

[JMD]

10 hours ago, Heart's Ease said:

It was me and @JMD and, yes that made me raise an eyebrow.

@jmd - I still intend to come back to you on points you raised. 

Please do Hearts Ease, can't specifically recall what I wrote, but do find the Freegold concept very interesting... perhaps I was being too cynical/biased against the Euro when in reality it is the Euro Zone that is the real disfunctional party.                                                                                                                                                                                          ... to go off on one of my tangents... for me I would favour a 'non-volatile' block-chain based crypto currency (probably not bitcoin then!). This is because I want central bank power to diminish and for the individual to 'matter much more' (block-chain being key tech here) - but not just in some narrow monetary way; but because I have become a reluctant libertarian (shan't bore you with what type, but it started way back and the Corona 'power grab' was the final push for me), realising now that there is nothing - workable/believable - behind the veil of our so-called democracy, instead we have hollowed out hierarchy, institutions, leadership, and I fear if we continue our sociatal squabbling it is all set to go the same way as the predicted monetary collapse come decade end. Btw I'm not just all doom and gloom, and actually think airing these topics might help in providing solutions.

[The Idiocrat]

4 hours ago, DurhamBorn said:

They are,all shiny etc and show a nice steady 4% growth mostly because they go into Vanguard style set ups.They tend to take 2% fees or even 2.2% including fund fees so a third of the growth.My worry for people is the size of the bond side might mean those funds fall inflation adjusted quite a lot over the cycle and then those fees do real damage.People in drawdown in a 20/80 fund might do even worse,3% falls a year,2% fees and 5% drawdown means a pretty much empty pension after 10 years.

Good grief, that really puts those fees into perspective. Thanks for that! I'm pretty sure he's only been talking about her buying an annuity when the time comes, rather than drawdown, I presume because he'll get a chunky commission. I'm not sure how much is in bonds but I plan to do a simple portfolio sector breakdown (no nice pie charts in his report) next time around to see where it's going - there seemed to be a lot of emerging market funds that caught my eye on the list. 

[sancho panza]

14 hours ago, DurhamBorn said:

Yes,really interesting and really chimes with the thread.Government investing direct into the economy.Interesting its 50/50 with India as well.I need to understand these new space telcos more to see if they affect the normal telcos.

Tech crunch on the India/UK deal.I was gobsmacked we'd got a $1bn deal going through with UK govt as buyer and I had zero awareness of the players or the sector.Obviously heard of Bharti Global....but sitll.Unusally brave deal by UK govt.

Goes to shwo as well UK linking up with Commonwealth too.

Appreciate if any of our resident techies can enlighten us cave dwellers us ref the importance of this technology commerically.

 

 

'Distressed satellite constellation operator OneWeb, which had entered bankruptcy protection proceedings at the end of March, has completed a sale process, with a consortium led by the UK Government as the winner. The group, which includes funding from India’s Bharti Global – part of business magnate Sunil Mittal’s Bharti Enterprises – plan to pursue OneWeb’s plans of building out a broadband internets satellite network, while the UK would also like to potentially use the constellation for Positioning, Navigation and Timing (PNT) services in order to replace the EU’s sat-nav resource, which the UK lost access to in January as a result of Brexit.

The deal involves both Bharti Global and the UK government putting up around $500 million each, respectively, with the UK taking a 20 percent equity stake in OneWeb, and Bharti supplying the business management and commercial operations for the satellite firm.

OneWeb, which has launched a total of 74 of its planned 650 satellite constellation to date, suffered lay-offs and the subsequent bankruptcy filing after an attempt to raise additional funding to support continued launches and operations fell through. That was reportedly due in large part to majority private investor SoftBank backing out of commitments to invest additional funds.

 

The BBC reports that while OneWeb plans to essentially scale back up its existing operations, including reversing lay-offs, should the deal pass regulatory scrutiny, there’s a possibility that down the road it could relocate some of its existing manufacturing capacity to the UK. Currently, OneWeb does its spacecraft manufacturing out of Florida in a partnership with Airbus.

OneWeb is a London-based company already, and its constellation can provide access to low latency, high-speed broadband via low Earth orbit small satellites, which could potentially be a great resource for connecting UK citizens to affordable, quality connections. The PNT navigation services extension would be an extension of OneWeb’s existing mission, but theoretically, it’s a relatively inexpensive way to leverage planned in-space assets to serve a second purpose.

Also, while the UK currently lacks its own native launch capabilities, the country is working towards developing a number of spaceports for both vertical and horizontal take-off – which could enable companies like Virgin Orbit, and other newcomers like Skyrora, to establish small-sat launch capabilities from UK soil, which would make maintaining and extending in-space assets like OneWeb’s constellation much more accessible as a domestic resource.'

 

[sancho panza]

14 hours ago, DurhamBorn said:

They are,all shiny etc and show a nice steady 4% growth mostly because they go into Vanguard style set ups.They tend to take 2% fees or even 2.2% including fund fees so a third of the growth.My worry for people is the size of the bond side might mean those funds fall inflation adjusted quite a lot over the cycle and then those fees do real damage.People in drawdown in a 20/80 fund might do even worse,3% falls a year,2% fees and 5% drawdown means a pretty much empty pension after 10 years.

Isn't it worse in a rising interest rate environemtn,bonds currently owned by the funds will be dropping in price while they're still taking their 2%.

I need to get more educated on pesnions.

[sancho panza]

Inteersting piece on London which pretty much applies to msot of the UK.Sadly,it doesn't discuss foreign student numbers but covers a number of issues raised on here.

 

https://edition.cnn.com/2020/07/04/business/london-coronavirus-economy/index.html

The UK is reopening for business. London may never be the same

Underground journeys for the month of March tumbled 43% from the 106 million recorded in February, and plunged even further in April, during the height of lockdown, to just 5.7 million. Social distancing rules mean the Tube can only handle up to 15% of its normal traffic, according to London's mayor, Sadiq Khan.

 

The fallout from lockdown has been severe. London's economy is expected to contract nearly 17% this year, according to figures from the city government, a sharper drop than the 14% decline the Bank of England expects for the United Kingdom as a whole.

 

Companies in London are expected to shed some 460,000 jobs, or about 7% of the workforce, with manufacturing, construction, retail, and accommodation and food services the hardest hit. Employment is not expected to fully recover until 2022.

 

What happens to real estate, which accounts for 15% of London's economy, matters a great deal to the city.

The government has protected commercial tenants from eviction through August, but those measures will at some point expire. According to property management platform, Re-Leased, just 45% of commercial rents for the third quarter had been paid by early July. But that was an improvement on the previous three months and "a sign of the capital's resilience," said Re-Leased CEO, Tom Wallace.

 

Still, the penetration of online shopping during the coronavirus will mean a reduction in brick-and-mortar outlets, which could radically alter the landscape of London's vast retail space and create yet more uncertainty for the city's real estate market. "What would have happened over five years is happening over months," said Richards.

The City, reinvented

London's financial heart, referred to as the City of London, has a proven track record of reinvention.

Storied institutions like Lloyd's of London, the Bank of England and the London Stock Exchange have been around for centuries, withstanding radical social, political and economic turmoil.

 

Today, the City is home to well over 250 international banks and handles 43% of global foreign exchange trading, according to the Bank for International Settlements. Financial services contributed £65 billion ($81 billion) to the London economy in 2018, or about 15%, figures from City Hall show.

And despite four years of uncertainty over Brexit, the United Kingdom has been Europe's top location for international financial services investment over the past two decades, with London claiming the bulk of those flows.

 

There are factors working against the City, however. The UK government's handling of the coronavirus crisis has been widely criticized, and business and consumer confidence remains depressed.

 

The City of London may yet be tested. Crucially, there is currently no guarantee that UK financial firms will retain access to the European Union after this year — an export market worth £26 billion ($32.4 billion) in 2018, according to the Office for National Statistics, or 40% of the sector's total value.

 

The city is home to a large share of digital consumer businesses, Chandratillake said, including online grocer Ocado, digital banks such as Revolut and Monzo, and food delivery companies such as Deliveroo and Gousto.

 

London also boasts an outsized share of technology companies in areas such as cyber security and workforce management, now servicing armies of home workers. And the coronavirus has boosted investment into health technology, benefiting London and the United Kingdom more broadly.

 

Leisure and hospitality "really strategically matter," said Simpson. "People come from all over the world partly because London is a cool place to live."

Nearly 40% of Londoners are born outside the United Kingdom, making London one of the most cosmopolitan cities in the world. It is home to 1 million EU nationals and was the world's third most visited city in 2018, narrowly behind Paris and Bangkok, according to Mastercard.

Last year, London boasted 21.7 million overseas visitors who spent £15.7 billion ($19.6 billion) on the local economy and supported 250,000 jobs, according to the Office for National Statistics.

"That revenue keeps certain things alive in London," said UK Tourism Alliance director Kurt Janson. "The West End theaters couldn't survive if not for overseas visitors."

 

London's pubs and restaurants face an even greater threat from social distancing.

Already, Michelin-starred Texture and the upmarket Indian Accent, a Mayfair outpost of the Delhi original, have permanently closed. They are unlikely to be the only casualties.

Murat Kilic, the owner of Amber, in the hip East Aldgate neighborhood, told CNN Business that he is not confident about reopening. Amber is opening its doors on Saturday for the first time in nearly four months, but at less than half its previous capacity.

 

Whether Londoners are quick to return to bars and eateries remains to be seen. Worryingly, household income and expenditure are set to tumble by 5.5% and 12% respectively this year, and are not expected to reach 2019 levels before at least 2023, according to City Hall.