Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

IGNORED

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


spunko

Recommended Posts

leonardratso

well, BTC just blew out, cleaned me out completely, some LTC blew out as well, its gone crazy today,

Thats £380 quid made today, not bad for such a low stake. Cant complain.

Link to comment
Share on other sites

  • Replies 35.1k
  • Created
  • Last Reply
1 hour ago, Sugarlips said:

What happens next to the 30 year mortgage rate is surely the key to if Main Street can stay solvent through CoVID pt2.

Already at record lows, according to this there are already lenders offering 2.25% for 30 yrs down 1 - 1.5% on last year.

https://www.cnbc.com/2020/07/24/mortgage-rates-just-hit-another-record-low.html

Will the Fed signal lower for longer again this week? Is the reflation event going to get pushed out to the mid ‘20’s?

DCA1CADF-BF87-4D62-BB10-F76D057FC130.png

 

Macro strategy page 1,line 1,

 

"the most important thing in a market economy is the price of money.Everything else is simply cross market work.All assets,both real,and yet to be created are valued on the cost of money.Everything is.The cost of money has already hurt as many people as possible,or is about to hurt as many people as possible depending on where it is in the cycle,both short term business cycle and longer term credit cycle"

 

The Fed is pushing down the long end as we expected for many reasons,but the macro reason is so companies,governments and less so individuals can roll debts into longer term profiles at extreme low rates.As this plays out the Fed can then allow inflation to run ahead of those rates and in doing so de-leverage the economy without killing growth.They are exporting over 35 years of dis-inflation onto the Feds balance sheet where it can sit.

I think its pretty obvious now the CBs fully intend to chase inflation later rather than try to contain it early.They are going to try to stay close,but run rates behind it so that debts are eaten away,perhaps by 30%- 40% over the cycle inflation adjusted.

Once this process plays through in the early stages,then new players will struggle to enter markets as the cost of capital increases just as the cost of building out assets increases.A pincer movement on inflation.

 

 

 

Link to comment
Share on other sites

37 minutes ago, DurhamBorn said:

 

Macro strategy page 1,line 1,

 

"the most important thing in a market economy is the price of money.Everything else is simply cross market work.All assets,both real,and yet to be created are valued on the cost of money.Everything is.The cost of money has already hurt as many people as possible,or is about to hurt as many people as possible depending on where it is in the cycle,both short term business cycle and longer term credit cycle"

 

The Fed is pushing down the long end as we expected for many reasons,but the macro reason is so companies,governments and less so individuals can roll debts into longer term profiles at extreme low rates.As this plays out the Fed can then allow inflation to run ahead of those rates and in doing so de-leverage the economy without killing growth.They are exporting over 35 years of dis-inflation onto the Feds balance sheet where it can sit.

I think its pretty obvious now the CBs fully intend to chase inflation later rather than try to contain it early.They are going to try to stay close,but run rates behind it so that debts are eaten away,perhaps by 30%- 40% over the cycle inflation adjusted.

Once this process plays through in the early stages,then new players will struggle to enter markets as the cost of capital increases just as the cost of building out assets increases.A pincer movement on inflation.

 

 

 

I agree.

Any government worth their salt should be jumping in with massive infrastructure improvements using fixed borrowing now rates are low.  Same for organisations if they can get 20 year fixes.

 

Gvts wont though.  Because they are driven by election cycles, not what will work in 20 years.

Link to comment
Share on other sites

4 hours ago, DurhamBorn said:

 

Macro strategy page 1,line 1,

 

"the most important thing in a market economy is the price of money.Everything else is simply cross market work.All assets,both real,and yet to be created are valued on the cost of money.Everything is.The cost of money has already hurt as many people as possible,or is about to hurt as many people as possible depending on where it is in the cycle,both short term business cycle and longer term credit cycle"

 

The Fed is pushing down the long end as we expected for many reasons,but the macro reason is so companies,governments and less so individuals can roll debts into longer term profiles at extreme low rates.As this plays out the Fed can then allow inflation to run ahead of those rates and in doing so de-leverage the economy without killing growth.They are exporting over 35 years of dis-inflation onto the Feds balance sheet where it can sit.

I think its pretty obvious now the CBs fully intend to chase inflation later rather than try to contain it early.They are going to try to stay close,but run rates behind it so that debts are eaten away,perhaps by 30%- 40% over the cycle inflation adjusted.

Once this process plays through in the early stages,then new players will struggle to enter markets as the cost of capital increases just as the cost of building out assets increases.A pincer movement on inflation.

 

 

 

Thanks DB, I guess I'm always to explore what this means for the regular Joe. 

My brother for example is a locksmith with a 150k mortgage on his average semi in Basingstoke. He's happy at present if Hsbc will give him 5 years @1.7% P&I as he should be - so long as all spare income goes into the principal especially if inflation will shrink the debt by 30% over that time, just don't expect the house to be worth much come the end of the term? 

In my experience banks don't tend to revalue the home at the end of the fixed term so he should be ok to roll the remaining balance in 5 years, he should just expect to be paying much higher interest on the residual balance?

Link to comment
Share on other sites

16 hours ago, Loki said:

@leonardratso Silver to $35 now according to David Hunter

What I don't understand about this is why silver is increasing so much more than gold, as the former is an indistrial metal and that demand due to recession will be dropping.

Link to comment
Share on other sites

51 minutes ago, MrXxxx said:

What I don't understand about this is why silver is increasing so much more than gold, as the former is an indistrial metal and that demand due to recession will be dropping.

Your comment just tanked the silver market. 

Link to comment
Share on other sites

leonardratso

maybe woodfords back

your better off not knowing the prices, theyve all tanked. Maybe they are protecting you.

Link to comment
Share on other sites

jamtomorrow

https://www.honestjohn.co.uk/news/car-market-1/2020-07/mitsubishi-to-stop-launching-new-models-in-uk/

Interesting development. Unlike other familiar marques, they're not going to the wall (yet) - looks more like a "rentrenchment".

Does it fit with the thesis of the thread? Mitsubishi Motors is supposedly independent of the wider Mitsubishi family of companies, so it's tempting to discount the consumer vs industrial perspective - but I'm left wondering what "independent" really means.

Mitsubishi ends new car development for the UK

Mitsubishi has frozen the development and introduction of new models for Europe, including the UK, as part of plans to cut costs.

The surprise move means that current models are unlikely to be replaced when they become non-compliant with EU emissions regulations. This means upcoming models - including the new L200 pick-up truck, Outlander and Mirage won't be sold in the UK. 

A spokesperson for Mitsubishi UK said it was too early to say what the move would mean for dealers and showrooms, but it has pledged to continue to import and sell the existing range of cars and commercial vehicles. 

Mitsubishi UK will continue to provide full customer support in terms of service, repair, warranty, recalls, parts and accessories. There are around 115 Mitsubishi dealers across the UK.

Earlier this month the Society of Motor Manufacturers and Traders’ (SMMT) revealed that Mitsubishi’s UK sales had declined by almost 52 per cent during the first half of 2020.

The Japanese manufacturer plans to reduce its spend by 20 per cent over the next two years, which includes shifting its focus to the vehicle market in South-East Asia - where it currently has a 6.4 per cent market share, compared with just one per cent in Europe.

Further details on what this means for the Renault-Nissan-Mitsubishi Alliance are unclear, but Mitsubishi has confirmed plans to continue with the sharing of technology and production - which cuts estimated model development costs by up to 40 per cent.

Link to comment
Share on other sites

1 hour ago, kibuc said:

Your comment just tanked the silver market. 

and GDXJ.

I sold a bunch at 62.  Someone timed the top to perfection when they bought off me.  betcha it was a robinhooder...

Link to comment
Share on other sites

15 hours ago, Errol said:

Entire business segment (half an hour of 'Ian King Live') on Sky News today didn't mention gold once (despite mentioning oil price, currencies, markets etc.)

That's half an hour of your life wasted then!

Link to comment
Share on other sites

11 hours ago, wherebee said:

Could well go higher, but I think it's rational to take some profit on the way up

Should have rebalanced my general portfolio but didn't and now the runners have pulled back and the laggards (including you know who) have gone up.  Lesson learnt?

Link to comment
Share on other sites

Democorruptcy
59 minutes ago, Loki said:

HL appears to have crashed. Site won't even load now

On the subject of HL...

I have an account with HL with an ISA and SIPP.

I maintain 3 Watchlists there that mirror my ISA, my SIPP and a Combination of both. I also have spreadsheets that detail individual transactions. I use average prices paid then adjust them based on extra purchasing or selling.

Therefore I don't take much notice of the HL Stocks tab and the P/L on it per share or overall. Yesterday I noticed a discrepancy there compared to my Watchlist and spreadsheet. In this case it displayed a profit in my mind that doesn't exist.

Without going into the details of my actual trades and ignoring costs, using nice round figures, say you buy 3000 shares at 300 the cost is £9000

Say the price dropped to 200 so you bought another 2000 that cost is £4000

At that point your average price is 260 (£13,000 / 5000)

Say the price rises back to 300 so you decide to take the profit on the 2000 shares and sell them.

If you then look at your HL Shares tab it would show the cost for the remaining 3000 shares as £7800 because it still uses the 260 average price. It would show a profit of £1,200 +13% on those 3000 shares at the current 300 price even though in reality there is no profit on them in my mind! They cost £9000

Obviously HL cannot read my mind and know which portion of my shares I sold. In my mind I took my profit on the 2000 and banked it but the remaining 3000 at 300 is only level, not +£1,200 or +13%. If I'd decided to take my "profit" and sell I'd have been disappointed when I completed the transaction in my spreadsheet!

I only mention this for people looking to take their HL  'profits'.

Link to comment
Share on other sites

1 hour ago, jamtomorrow said:

Mitsubishi ends new car development for the UK

Mitsubishi has frozen the development and introduction of new models for Europe, including the UK, as part of plans to cut costs.

I hate crappy misleading headlines like this!  FFS, Europe, not the UK!  Dire when you have to read the article to validate/correct the headline.  Happens all the time.

Link to comment
Share on other sites

9 minutes ago, Democorruptcy said:

Obviously HL cannot read my mind and know which portion of my shares I sold.

Neither can you, to be honest, due to shares being fungible. "Tranches", "ladders" etc are useful but they are one level of abstraction higher than the underlying shares that get dealt.

Link to comment
Share on other sites

11 minutes ago, Democorruptcy said:

Therefore I don't take much notice of the HL Stocks tab and the P/L on it per share or overall.

Good mention.  I don't rely on anything other than my own records and market quotes.  I see a lot of dirty data on all these financial websites (including the data providers).

Link to comment
Share on other sites

1 minute ago, geordie_lurch said:

Nope it's not just you...

 

Thanks.  Bit annoying as I don't mind paying the higher dealing charge on the basis I can reasonably expect better service than the cheaper alternatives.

Link to comment
Share on other sites

31 minutes ago, Democorruptcy said:

On the subject of HL...

I have an account with HL with an ISA and SIPP.

I maintain 3 Watchlists there that mirror my ISA, my SIPP and a Combination of both. I also have spreadsheets that detail individual transactions. I use average prices paid then adjust them based on extra purchasing or selling.

Therefore I don't take much notice of the HL Stocks tab and the P/L on it per share or overall. Yesterday I noticed a discrepancy there compared to my Watchlist and spreadsheet. In this case it displayed a profit in my mind that doesn't exist.

Without going into the details of my actual trades and ignoring costs, using nice round figures, say you buy 3000 shares at 300 the cost is £9000

Say the price dropped to 200 so you bought another 2000 that cost is £4000

At that point your average price is 260 (£13,000 / 5000)

Say the price rises back to 300 so you decide to take the profit on the 2000 shares and sell them.

If you then look at your HL Shares tab it would show the cost for the remaining 3000 shares as £7800 because it still uses the 260 average price. It would show a profit of £1,200 +13% on those 3000 shares at the current 300 price even though in reality there is no profit on them in my mind! They cost £9000

Obviously HL cannot read my mind and know which portion of my shares I sold. In my mind I took my profit on the 2000 and banked it but the remaining 3000 at 300 is only level, not +£1,200 or +13%. If I'd decided to take my "profit" and sell I'd have been disappointed when I completed the transaction in my spreadsheet!

I only mention this for people looking to take their HL  'profits'.

They are just following the HMRC rules for calculating gains on partial disposal of assets. Obviously not an issue in an ISA or SIPP as they are exempt for capital gains purposes.

For interest(!): https://www.gov.uk/tax-sell-shares/same-company

 

So when you sell the 2000 shares they are assumed to have the average cost (260p each giving £5200) and the profit on them is thus £800. The remaining 3000 shares still have a cost of £7800, a value of £9000 and a potential profit of £1200.

 

 

Link to comment
Share on other sites

Democorruptcy
20 minutes ago, Wheeler said:

They are just following the HMRC rules for calculating gains on partial disposal of assets. Obviously not an issue in an ISA or SIPP as they are exempt for capital gains purposes.

For interest(!): https://www.gov.uk/tax-sell-shares/same-company

 

So when you sell the 2000 shares they are assumed to have the average cost (260p each giving £5200) and the profit on them is thus £800. The remaining 3000 shares still have a cost of £7800, a value of £9000 and a potential profit of £1200.

 

 

That's OK but what their display needs is an option box

Display Profit and Loss Using Average Price Yes/No

If Yes the average price is used like now

If No each individual purchase has the detail of the price actually paid and true Profit or Loss.

If that box existed selecting Yes then selecting No could see vast differences in the bottom line Profit and Loss

Of course the example I gave was a share then went down, if it had gone up the average price would have worked the other way on the P/L.

Like I say I keep my own P/L and rarely even look at that page, only trying to help others who might rely on it more.

Link to comment
Share on other sites

3 minutes ago, Democorruptcy said:

Like I say I keep my own P/L and rarely even look at that page, only trying to help others who might rely on it more.

TBH, a bit like you say, I don't look at any P&L that often other than just for S&G's.  I look at price action.  The P&L follows.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.

×
×
  • Create New...