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

[DurhamBorn]

44 minutes ago, Cattle Prod said:

Cracker here from Luke Gromen. Bondholders gonna pay...

If they raise CGT here its a waste of time. Assets, domiciles will move. Tax take goes up when you reduce CGT.

Yes bond holders are paying ,those 40/60 pension draw down accounts will suffer.All this tax hike talk is just noise.The tax they are going to use is the one that covers everything,everyone,every transaction,every bit of economic activity.Inflation.M2 is the Enola Gay.

[Eventually Right]

1 hour ago, BWW said:

 

Would not be unreasonable if they allowed inflation to be taken into account. Even then RPI is hugely less than real world inflation of essential [since they love that adjective] spending.

I’d have to respectfully disagree with that, as I don’t think it accounts for risk. 

If I do some research, and decide to put money I’ve saved from my taxed income, into something like Bitcoin or options, then I can handle paying 20% of the gain if I happen to do well. I object massively to paying a tax rate similar to the income tax rate of (insert premier league footballer of choice/investment banker etc) who are on guaranteed contracts. If my investment analysis is wrong, or I’m just unlucky then I’ll just lose all my money-taxpayer won’t bail me out, nor should they.

Similarly, surely it makes it much less likely people will take the risk of starting a company, when they know that even if they work their arses off, and get lucky and become successful, the government is going to take nearly half when they sell it?

Suspect it won’t be quite as bad as 40% when it comes to it, and hopefully won’t be before 2022!

[DurhamBorn]

Talking of M2 the reason it matters is two fold.First if it increases quick enough it can mean debt falls by a large amount in relation.Then as it leaks into assets there becomes a greater cost to holding that M2.As dis-inflation moves into inflation it is certain loss to hold currency as rates lag.Its a pincer movement on inflation.

https://www.federalreserve.gov/releases/h6/current/default.htm

M2 increased 33% March to September.

[sancho panza]

#debtdeflationcometh

turns out that councisl and CRE don't mix well.

https://www.standard.co.uk/news/politics/croydon-council-effectively-bankrupt-section-114-b66240.html

Croydon Council ‘declares bankruptcy’ and bans spending with Section 114 notice

It is the first time a local authority has issued a Section 114 since Northamptonshire County Council in 2018

Croydon Council has effectively declared bankruptcy, just weeks after auditors accused the Labour-led authority of years of financial mismanagement.

It is the first time a local authority has issued the notice since Northamptonshire County Council in 2018.

The report revealed that warnings about the council’s parlous financial situation dating back to 2017/2018 had been effectively ignored.

In her letter issuing the Section 114 notice, the council’s director of finance Lisa Taylor warned of a £66 million budget black hole for the current financial year.  

This includes £36 million in “undeliverable” income from the council’s in-house property developer, Brick by Brick.

“Croydon Council has just issued a Section 114 notice - ie, they are bust,” he said. “They are the only London borough in this position.”

“Labour has bankrupt Croydon through poor financial control, running up £1.5 billion in debt and engaging in disastrous commercial property speculation.

[sancho panza]

10 hours ago, jamtomorrow said:

Was listening to Tian Yang on one of the recent MacroVoices pods, talking about energy and commodities in the coming reflation.

I *loved* the Spotter's Guide to investing opportunities, especially the clarity with which he highlighted opportunity to focus on sectors with long lags between price stimulus and supply response (because the longer the lag, the longer the incumbents get to cream FCF at supply-constrained prices).

We've covered that concept at some length for oilies, but I got to wondering what other sectors have that same characteristic. 

Nuclear is an obvious one, typically decades from policy ideation to generation. But I'm finding it hard to identify incumbents that own enough nuke generating capacity to qualify as a "nuke" play.

What about distillates, and petrochemical products more generally? World's gonna want a lot of plastics when this reflation gets going. What's the price stimulus -> supply response lag like for, say, plastics production?

From my ignorant outsider vantage point, refinery and petrochemical production capacity doesn't seem the sort of thing you throw together in the space of a few months.

I think the only way to play Nuclear is to buy Uranium miners.We've had a holding in Cameco for 5 years,which has done virtually nothing.But it is relatively specific exposure compared to buying a utiltiy that may own some nucear power stations.

[Democorruptcy]

1 hour ago, Eventually Right said:

I’d have to respectfully disagree with that, as I don’t think it accounts for risk. 

If I do some research, and decide to put money I’ve saved from my taxed income, into something like Bitcoin or options, then I can handle paying 20% of the gain if I happen to do well. I object massively to paying a tax rate similar to the income tax rate of (insert premier league footballer of choice/investment banker etc) who are on guaranteed contracts. If my investment analysis is wrong, or I’m just unlucky then I’ll just lose all my money-taxpayer won’t bail me out, nor should they.

Similarly, surely it makes it much less likely people will take the risk of starting a company, when they know that even if they work their arses off, and get lucky and become successful, the government is going to take nearly half when they sell it?

Suspect it won’t be quite as bad as 40% when it comes to it, and hopefully won’t be before 2022!

Haven't 40% rate taxpayers been subsidising you for years?

There will be less companies set up when it goes to 40% because a lot were set up solely to avoid paying income tax. Like all those BBC presenters and even people in the civil service.

Betfair's Premium Charge was set at 20%, 40% or 60%! Plus you don't have The Fed's plunge protection team watching your back in a horse race!

[BWW]

2 hours ago, Eventually Right said:

I’d have to respectfully disagree with that, as I don’t think it accounts for risk. 

If I do some research, and decide to put money I’ve saved from my taxed income, into something like Bitcoin or options, then I can handle paying 20% of the gain if I happen to do well. I object massively to paying a tax rate similar to the income tax rate of (insert premier league footballer of choice/investment banker etc) who are on guaranteed contracts. If my investment analysis is wrong, or I’m just unlucky then I’ll just lose all my money-taxpayer won’t bail me out, nor should they.

Similarly, surely it makes it much less likely people will take the risk of starting a company, when they know that even if they work their arses off, and get lucky and become successful, the government is going to take nearly half when they sell it?

Suspect it won’t be quite as bad as 40% when it comes to it, and hopefully won’t be before 2022!

The reward of risk is being able to gain a much higher profit than the guaranteed salary if the punt / hard work comes good.

I don't really see the connection with tax IF the premise of tax is gov takes a % of whatever income everyone has to pay for stuff for everyone [democracy, roads, schools, OAPs etc]. Why should you pay a lower % because of where your income comes from.

There's a different argument that public sector salaries in particular are way to high but this is not the way to change that. Arguably private sector salaries too.

If your gamble [with bitcoin] makes a loss you can offset it with another that makes a profit. Hopefully you end up with a net profit EOY and pay CGT on that net profit only [if any].

That's leaving aside the societal desirability of investment in /  making profit from speculation on the fiat price of bitcoin. Of course an argument can be made but desirability not quite as apparent as risking some $$ in a business that will provide jobs for lots of families if it works.

[Eventually Right]

12 minutes ago, Democorruptcy said:

Haven't 40% rate taxpayers been subsidising you for years?

Eh? How? I work full time (sadly not enough to be taxed at 40%) and I’ve never had cause to pay CGT before-I might this year for the first time.

There will be less companies set up when it goes to 40% because a lot were set up solely to avoid paying income tax. Like all those BBC presenters and even people in the civil service.

That’s fairly niche though, right? That’s just tax evasion, and should never have been allowed. I don’t know much about those schemes, but were they using them to pay CGT rather income tax? I assumed they’d be taking money as dividends? 
I can’t see how it wouldn’t disincentivize potential entrepreneurs from starting new businesses. If you’re on the fence, you’re more likely to think “screw it, reward isn’t worth the risk, I’ll stick to my day job”?

 

 

[Eventually Right]

15 minutes ago, BWW said:

The reward of risk is being able to gain a much higher profit than the guaranteed salary if the punt / hard work comes good.

I don't really see the connection with tax IF the premise of tax is gov takes a % of whatever income everyone has to pay for stuff for everyone [democracy, roads, schools, OAPs etc]. Why should you pay a lower % because of where your income comes from.

There's a different argument that public sector salaries in particular are way to high but this is not the way to change that. Arguably private sector salaries too.

If your gamble [with bitcoin] makes a loss you can offset it with another that makes a profit. Hopefully you end up with a net profit EOY and pay CGT on that net profit only [if any].

That's leaving aside the societal desirability of investment in /  making profit from speculation on the fiat price of bitcoin. Of course an argument can be made but desirability not quite as apparent as risking some $$ in a business that will provide jobs for lots of families if it works.

I take your point about making profit from speculation, vs risking money to set up a business that provides jobs. The CGT levelled at each should not be the same to reflect that.

Let me hold Bitcoin and options in an ISA, and I’d be perfectly happy 😉

[DurhamBorn]

It was only a week ago the MSM and it seemed the whole world was saying oil was dead.

https://www.telegraph.co.uk/business/2020/11/11/ftse-rise-14pc-end-next-year-says-goldman-sachs/

My road map says oil of $80 is possible next year,if stimulus carries on as i expect.Their estimates are too low.

[DurhamBorn]

6 hours ago, sancho panza said:

I think the only way to play Nuclear is to buy Uranium miners.We've had a holding in Cameco for 5 years,which has done virtually nothing.But it is relatively specific exposure compared to buying a utiltiy that may own some nucear power stations.

I really miss not being able to buy the ETF URA,used it many times in the past.

[jamtomorrow]

Looks like my prediction that homeworkers would have to be demonised at some point has come "good": https://www.bbc.com/news/business-54876526

Deutsche Bank Research: Tax home workers 'to help those who cannot'

This one is so bonkers, you have to wonder why Deutsche thought it better to look ridiculous than keep the kite in its box. Or maybe they've gotten themselves in a CRE hole deeper than Merkel's longest rope? A cry for help?

[planit]

FT have a negative outlook on oil, they are basically saying they don't think demand is going to go up much (fine - it's an opinion) but they say the futures market for oil has not moved higher. 

Any comments on that from the more knowledgeable people on here?

 

Sorry, I know it's pay-walled but perhaps you can grab it via google.

Oil producers have more than a pandemic to worry about

https://www.ft.com/content/e1b7bab4-b962-4fab-ae7f-10da597b1cf6

[Democorruptcy]

7 hours ago, Eventually Right said:

h? How? I work full time (sadly not enough to be taxed at 40%) and I’ve never had cause to pay CGT before-I might this year for the first time.

That’s fairly niche though, right? That’s just tax evasion, and should never have been allowed. I don’t know much about those schemes, but were they using them to pay CGT rather income tax? I assumed they’d be taking money as dividends?

I can’t see how it wouldn’t disincentivize potential entrepreneurs from starting new businesses. If you’re on the fence, you’re more likely to think “screw it, reward isn’t worth the risk, I’ll stick to my day job”?

OK you have been subsidising others, so far.

I wouldn't call the BBC incident niche, I'd call it the tip of the icebeg.

We managed having CGT for individuals the same as income tax rates from 1988 to 2008. If it prevents a few entrepreneurs like BTL landlords, so be it.

There is more likelihood of me paying CGT rather than PAYE but I don't agree with them being different, I think it creates more inequality.

[Democorruptcy]

46 minutes ago, planit said:

FT have a negative outlook on oil, they are basically saying they don't think demand is going to go up much (fine - it's an opinion) but they say the futures market for oil has not moved higher. 

Any comments on that from the more knowledgeable people on here?

 

Sorry, I know it's pay-walled but perhaps you can grab it via google.

Oil producers have more than a pandemic to worry about

https://www.ft.com/content/e1b7bab4-b962-4fab-ae7f-10da597b1cf6

Crude oil futures here:

https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

[Yadda yadda yadda]

11 hours ago, DurhamBorn said:

Talking of M2 the reason it matters is two fold.First if it increases quick enough it can mean debt falls by a large amount in relation.Then as it leaks into assets there becomes a greater cost to holding that M2.As dis-inflation moves into inflation it is certain loss to hold currency as rates lag.Its a pincer movement on inflation.

https://www.federalreserve.gov/releases/h6/current/default.htm

M2 increased 33% March to September.

Reading the definitions at that link am I correct to say the following.

M1 is actual cash in circulation.

M2 additionally includes easily accessible money held on deposit.

Therefore M2 is money that can be quickly spent. Potentially driving up velocity, especially if people fear losing value as you outline.

[geordie_lurch]

Well that rally didn't last long - most of my shares are down at least 1% today but most are 2 - 4% so far but I will just leave them alone for now

[AWW]

Shares can't rally 10% a day for long. There's a lot less profit taking than I thought there would be.

[geordie_lurch]

7 minutes ago, AWW said:

Shares can't rally 10% a day for long. There's a lot less profit taking than I thought there would be.

Can you 'see' the profit taking somewhere or just from what you have picked up? Sorry if a stupid question but I'm relatively new to all such things and trying to learn

[Yellow_Reduced_Sticker]

1 hour ago, planit said:

FT have a negative outlook on oil, they are basically saying they don't think demand is going to go up much (fine - it's an opinion) but they say the futures market for oil has not moved higher. 

Any comments on that from the more knowledgeable people on here?

 

Sorry, I know it's pay-walled but perhaps you can grab it via google.

Oil producers have more than a pandemic to worry about

https://www.ft.com/content/e1b7bab4-b962-4fab-ae7f-10da597b1cf6

 

GREAT Tip off from the FT, as a CONTRARIAN ...i'll BE BUYING more when there's a dip in prices!

RE: "knowledgeable people on here?"... with me that's debatable! however my share buying timing is IMPECCABLE, just ask the guys on here HA-ha!

[Hardhat]

BAT divi landed today 

[Bobthebuilder]

43 minutes ago, geordie_lurch said:

Can you 'see' the profit taking somewhere or just from what you have picked up? Sorry if a stupid question but I'm relatively new to all such things and trying to learn

Trading volumes.

[JREWING]

https://www.google.com/amp/s/amp.abc.net.au/article/12876638

Why is the Telstra share price $3.08 in Australia but $10.84 here in the HL portal?

The exchange rate is 1.81.

I ask as I think this is a strong buy.

Would I be better opening up a HSBC share trading account online a I have an Australian HSBC day to day account. Bunging some bucks in it and buying at $3.08.

Or buying here in HL portal at $10.84.

I can pay tax in Australia, so I think I might be okay opening a HSBC AU share account and buying shares.

But I do think its still a good price.

The boss brought $10k worth at 2.88 in her super so she's motoring.

16 cents divi a share. It's a monopoly over there..

[Junction25]

1 hour ago, Hardhat said:

BAT divi landed today 

Nice .. Thinking buying some .How much did u pay for the share ?

[Hardhat]

1 minute ago, Junction25 said:

Nice .. Thinking buying some .How much did u pay for the share ?

Got in around £25. Bought them for the yield really,and reinvesting divis. I would buy more at this price but I'd have to sell something else cos I'm fully allocated.