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

[Noallegiance]

A brief timeline of the destruction of currency:

History of house prices in Britain | SunLife

I'm left only holding hope of being able to have our own home for our family. We're about as positioned as we can be, which isn't a lot but it'll help. Dave H seems to be pointing toward the mother of all assets crashes soon followed by fast-running upward interest rates beyond the control of the central planners. If that happens we've got a chance of a place, but I guess that world comes with a whole new set of problems.

[TV Tips]

Slightly off topic but Durhamborn are you same Durhamborn who posted on ESCTips, Sofabet and Entertainment odds? 

[Noallegiance]

I don't know why it's happening today, but I seemed to be very tuned in to just how much of a cluster-fuck we appear to be drifting into.

It has my heart rate up a little.

[DurhamBorn]

1 hour ago, Loki said:

That's very honest of them I have to say.

My home town of 11k people was the credit card fraud capital of the country back in the day ,a quarter of all internet purchases  

http://news.bbc.co.uk/1/hi/uk/8240261.stm

 

[Loki]

3 minutes ago, DurhamBorn said:

My home town of 11k people was the credit card fraud capital of the country back in the day ,a quarter of all internet purchases  

http://news.bbc.co.uk/1/hi/uk/8240261.stm

 

That's a lot of pizza ovens

[Yadda yadda yadda]

2 hours ago, Bobthebuilder said:

I've noticed a change in my neck of the woods. Fast food delivery now all London boys, noticed a few street fights.

What do you mean by London boys? Do you mean Londoners who have moved out or do you mean natives when previously it was immigrants? I thought you were in SE London but that might be me getting confused.

[Bobthebuilder]

10 minutes ago, Yadda yadda yadda said:

What do you mean by London boys? Do you mean Londoners who have moved out or do you mean natives when previously it was immigrants? I thought you were in SE London but that might be me getting confused.

Yeah, SE London. Black UK lads seem to be replacing EErs. There's a thing round our way lately. If it's a UK delivery lad you double tip them. Doubles their profit, helps them out.

[sancho panza]

On 21/03/2021 at 22:26, dnb24 said:

Black swan event for Europe? Close of play Friday it all went tits up for Turkey who managed to exceed the Feds decade long inflation aim (in a weekend). Who will be on the hook? Europe’s finest banking establishments. 

Just to add some detail.Looks like @DurhamBorn was right on them using their dollars up.

I bet the gold holders of Turkey are heaving a sigh of relief.Interesting to see the demand for credit dipping as rates rise.Could be a foretaste for us Brits??

https://wolfstreet.com/2021/03/22/after-shock-awe-rate-hike-turkeys-central-bank-governor-gets-sacked-and-all-heck-breaks-loose/

The Lira plunges, stocks plunge, yields jump. Capital controls expected.

By Nick Corbishley for WOLF STREET:

After four months of relative calm, the Turkish lira is once again doing what it does best: slumping against every major currency. It nose-dived 17% overnight to near all-time lows, hitting 8.39 against the dollar and 9.97 against the euro before recovering later on, ending the day down over 7% against the dollar, amid concerns that the central bank and state-owned banks cushioned the fall by selling dollars into the market, thereby further depleting Turkey’s already scarce foreign currency reserves. The lira has lost half of its value since its currency crisis began in 2018.

The Borsa Istanbul Index suffered one of its steepest selloffs in years, before triggering circuit breakers that halted trading. The BIST 100 Index ended the day down 9.8%. Yields on Turkey’s lira-denominated 10-year bonds soared from 14% to 19%, as investors rushed for the exits. Investors also dumped shares of European banks with close ties to Turkey. Spain’s BBVA, which owns around half of Turkish lender Garanti, tumbled 7.5%, its biggest fall since November.

The trigger was President Recep Tayyip Erdoğan’s snap decision on Friday evening to fire the governor of Turkey’s Central Bank, Naci Ağbal, who on Thursday, in order to tamp down on surging inflation and to prop up the lira, had engineered a shock-and-awe 2.0 percentage-point hike of the policy rate from 17% to 19%, when economists had expected a rate hike of half that magnitude. It was the third time since mid-2019 that Erdogan has sacked a central bank chief.

 

In just four months, the lira rallied 18% against the dollar as investors were lured by the highest real interest rate in emerging markets after Egypt’s. But Ağbal’s sharp hikes in interest rates had sapped demand for new loans.

“We’re seeing a significant deceleration in lira lending growth — all banks are seeing less demand for borrowing because of high interest rates,” said Sevgi Onur, vice president and banking analyst at Seker Invest in Istanbul, in early March.

Turkey’s debt-dependent economy cannot grow without strong growth of debt. Hence Erdogan’s decision to replace Ağbal. In the space of just one day’s trading, four months’ worth of gains evaporated.

This cheap lending further depleted the country’s foreign currency reserves. Fears are now rising that Turkey’s central bank will not have the firepower needed to defend the currency over the coming months after reportedly burning through over $100 billion in foreign reserves since early 2019.

“Without much remaining reserves to defend the currency, and considering an expected exodus in foreign and local investor capital, it may be difficult for Turkey to avoid another currency crisis in the coming months,” Kalen said.

It will be Turkey’s third in three years. The more the lira falls, the more inflation will rise in Turkey’s import-dependent economy. The more inflation rises, the more people will turn to the dollar or other hard currencies to protect their savings. Once the central bank brings real interest rates back into negative territory, it will probably bring back the soft capital controls that prevailed during Berat Albayrak’s tenure in an attempt to stabilize rates. But the economy is still weak. The virus crisis wiped out a big chunk of the nation’s revenue from tourism. Now, the newly plunging lira is going to make it even harder for Turkey’s struggling companies to service their foreign-denominated debts. By Nick Corbishley,

 

 

 

[Lightscribe]

8 hours ago, Noallegiance said:

I don't know why it's happening today, but I seemed to be very tuned in to just how much of a cluster-fuck we appear to be drifting into.

It has my heart rate up a little.

It’s palpable isn’t it. Perhaps for me it’s because I’ve worked throughout lockdown and have seen the effects and all the permanently closed businesses in London first hand. We all have a basic understanding on here of the macroeconomic climate we’ve been anticipating for and can see it unfolding in front of our eyes. There’s no way out of this without economic fallout, none, zip, zero, one way or the other and they know it too. It’s now just how far the narrative can be stretched until everyone realises that the Emperor isn’t wearing any clothes.

The masses however have been working happily from home completely oblivious, they don’t understand or care about complicated things such as the global economy as long as things just get back to ‘normal’.  By ‘normal’ that means shops and entertainment open, being able to go on holiday and life picking up where it left off and just pretending that last year didn’t happen. After all house prices have gone up, WFH for the foreseeable, no commute or childcare, saved shedloads of money with everything closed, whats not to like?

The problems will only arise when they realise that ‘normal’ isn’t coming back.

[MrXxxx]

10 hours ago, sancho panza said:

dealt with a stabbing during a shift a few days back.When the furlough ends,I really think the lid is going to come off.Lot of bad boys are going to come out settling scores and alot of otehr people are going to be desperate in any number of ways.

Sad times are coming I think

I agree, and I don't think its going to be for a short period either, hence why I am thinking forward to my future retirement and where I would like it/what sort of society I would like it to be in....it's ok while you are young and can `handle yourself` but as you age you will become an easy target/victim. I would rather have a frugal living in a  safe society rather than a comfortable one in a dangerous society.

[sancho panza]

1 hour ago, Lightscribe said:

There’s no way out of this without economic fallout, none, zip, zero, one way or the other and they know it too. It’s now just how far the narrative can be stretched until everyone realises that the Emperor isn’t wearing any clothes.

The masses however have been working happily from home completely oblivious, they don’t understand or care about complicated things such as the global economy as long as things just get back to ‘normal’.  By ‘normal’ that means shops and entertainment open, being able to go on holiday and life picking up where it left off and just pretending that last year didn’t happen. After all house prices have gone up, WFH for the foreseeable, no commute or childcare, saved shedloads of money with everything closed, whats not to like?

The problems will only arise when they realise that ‘normal’ isn’t coming back.

I was reading last night that Bozo Boris and his crooked henchman are thinking of compelling care home staff to have the vaccine.Despite the fact that a lot of them are females of child bearing age and the manufacturers have warned their is little research in terms of the vacines affecting fertility.

Staff I've spoken to have talked of pressure to get vaccine. but even so,50% of care home workers in Londinium still haven't had it.Apparently,it's mainly BAME staff.

BMJ no less.Interesting that Dr's,especially those who are black,are not having the vaccine.So,let's get this straight,those with the best understanding of the pharmacology of the vaccine are the least likely to take it.

Good luck with the waiting lists if they start 'no jab,no job' with the Dr's.Probably why they've started the concerted 'you're going to kil grnamda' press campaign to make people have it.

https://www.bmj.com/content/372/bmj.n460

The analysis, published as a preprint on 13 February,1 looked at 19 044 staff at the University Hospitals of Leicester NHS Trust who had all been offered a vaccination since 12 December. As of 3 February, 65% (12 278) had received at least one dose of vaccine. But this masked substantial variation, with 71% (8147 of 11 485) of white staff taking up the vaccine, compared with 59% (2843 of 4863) of South Asian staff and 37% (499 of 1357) of black staff. Overall, 36% of the trust’s staff are from ethnic minority backgrounds.

Across all staff, take up was lowest among doctors (57%, 1721 of 3001), and highest among administrative and executive staff (73%, 2537 of 3465) and healthcare scientists (73%, 634 of 871).

The authors said that further work was needed to understand why doctors were less likely to take up the vaccine but noted that doctors were the only staff group at the trust in which people from ethnic minorities form the majority. Doctors were also younger as a cohort than other staff so might perceive themselves as being at lower risk.

[sancho panza]

1 hour ago, MrXxxx said:

I agree, and I don't think its going to be for a short period either, hence why I am thinking forward to my future retirement and where I would like it/what sort of society I would like it to be in....it's ok while you are young and can `handle yourself` but as you age you will become an easy target/victim. I would rather have a frugal living in a  safe society rather than a comfortable one in a dangerous society.

I'll be avoiding inner city areas,even the nice bits.

Reality is that the Police force of today is not the Police force of 15 years ago.I was speaking to a copper who joined in 2008 and she was saying when she started,cities with circa 250k popn would have 75 police working a Friday night shift.Now it's between 25-30.

On top of that,the Police appear to have moved to graduate recruits and away from taking ex military types and teaching them some law.Hence you end up on some jobs,ask for back up and a couple of really polite nice girls come along.

I've seen a fair few of the hard nosed police types I used to see on my rounds retire/get desk job/leave in the last few years.At that recent stabbing,I looked around and in all honesty,most of the attending police looked well manicured/coiffured but very hesitant/scared as it was quite a volatile situation.It was unsual as usually there's a few more experienced types around but still.I don't want to be too critical,as I wouldn't want to be a policeman but I'm just trying to explain the changes that have occurred from my perpsective

From what I can see,three or four decent size incidents kicking off in a 250k popn city and the police would be struggling I think.

Really wanted to say soemthing like this in reply to @Bobthebuilder last night but bottled it as I didn't want to be seen as anti police,but I think I'm reflecting reality here.

 

[Barnsey]

10 hours ago, Noallegiance said:

A brief timeline of the destruction of currency:

History of house prices in Britain | SunLife

I'm left only holding hope of being able to have our own home for our family. We're about as positioned as we can be, which isn't a lot but it'll help. Dave H seems to be pointing toward the mother of all assets crashes soon followed by fast-running upward interest rates beyond the control of the central planners. If that happens we've got a chance of a place, but I guess that world comes with a whole new set of problems.

That's a bit of a laughable fluff piece but not surprising given the source.

Look at UK and US house prices from 97-07, the 10 years Blair was in power. Not blaming him of course, especially for US house price growth , but that was the most destructive decade for housing inequality both here and across the pond. What we've seen since the GFC has got nothing on that.

10 hours ago, Noallegiance said:

I don't know why it's happening today, but I seemed to be very tuned in to just how much of a cluster-fuck we appear to be drifting into.

It has my heart rate up a little.

 

2 hours ago, Lightscribe said:

It’s palpable isn’t it. Perhaps for me it’s because I’ve worked throughout lockdown and have seen the effects and all the permanently closed businesses in London first hand. We all have a basic understanding on here of the macroeconomic climate we’ve been anticipating for and can see it unfolding in front of our eyes. There’s no way out of this without economic fallout, none, zip, zero, one way or the other and they know it too. It’s now just how far the narrative can be stretched until everyone realises that the Emperor isn’t wearing any clothes.

The masses however have been working happily from home completely oblivious, they don’t understand or care about complicated things such as the global economy as long as things just get back to ‘normal’.  By ‘normal’ that means shops and entertainment open, being able to go on holiday and life picking up where it left off and just pretending that last year didn’t happen. After all house prices have gone up, WFH for the foreseeable, no commute or childcare, saved shedloads of money with everything closed, whats not to like?

The problems will only arise when they realise that ‘normal’ isn’t coming back.

Likewise, worked all the way through in public transport throughout the Midlands. Moved up here in Nov 2019 when things were fine, 4 months later, zombie apocalypse. The past year has just been lots of kids travelling around with Dunlop suitcases completely unchecked, open distribution network. Now our town permanently reeks of weed wherever you go.

We're in the fourth turning (for those who haven't read it yet, it'll help make sense of these crazy few years). If it wasn't a pandemic it would be something else. It's a great reset led by human behaviour rather than higher powers, they're just trying to steer us through it in a way that minimises social destruction (hence furlough scheme being constantly extended, stimulus cheques in US etc).

Notice how short-lived the anger towards the root cause of this huge mess was? Didn't take long for us to turn on ourselves.

Sadly it ain't over yet, we've probably got another 7-8 years of this before any true resolve, matching up with the premise of this topic of course.

Through the ashes might come some sort of renewed national unity, finally?

 

[Boglet]

2 hours ago, MrXxxx said:

I agree, and I don't think its going to be for a short period either, hence why I am thinking forward to my future retirement and where I would like it/what sort of society I would like it to be in....it's ok while you are young and can `handle yourself` but as you age you will become an easy target/victim. I would rather have a frugal living in a  safe society rather than a comfortable one in a dangerous society.

The way things are going, the UK will look like South Africa by the time I retire. Very worrying.

[Calcutta]

Much like people burning their rubbish when the council stop collecting, people will organise their own protection when the police finally give up even trying. 

What could be better for community cohesion than organising a death squad. 

[Chewing Grass]

Smell the bullshit on this one, Payrolled employment rises for third month after a year of lockdown misery for jobs, data released by the Office for National Statistics (ONS) showed an increase of 68,000 last month.

That is entirely down to IR35 forcing ltd company contractors into staff/umbrella co jobs.

Absolute misleading article.

https://www.msn.com/en-gb/news/world/payrolled-employment-rises-for-third-month-after-a-year-of-lockdown-misery-for-jobs/ar-BB1eRGn4

[Shamone]

On 21/03/2021 at 11:33, DurhamBorn said:

Exactly.The left cant win elections anymore as they have nothing in common with working people,they are actually the greatest enemy a working man has.So instead they worked their way into the public sector and like you say the so called third sector.They then divert funding to themselves and back again.My local Labour party are posting leaflets about nurses pay going up 1% etc,but no mention of the fact the council is fleecing nurses (and every other worker) by an extra 4% on council tax.The state has now so many that they are sucking all private capital their way.

The huge worry of course is governments cant stop them.Council tax is a huge threat to ordinary people.Our police precept went up 7%.Of course hardly any police,its for their pensions.They can sit at home on huge pensions while others toil away for peanuts.

Excellent post.It’s divide and rule and is pure evil.

[DurhamBorn]

Good to see the oilies getting shook a bit today as we expected.Hopefully the weak hands who bought on the way down will decide to lock in some profits before they lose them.That should then see a really sharp run up in their prices.

Tobacco is making up for them though and also the telcos today.I kept trimming a few holdings yesterday that were up between 100% and 200% and bought some more BAE and opened a position in TIM SA (TIMB).Iv been re-investing about 60% of what im trimming so building up some cash as well.

 

 

[Transistor Man]

On 07/03/2021 at 14:09, ThoughtCriminal said:

There's apparently a huge semiconductor shortage that's going to bite soon. 

 

ST Microelectronics must be in a good position here.

Full lineup of automotive electronics & sensors, and their own European-based fabs. 

[invalid]

 

Old news and discussed before but interesting that this was fairly prominent on the BBC yesterday:

 

Quote

 

Factory blaze adds to computer chip supply crisis

Many car-makers have slowed or temporarily halted production at some of their plants. It had earlier been estimated that they faced losing more than $60bn (£43.3bn) of sales as a result.

The Nikkei Asia reported on Sunday that the price of memory chips had risen 60% since the start of 2021

 

 

So globally we have the chip shortage and increases in shipping costs, I expect these will be just a blip and will resolve in time but I doubt things will get back to exactly where they were.

Focusing down onto the UK, I've not heard much about food price inflation, although it did get a mention as a main driver for the increase in last months inflation figures.

An increase in oil prices over the coming months could really light a fire under inflation.

The measuring of inflation as ever is an interesting one. I saw that they have added CovID related items into the basket. For example, hand sanitizer. I wonder if they added it at a time when prices had peaked so that it will have a reducing effect going forward?

 

 

 

[SpectrumFX]

2 hours ago, sancho panza said:

I'll be avoiding inner city areas,even the nice bits.

Reality is that the Police force of today is not the Police force of 15 years ago.I was speaking to a copper who joined in 2008 and she was saying when she started,cities with circa 250k popn would have 75 police working a Friday night shift.Now it's between 25-30.

On top of that,the Police appear to have moved to graduate recruits and away from taking ex military types and teaching them some law.Hence you end up on some jobs,ask for back up and a couple of really polite nice girls come along.

I've seen a fair few of the hard nosed police types I used to see on my rounds retire/get desk job/leave in the last few years.At that recent stabbing,I looked around and in all honesty,most of the attending police looked well manicured/coiffured but very hesitant/scared as it was quite a volatile situation.It was unsual as usually there's a few more experienced types around but still.I don't want to be too critical,as I wouldn't want to be a policeman but I'm just trying to explain the changes that have occurred from my perpsective

From what I can see,three or four decent size incidents kicking off in a 250k popn city and the police would be struggling I think.

Really wanted to say soemthing like this in reply to @Bobthebuilder last night but bottled it as I didn't want to be seen as anti police,but I think I'm reflecting reality here.

 

I used to work with a retired copper. He was very nice, but he was also about 6 for 4 and built like a brick shithouse. The sort of man you'd have to be utterly retarded to even consider starting a fight with.

One of my wife's friends from school is in the police now. She's also very nice, but it's about 5 foot 2, and looks like a marathon runner.

The old fella would be late 60's by now, but he's still the one I'd want to have on my side in a fight.

[invalid]

Pleased to see one of my goldies in the news:

Centamin 2020 profit soars and dividend outlook reaffirmed

Centamin PLC on Monday said its profit jumped more than 80% in 2020, with the gold miner also achieving record revenue helped by booming bullion prices.

 

The following from the article made me think of the parallels with oil companies:

"Earnings rose despite output falling."

 

And this reminded me as something often mentioned on this thread:

"the group generated significant free cash flow, of USD142 million, a 91% increase, making it possible to propose and pay dividends attributable to 2020 of USD104 million"

 

Edit to add:

"Centamin continues to maintain a robust financial strategy, with cash and liquid assets of US$310 million as at 31 December 2020, with no debt, hedging or streaming in place."

 

 

[DurhamBorn]

2 hours ago, invalid said:

 

Old news and discussed before but interesting that this was fairly prominent on the BBC yesterday:

 

 

So globally we have the chip shortage and increases in shipping costs, I expect these will be just a blip and will resolve in time but I doubt things will get back to exactly where they were.

Focusing down onto the UK, I've not heard much about food price inflation, although it did get a mention as a main driver for the increase in last months inflation figures.

An increase in oil prices over the coming months could really light a fire under inflation.

The measuring of inflation as ever is an interesting one. I saw that they have added CovID related items into the basket. For example, hand sanitizer. I wonder if they added it at a time when prices had peaked so that it will have a reducing effect going forward?

 

 

 

The thing with shipping is unit costs.As the girl who did my contracts in China used to say to me,,"why you pay to ship fresh air" and then she used to get the factory to take the legs off put in a few screws and cut the box size by 1/3rd.

Shipping anything small and the container cost doesnt really matter as much,but once you get yo a box say 20cmx50cmx60cm your looking at 600 on a big container.That puts £10 on a unit.

I ran the figures on what i used to import,

When i stopped each firepit cost me £36 landed at my unit.£7 courier costs,£10 Amazon fees £55 to get to customer £79 selling price.

Now they would cost £49 landed,£8 courier costs,£11 Amazon fees £68 to get to customer.20%+ inflation.

 

[planit]

2 hours ago, DurhamBorn said:

Good to see the oilies getting shook a bit today as we expected.Hopefully the weak hands who bought on the way down will decide to lock in some profits before they lose them.That should then see a really sharp run up in their prices.

Tobacco is making up for them though and also the telcos today.I kept trimming a few holdings yesterday that were up between 100% and 200% and bought some more BAE and opened a position in TIM SA (TIMB).Iv been re-investing about 60% of what im trimming so building up some cash as well.

 

 

Funny you mention this now, this morning I have been mulling over buying more RDSB. You nailed the top slice when BP was ~324 which I missed. 

 

The gold miners have increased as of late but most people seem to be expecting another move down. The contrarian in me thinks this last move might not happen as there are too many people expecting it. I am hoping gold moves sideways for a while as I am not wanting to invest yet. I got bought out of TSG Trans Siberian Gold with the lowish takeover offer.

 

 

[invalid]

6 minutes ago, DurhamBorn said:

The thing with shipping is unit costs.As the girl who did my contracts in China used to say to me,,"why you pay to ship fresh air" and then she used to get the factory to take the legs off put in a few screws and cut the box size by 1/3rd.

Shipping anything small and the container cost doesnt really matter as much,but once you get yo a box say 20cmx50cmx60cm your looking at 600 on a big container.That puts £10 on a unit.

I ran the figures on what i used to import,

When i stopped each firepit cost me £36 landed at my unit.£7 courier costs,£10 Amazon fees £55 to get to customer £79 selling price.

Now they would cost £49 landed,£8 courier costs,£11 Amazon fees £68 to get to customer.20%+ inflation.

 

 

With China being the worlds factory, I'm struggling to get my head around what might happen with Chinese output and costs due to the shipping costs and CovID.

I'm expecting that it will settle down but never be quite the same again. But will it be too late, will the damage be done? Will this be a vicious circle where the customer (rest of the world) is going broke so the shopkeeper (China) have to raise prices as sales drop?

Long term as the UK gets poorer I expect some jobs and manufacturing will shift back to the UK (same for US and EU) but only at a small scale and only select industries. It might help slow the decline in UK wealth, I hope.