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

[Majorpain]

1 hour ago, Cattle Prod said:

From Jewson this morning:

 

Who thinks they'll put prices back down when supply eventually increases?

Problem with timber is its limited by the number of trees and growth rate, so there is always a natural limit to how much you can actually produce, in addition to things like sawmill capacity.  If the central banks keep printing out the wazoo, supply stands no chance of keeping up with demand.

UK construction have run out of steel and concrete, and now its looks like they are going to run out of wood as well!

[harp]

So no chance of property prices going down with input/ labour prices going up? 

[Barnsey]

58 minutes ago, harp said:

So no chance of property prices going down with input/ labour prices going up? 

The market is hot no doubt, but this isn't pre GFC madness, look at the collapse of high LTV lending.

Banks are being careful, house building was shut down for months and slowly being brought back in the face of labour and commodity constraints (when did that happen last, WWII?) .

Don't fall for the stamp duty holiday bollocks as this phenomenon is global, a s**t ton of people have a f**kload of enforced savings they've used as a deposit as they reassess their priorities. Be careful with the comparisons to 2008.

From John Auther's daily email:

[Barnsey]

56 minutes ago, Majorpain said:

Problem with timber is its limited by the number of trees and growth rate, so there is always a natural limit to how much you can actually produce, in addition to things like sawmill capacity.  If the central banks keep printing out the wazoo, supply stands no chance of keeping up with demand.

UK construction have run out of steel and concrete, and now its looks like they are going to run out of wood as well!

Interesting dynamic going on as timber prices in the U.S. are reverting back down to long term trend.

In other news:

 

[Hancock]

1 hour ago, Barnsey said:

 

Don't fall for the stamp duty holiday bollocks as this phenomenon is global, a s**t ton of people have a f**kload of enforced savings they've used as a deposit as they reassess their priorities. Be careful with the comparisons to 2008.

 

SDLT holiday has encouraged people to buy ... but what happens when those with vast savings which has to be a limited amount of people run out.

The difference with 2008 is they could drop interest rates, in 2021 if inflation is rampant then the only way for interest rates it up.

 

[Nomad]

Have households really saved that much money to make an impact on the decision to invest in a new/larger property? Personally I have saved commuting costs, about 4k, but no way would that constitute enough to change my property plans.

[Harley]

4 hours ago, Cattle Prod said:

From Jewson this morning:

 

Who thinks they'll put prices back down when supply eventually increases?

I'm just back from from the merchants.  Went to buy 2x1.  Out of stock with no replenishment date.  2x1 FFS.  Will try a mill but may just rip what I've got.

The worst part was I was replenishing the pile I bought back in Mar 20 in anticipation of shortages which have only just happened!  Not that I've been a keen buyer lately but my pile is now low and any jobs may have to be put on hold. 

I've already repurposed a lot of used wood which was nice to do, although won't last as long.

[Harley]

3 hours ago, Cattle Prod said:

From Jewson this morning:

 

Who thinks they'll put prices back down when supply eventually increases?

Lumber has already retraced c.50% and looks a bit weak but the old prices need to flow through the system, if they are ever to go down, a bit.  Also time of year.  But they are high, even at the local mills who source locally!

[JMD]

1 hour ago, Barnsey said:

Interesting dynamic going on as timber prices in the U.S. are reverting back down to long term trend.

In other news:

 

Lyn Alden wrote recently that US lumber price increases were due to mill/supply chain issues... i sometimes ask myself is there nothing she doesn't know!

[Harley]

1 minute ago, JMD said:

Lyn Alden wrote recently that US lumber price increases were due to mill/supply chain issues... i sometimes ask myself is there nothing she doesn't know!

Same issue for cement, etc.  A lot of these processes only make money at (massive) full scale given the fixed costs (furnace start up and running, etc) which is risky if you lose staff, transport, or customers.  Also takes time to bring plant back on line (e.g. furnaces).

[Boon]

2 hours ago, Nomad said:

Have households really saved that much money to make an impact on the decision to invest in a new/larger property? Personally I have saved commuting costs, about 4k, but no way would that constitute enough to change my property plans.

Thing is, prices are set by the marginal buyers, so it doesn't really need to tally with an average experience.

For instance, I think a lot of people will be like yourself - only saving commuting and dining out costs, maybe a bit more because it was actually hard to spend money on anything. A modest amount.

But there are also significant amounts of people who did very well out of it. The people that got grants, basically a lump sum of cash with minimal checks. The people that were furloughed but then also used their time on their side gigs, effectively doubling their income as they too had reduced expenditure.

IMO outside of London a relatively small amount of money, say £50k would be enough to upgrade to something bigger.

I too think there is a lot of excess saving hanging around, trouble is most of that will be concentrated in the top 50%.  If you were struggling before the pandemic financially, chances are you are no richer now. But if you had a reasonable level of investment in almost anything apart from cash, it must be quite hard to be poorer. Those would could average down into the dip will be a lot better off.

[Majorpain]

2 hours ago, Harley said:

I'm just back from from the merchants.  Went to buy 2x1.  Out of stock with no replenishment date.  2x1 FFS.  Will try a mill but may just rip what I've got.

Sheet of UK made MDF was going for £21 Oct 20, this month £31.  The only redeeming feature is its the only thing available in quantity!

[Barnsey]

2 hours ago, Boon said:

Thing is, prices are set by the marginal buyers, so it doesn't really need to tally with an average experience.

For instance, I think a lot of people will be like yourself - only saving commuting and dining out costs, maybe a bit more because it was actually hard to spend money on anything. A modest amount.

But there are also significant amounts of people who did very well out of it. The people that got grants, basically a lump sum of cash with minimal checks. The people that were furloughed but then also used their time on their side gigs, effectively doubling their income as they too had reduced expenditure.

IMO outside of London a relatively small amount of money, say £50k would be enough to upgrade to something bigger.

I too think there is a lot of excess saving hanging around, trouble is most of that will be concentrated in the top 50%.  If you were struggling before the pandemic financially, chances are you are no richer now. But if you had a reasonable level of investment in almost anything apart from cash, it must be quite hard to be poorer. Those would could average down into the dip will be a lot better off.

65% of British households own outright or have a mortgage, with much more equity sloshing around now. Just think of the 400,000 British families who've missed out on 2 annual summer holidays to Disney World, £15k right there?

[Democorruptcy]

11 minutes ago, Barnsey said:

65% of British households own outright or have a mortgage, with much more equity sloshing around now. Just think of the 400,000 British families who've missed out on 2 annual summer holidays to Disney World, £15k right there?

We know you are a property owner now Barnsey but there's no need to get carried away.

[Barnsey]

1 hour ago, Democorruptcy said:

We know you are a property owner now Barnsey but there's no need to get carried away.

Fair enough 

Ok, so the 400,000 British households that visit Florida every year might not be the same households every year, but holidays like that ain't cheap. 

[Barnsey]

6 hours ago, Nomad said:

Have households really saved that much money to make an impact on the decision to invest in a new/larger property? Personally I have saved commuting costs, about 4k, but no way would that constitute enough to change my property plans.

"Meanwhile the household savings ratio was 19.9%, its second highest level on record, the ONS said."

Sky News: GDP setback was worse than feared during latest lockdowns as savings surged.
https://news.sky.com/story/gdp-setback-was-worse-than-feared-during-latest-lockdowns-as-savings-surged-12345352

Household savings ratio in years leading up to GFC was around 7.5%.

[Chewing Grass]

5 minutes ago, Barnsey said:

"Meanwhile the household savings ratio was 19.9%, its second highest level on record, the ONS said."

Sky News: GDP setback was worse than feared during latest lockdowns as savings surged.
https://news.sky.com/story/gdp-setback-was-worse-than-feared-during-latest-lockdowns-as-savings-surged-12345352

Household savings ratio in years leading up to GFC was around 7.5%.

I am full on fucking the government by any financial means possible and folk have about 6 months to make the most of it tops before they start turning the screws again.

The bank is getting it as well as I double down of paying everything off as fast as poss whilst avoiding leaving 'savings' with them.

[DurhamBorn]

2 hours ago, Barnsey said:

65% of British households own outright or have a mortgage, with much more equity sloshing around now. Just think of the 400,000 British families who've missed out on 2 annual summer holidays to Disney World, £15k right there?

Iv got Premier Inn booked in Brid next May for £35 a night 

[Barnsey]

8 minutes ago, DurhamBorn said:

Iv got Premier Inn booked in Brid next May for £35 a night 

Can't go wrong with them, wish they had a loyalty club! The day they start charging £40 we're all f***ed. Saying that, their £8.99 breakfast is definitely not as good as before.

[Noallegiance]

2 hours ago, Barnsey said:

65% of British households own outright or have a mortgage, with much more equity sloshing around now. Just think of the 400,000 British families who've missed out on 2 annual summer holidays to Disney World, £15k right there?

How many mostly pay cash for these trips and how many mostly borrow?

[harp]

 

 

Javier Blas

 

@JavierBlas

 

GAS MARKET: European natural gas prices extend rally, reaching eyewatering levels. UK NBP one-month ahead prices are pretty close to breach above the 2008 peak, going to a 15-year high. ***The rise in utility bills (a political hot potato) is going to be pretty spectacular***

 

12:08 pm · 30 Jun 2021·Twitter Web App

 

51

Retweets

12

Quote Tweets

129

Likes

[ThoughtCriminal]

Anecdotal 

 

Took azzy roof off today for big roofing company and the owner was there. 

 

Said hes had to camcel loads of big jobs that were booked last year as his materials prices have gone up that much he'd lose money. 

 

Sheets he was paying 19 quid for last year are now 85. 

 

Im seeing it everywhere now. 

[leonardratso]

when the wheel barrow is worth more than the contents eh.

[Hancock]

5 hours ago, DurhamBorn said:

Iv got Premier Inn booked in Brid next May for £35 a night 

Brids like a freak show .... I take my kid there now and then to make fun of all the fat people, she tells me she is ashamed and embarrassed to be with me!

 

[DurhamBorn]

7 hours ago, Hancock said:

Brids like a freak show .... I take my kid there now and then to make fun of all the fat people, she tells me she is ashamed and embarrassed to be with me!

 

I like ordinary people ,my partners relatives live there and were scared to go in a couple of the pubs and told us not to.I thought they were quite posh compared to where i grew up  nothing wrong with them at all and £2.15 a pint.It hasnt been taken over by the BTL/holiday let brigade as well.Its a place that might boom going forward as well,there is a massive amount of gas sitting offshore.