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

[Noallegiance]

While not useful, here's an interesting fact:

If the US stopped accumulating debt now and paid it off at $6billion per month at 0.25% interest, it will be paid off in the year 3847.

[DurhamBorn]

8 hours ago, The Grey Man said:

Why are Amazon bombarding me with requests for cash.

Sorry , my ignorance , chance for a second income according to the ads.

Just as  Bozo has left, rather stepped down.

Hmmm... something is brewing.

They have been a leading seller this last 18 months. Getting more expensive right from the start to.

Where have the economies scale gone? 

Havent ordered from these scallies for over  a year.

They make around 17% of everything a marketplace seller sells plus storage and prime fees and dont have to source or import.Much easier than actually importing and selling themselves.I was top seller on there in two categories,one i could of displaced the UK no1 seller in the space in physical retail if id really pushed.Amazon phoned me a few times to actually partner them and increase the range and they would provide an account manager etc but i turned them down as id decided to run all my stock down and buy gold miners with the money instead.

My import business needed the same things as Amazon need,and inflation in every part of the chain isnt it.

The question is can they increase prices as fast as the inflation.

[Sugarlips]

Are we having a US CPI sweepstakes? 

I assume it will be massaged down prior to released then revised up next month when no one is looking.

[planit]

9 hours ago, Cattle Prod said:

I needed to update that, new data out today, another 400 or so DUCs gone, and trajectory is increasing. Smacks of desperation to me, its a one time only play you can make after years of over investment.

This is like a Mexican standoff, between the operator, their investors, and the shale decline treadmill. If the investors don't give up money for a shitload of new wells, that's it. Bear in mind, production has been flat with those ~2500 wells put on production. At say 800bbl a well, that's 2 million barrels added to stay flat. That's where I was out in my figures, I didn't think there were enough usable DUCs to use. Impossible to know, its probably the most confidential info in a company. But it begs the question: when they run through the DUCs, are they going to be allowed the money to drill 2500 extra wells? And if not, where is the next 2mbpd coming from, just to stay flat?

 

There is a delay in the investors receiving money from profits*, investors will not make decisions to invest more money until they have seen some of the profits, especially since the promised money didn't materialise in the past.

After the investor delay there is then the delay whilst the new drilling is planned and implemented.

The companies are doing such a good job of using the resources they have that there might also be a lack of realisation by investors on the immanency/speed of the production drop looming.

If we assume your mechanism is correct then human nature and the system will ensure production will drop. The length of the delays, ESG insanity and confidence in the future oil price will determine how deep the dip will go before rising again.

If, as you say, no one knows when the DUC's will run out, this will be a 'no one saw it coming' shock to everyone.

 

*  (Profits are also worse if shale hedged at lower oil prices as reported)

 

[planit]

22 minutes ago, Sugarlips said:

Are we having a US CPI sweepstakes? 

I assume it will be massaged down prior to released then revised up next month when no one is looking.

This is interesting this month. The year on year figure changes are affected by the monthly increase the previous year dropping out of the figures.

 

 

The last 3 months we have been dropping the figures in section A, the decline in A means year-on-year inflation would have been rising even if there were no price increases over the last 3 months. It is not surprising that we had a steep increase up to now.

 

This month is the first month in section B,

May-June 20 was a 0.52% increase so the figure posted today would have to be over 0.6 to increase the annual rate of inflation. Last month was 0.64% and I doubt it will be higher this month as supply shocks are starting to be addressed. If the YoYrate did increase to 5%, it would be a nice headline figure.

Next month is also in section B so it would be easy for there to be a dip in inflation over the next 2 months. Lets guess that inflation drops to 4.6%

 

Section C, the average inflation rate per month is 0.25% and this would be easier to beat over the 7 months so after dropping to 4.6% it could start increasing again with only a 0.3% per month increase.

 

In reality the monthly increases will probably keep going down from now on  so even if yearly inflation did rise at the beginning of section C it would be short lived. The crazy headline grabbing increases are over.

 

A yearly rate of 2% inflation would need 0.165% per month.

 

[MrXxxx]

Q regarding SIPPs.

Say you have set-up a SIPP,

do you/your employer have to transfer capital in directly 

OR

can you pay in from your post-tax capital and then have the SIPP provider add the 25% tax into your SIPP?

[reformed nice guy]

39 minutes ago, Sugarlips said:

Are we having a US CPI sweepstakes? 

I assume it will be massaged down prior to released then revised up next month when no one is looking.

The forecast from investing.com is 4.0% so Il guess 4.2%

In 12 months oil has went from ~$40 to $75, Americans average petrol from about $2.5 to $3.5 etc, used car price up, lumber up, houses up bigly. Its probably really 10% but Il stick with an "official" 4.2%

[reformed nice guy]

Just now, MrXxxx said:

Q regarding SIPPs.

Say you have set-up a SIPP,

do you/your employer have to transfer capital in directly 

OR

can you pay in from your post-tax capital and then have the SIPP provider add the 25% tax into your SIPP?

It is usually more efficient for the employer to transfer in directly as they can take it off their top line, so its just another expense

[Hancock]

15 hours ago, Cattle Prod said:

 I remember Cameron went up to the Shetlands around indyref time, 😅

I was there at the gas plant that was being built, the scousers and jocks called an illegal strike and he had to cancel his visit to the site.

[Hancock]

Ive just been to Poundland to buy some toothpaste and some sunglasses.

Price has gone up from £1 per item to £1.50 each .... 

Anyway for those that have the time, here is why manufacturing isn't coming back to the UK anytime soon.

https://www.lrb.co.uk/the-paper/v43/n14/james-meek/who-holds-the-welding-rod 

[MrXxxx]

10 minutes ago, reformed nice guy said:

It is usually more efficient for the employer to transfer in directly as they can take it off their top line, so its just another expense

But is it possible to do it the other way, and would there be any disadvantages for the PAYE employee?

[Sugarlips]

14 minutes ago, reformed nice guy said:

The forecast from investing.com is 4.0% so Il guess 4.2%

In 12 months oil has went from ~$40 to $75, Americans average petrol from about $2.5 to $3.5 etc, used car price up, lumber up, houses up bigly. Its probably really 10% but Il stick with an "official" 4.2%

I’m gonna stick my finger in the wind and say it’s going to be a transitory 5%+ 

[MrXxxx]

Just put a book review in the 'The Library' thread with an ideal book for the Newbie investor that needs a firm foundation on the metrics used, how to set-up a portfolio, when to buy/sell, and maximizing tax benefits.

The Equity Edge by Mark Jeavons ISBN:978085719786

234 pages so not a mammoth read, and one of the best finance books for practical investing that I have read so far.

[arrow]

On 11/07/2021 at 16:23, Harley said:

I have the same issue.  Sometimes ok, other times not.  Might be the browser.

PS:  Yep, possible as I've just saved this with FF Focus which has more success than Duckduckgo.

Thanks I'll try that. Kiwi is working now!

 

 

[arrow]

54 minutes ago, Hancock said:

Ive just been to Poundland to buy some toothpaste and some sunglasses.

Price has gone up from £1 per item to £1.50 each .... 

Anyway for those that have the time, here is why manufacturing isn't coming back to the UK anytime soon.

https://www.lrb.co.uk/the-paper/v43/n14/james-meek/who-holds-the-welding-rod 

Wow. That was a long read. Couldn't the author just have written Brexit bad, Tories evil, Europe lovely, poor pitiful third world workers must be protected and given jobs even if it bankrupts the UK.

[reformed nice guy]

https://www.dailymail.co.uk/money/markets/article-9781483/Tate-Lyle-split-private-equity-firm-swoops.html

More going private. Not the entire company, but a large part being bought up by PE

[DurhamBorn]

1 hour ago, MrXxxx said:

But is it possible to do it the other way, and would there be any disadvantages for the PAYE employee?

Yes,iv always done it myself.Everywhere iv worked for a good few years iv taken my wage down to £12.5k and paid the rest into my SIPP,the tax relief arrives in about two weeks.Iv also of course take full pension i can including matched savings etc from employers then the first thing i do when i leave is launch a transfer out into my SIPP.

 

[eek]

9 minutes ago, DurhamBorn said:

Yes,iv always done it myself.Everywhere iv worked for a good few years iv taken my wage down to £12.5k and paid the rest into my SIPP,the tax relief arrives in about two weeks.Iv also of course take full pension i can including matched savings etc from employers then the first thing i do when i leave is launch a transfer out into my SIPP.

 

You get the income tax back - you don't get the NI back... 

[AlfredTheLittle]

13 minutes ago, eek said:

You get the income tax back - you don't get the NI back... 

Yes - most tax efficient is employer contributions because of the ni saving, including employer ni at 13.8%, so there's scope to negotiate with your employer for slightly higher contributions than the salary you would get, as they make such a big saving.

You get the same tax relief however contributions are made, but if they come from income you've paid ni on you don't get that back.

[DurhamBorn]

13 minutes ago, eek said:

You get the income tax back - you don't get the NI back... 

Thats very true,i always maxed out with employers on what they would contribute,but none would pay direct to my SIPP ,HR looked at you like you were an alien.I always got my NI back by claiming JSA for 6 months and didnt mind a small amount slipping through the net as its years for state pension.I get those for free now through from Adult Specified childcare credits for looking after my grandson.2 years needed for full,but il keep claiming them incase they increase years to 40 or something.

[Harley]

1 hour ago, reformed nice guy said:

https://www.dailymail.co.uk/money/markets/article-9781483/Tate-Lyle-split-private-equity-firm-swoops.html

More going private. Not the entire company, but a large part being bought up by PE

I hold but didn't have a clue such is my level of attention!

[Harley]

10 minutes ago, DurhamBorn said:

 

 

[Harley]

37 minutes ago, DurhamBorn said:

Yes,iv always done it myself.Everywhere iv worked for a good few years iv taken my wage down to £12.5k and paid the rest into my SIPP,the tax relief arrives in about two weeks.Iv also of course take full pension i can including matched savings etc from employers then the first thing i do when i leave is launch a transfer out into my SIPP.

 

My partner about to do the same.  Twice on account of, and I kid you not, the pension company linking it to another old pension she had forgotten about!

[Castlevania]

US CPI print 5.4% yoy 

[Heart's Ease]

Crikey.