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spunko

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

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55 minutes ago, Barnsey said:

It’s happening folks, it’s arrived...

FC8A943A-9A39-4DE1-855A-606B075C2071.png.f2b013c3e20d00ab3d464ffeb64abac9.png

If they cut on the 30th it’s an admission we’re entering a downturn, not sure how they spin this with CEO sentiment bouncing to an 11 year high post election (bo*****s IMO)

BoE asset holdings seem to be on a downward drift last few months...contrary to recent US purchases...attempting different tacks?

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14 hours ago, sancho panza said:

From which pool of shares are we talking. I havent really run a full set of SCS scores on utilities yet as I'm not buying any more for a couple of years.

Problem you have is the debt levels in that sector is much higher than msot,hence you need to run a full comparison across a raft of them to get an idea of where the averages lie.

Ref the GDX stuff,I'll run a new full set after the full year data comes out for those ocmpanies that run Jan to Dec.The scores I have are from May or so and a lot of those hcarts haev seen some real change.

I'll put the next set on computer.

Also worth noting that I've learned a lot since first running them.But they've done a decent job thsu far.

I was thinking the energy generators/distributers and renewables, e.g. drax or engie or sun power, in Europe and US. And perhaps the chemical industry (you have done your steel scores previously), e.g. basf or solvay.

I'm convinced (like all dosboders) that commodities will do well, and the bonus with them is that they are mostly already cheap. But I also think companies that use the commodities as their raw material - above sector types - will be highly sought, particularly when factoring in paying decent dividends (attractive alternative to the bond market). The key I guess is identifying the 'healthy' co's and then wait to get cheap, after market correction/recession.

This 'theme' is really just an attempt at a deployment of the idea introduced by Harley and DB last year of investing 'close to the sources'.   

 

Thank you SP - I'll definitely eagerly await your gdx scores. 

 

 

        

 

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20 hours ago, Cattle Prod said:

Marcellus and the natural gas bear market, excellent blog post here: 

http://blog.gorozen.com/blog/modeling-the-haynesville-and-marcellus-recoverable-natural-gas-reserves

His models look ok, I don't think he's allowing for rig number declines, but they predicted the older plays pretty well. If the Marcellus tops out in a year or so time, that will certainly mark the end of the US bear market in gas.

Disc: I have a small position now. I'll be watching this closely and will steadily buy f it looks to be playing out. This whole sector is "rubber band" - the commodity itself has spiked 7x from here in recent years. Dyodd - this is the widowmaker trade

Screenshot_20200112-104920_Chrome.jpg

They are interesting commodity guys, and mostly seem in agreement with this thread. However, they have an interesting take - perhaps just to differentiate themselves(what me cynical?) - on global warming. They think past warming has been driven mostly by sun spot activity (similar to Piers Corbyn, Jeremys brother) and as this solar cycle is now coming to an end, world temperatures will begin to fall... This means load up on fertilisers, potash, etc, as agri. yields will now decline. I know buying such commodities is already a theme of this blog, but thought it interesting because this potentially gives us another reason to buy/hedge.  

 

Edited by JMD

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3 minutes ago, JMD said:

They are interesting commodity guys, and mostly seem in agreement with this thread. However, they have an interesting take - perhaps just to differentiate themselves(what me cynical?) - on global warming. They think past warming has been driven mostly by sun spot activity and as this solar cycle is now coming to an end, world temperatures will fall... So this means load up on fertilisers, potash, etc, as agri. yields will decline. I know buying those commodities is already a theme of this blog but thought it interesting because it gives us another reason to buy/hedge.  

 

Clearly fake science to think that the activity of the colossal star we orbit could have anything to do with Earth's temperature. ;)  It's just a big light bulb in the sky.

I completely agree with what they say based on what you posted - USA lost a huge amount of crops last year - either due to damage to planted crops, #noplant19, or unable to dry grains because of unavailable propane.

1578857835978.png

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21 hours ago, Cattle Prod said:

Marcellus and the natural gas bear market, excellent blog post here: 

http://blog.gorozen.com/blog/modeling-the-haynesville-and-marcellus-recoverable-natural-gas-reserves

His models look ok, I don't think he's allowing for rig number declines, but they predicted the older plays pretty well. If the Marcellus tops out in a year or so time, that will certainly mark the end of the US bear market in gas.

Disc: I have a small position now. I'll be watching this closely and will steadily buy f it looks to be playing out. This whole sector is "rubber band" - the commodity itself has spiked 7x from here in recent years. Dyodd - this is the widowmaker trade

Screenshot_20200112-104920_Chrome.jpg

 

I have a keen interest in the oil and gas markets as I believe energy is so fundamental to everything else, although I don't understand it very well so read your posts with great interest. Thank you for taking the time to share your knowledge.

I noticed the other day that UK gas futures are at another 2 year low, less than half what they were in Oct 2018. What is driving the low prices, is it simply over supply? And is that over supply real, or just preception of it? I read so much about US gas being on the edge of going into decline, yet everyone else seems to think its going to carry on, do they know something we don't?

Surely the further they fall, the more that rubber band gets stretched? 12 months of low energy prices feeding into inflation figures, all good until prices shoot up like that rubber band being released. Could make for some interesting times.

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21 hours ago, Harley said:

Joking aside, that's a shock.  Think I need to stop posting shite and get some focus going!

https://www.leicestermercury.co.uk/news/leicester-news/new-owners-take-licence-operate-3500320

The High St in Leicester is ahead of many places in the region except maybe some former mining towns like Nuneaton,where you count the pubs and shops that aren't boarded up.

Says a lot when the Spoons pull out.They still have a couple of places in the city,but this had been there the longest.,

Walking in from that pub into the centre,it's beathtaking the changes since I was a kid.That street used to be one of the most desirable in Leicester.Lots of shops been empty for a few years.

When the estate agents start going bust,it'll be brutal.

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5 hours ago, null; said:

 

I have a keen interest in the oil and gas markets as I believe energy is so fundamental to everything else, although I don't understand it very well so read your posts with great interest. Thank you for taking the time to share your knowledge.

I noticed the other day that UK gas futures are at another 2 year low, less than half what they were in Oct 2018. What is driving the low prices, is it simply over supply? And is that over supply real, or just preception of it? I read so much about US gas being on the edge of going into decline, yet everyone else seems to think its going to carry on, do they know something we don't?

Surely the further they fall, the more that rubber band gets stretched? 12 months of low energy prices feeding into inflation figures, all good until prices shoot up like that rubber band being released. Could make for some interesting times.

This Winter has been wet and mild. I’ve had the heating on for all of one evening.

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9 hours ago, Barnsey said:

It’s happening folks, it’s arrived...

FC8A943A-9A39-4DE1-855A-606B075C2071.png.f2b013c3e20d00ab3d464ffeb64abac9.png

If they cut on the 30th it’s an admission we’re entering a downturn, not sure how they spin this with CEO sentiment bouncing to an 11 year high post election (bo*****s IMO)

They are following the Fed,or will be soon.They want to try to keep sterling down,they are trying to move the economy to more production over consumption.The government is getting ready to go into the bond markets for £100 billion to "invest".There is still a very real chance we see outright price deflation for a short period.That £100 billion will be followed by £500 billion more i expect along with the trillions from the Fed.

Im really hoping my oil road map at $43 is right as id really expand my holdings at that level.I still think sterling has $1.38 in site even if they cut.

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12 hours ago, Noallegiance said:

If I don't go first thing Sunday morning, good luck getting a space unless it's within an hour of closing. There's two Lidls and Two Aldis in my town of 250k.

We have Aldi,Lidl,Iceland,Morrisons,Tesco extra,Sainsbury,Asda,Herons Foods and Home Bargains in a town of 20k .We must have more food shopping space per capita than anywhere in the UK.Suits me though for the bargains.I go to Aldi at 8am,lots of 50% off first thing,but you have to be in as it opens.

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1 hour ago, sancho panza said:

https://www.leicestermercury.co.uk/news/leicester-news/new-owners-take-licence-operate-3500320

The High St in Leicester is ahead of many places in the region except maybe some former mining towns like Nuneaton,where you count the pubs and shops that aren't boarded up.

Says a lot when the Spoons pull out.They still have a couple of places in the city,but this had been there the longest.,

Walking in from that pub into the centre,it's beathtaking the changes since I was a kid.That street used to be one of the most desirable in Leicester.Lots of shops been empty for a few years.

When the estate agents start going bust,it'll be brutal.

Here in London the estate agents have been retrenching from the high street for the last 2 years to a single shop front unit or to a central hub.

A number of high street Arab supermarkets I know in west London are considering throwing the towel in as the cost of rent, rates staff and general overheads make it no longer worth their while. 

Whilst it is only January and general gloom is about this time of year, there is a certain uncertainty about the place

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Im really hoping my oil road map at $43 is right as id really expand my holdings at that level.I still think sterling has $1.38 in site even if they cut.

I really hope so as whilst I have been adding on a monthly basis into the oil and gas sector I am still very lightly invested. I would like to have my SIPP and ISA have the largest percentage of capital in this area. So far I only have about 10% that I would at least like to double.
 
Lets hope the Gods will be kind to us

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Sorry to keep banging on about housing, but do you think I’d be mad for offering 2010 price (when current owners bought in the dip) + RPI on a house I’ve seen which has probably had an extra £20k at least spent on it? Thankfully there’s tons of new builds around at a similar price to what their asking, which I hope I can use as a bargaining chip, even though in reality they’re pretty crap, but are the mid 90s built homes much better?

Everyone has an idea of what they’re willing to pay for a house, and I still feel like a bit of a numpty for already looking before recession, but if I can get 10-15% off a house in an area that’s “only” risen just above RPI in the past decade (which seems to be the standard measure of HPI) then maybe not a disaster providing I get a long mortgage fix below 3%. VERY conflicted right now but my patience is wearing incredibly thin. On the other hand could I live with myself if I committed now and then house prices even in a non bubbly area like this dropped 25%+

Current thought process:

Really do need to be getting on with buying a house after having waited for about 3 years now, mortgage and housing market choice might seriously dwindle in recession, and by the time things stabilise and more of both come onto the market again we might already see inflation and rates ticking up? Last time around the market was flat on its arse for about 3 years with very little coming into the market? Although I don’t doubt they’ll be a little more proactive this time with all the Ponzi schemes.

Keep staring at this and thinking things aren’t as bad as before -

3E4B5B95-E199-406E-A4FD-B00D5402015F.png.62c13c6ad0c21feb49edd696814e8897.png

Lending criteria tightens considerably in a recession and we’re probably at 80% LTV right now, not the 75% and below they lend to in such times of crisis. Other half is Finnish but with settled status, could there be complications at end of transition period if we waited until next year? Also high risk of her losing her job and struggling to find alternative employment in recession (sales job), not that I’m stupid enough to overborrow of course on my single income, definitely playing it safe.

All thoughts and perspectives greatly appreciated as always!

Edited by Barnsey

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1 hour ago, Barnsey said:

Sorry to keep banging on about housing, but do you think I’d be mad for offering 2010 price (when current owners bought in the dip) + RPI on a house I’ve seen which has probably had an extra £20k at least spent on it? Thankfully there’s tons of new builds around at a similar price to what their asking, which I hope I can use as a bargaining chip, even though in reality they’re pretty crap, but are the mid 90s built homes much better?

Everyone has an idea of what they’re willing to pay for a house, and I still feel like a bit of a numpty for already looking before recession, but if I can get 10-15% off a house in an area that’s “only” risen just above RPI in the past decade (which seems to be the standard measure of HPI) then maybe not a disaster providing I get a long mortgage fix below 3%. VERY conflicted right now but my patience is wearing incredibly thin. On the other hand could I live with myself if I committed now and then house prices even in a non bubbly area like this dropped 25%+

Current thought process:

Really do need to be getting on with buying a house after having waited for about 3 years now, mortgage and housing market choice might seriously dwindle in recession, and by the time things stabilise and more of both come onto the market again we might already see inflation and rates ticking up? Last time around the market was flat on its arse for about 3 years with very little coming into the market? Although I don’t doubt they’ll be a little more proactive this time with all the Ponzi schemes.

Keep staring at this and thinking things aren’t as bad as before -

3E4B5B95-E199-406E-A4FD-B00D5402015F.png.62c13c6ad0c21feb49edd696814e8897.png

Lending criteria tightens considerably in a recession and we’re probably at 80% LTV right now, not the 75% and below they lend to in such times of crisis. Other half is Finnish but with settled status, could there be complications at end of transition period if we waited until next year? Also high risk of her losing her job and struggling to find alternative employment in recession (sales job), not that I’m stupid enough to overborrow of course on my single income, definitely playing it safe.

All thoughts and perspectives greatly appreciated as always!

barnsey gnna be quick here as Ive got the two little panzas watching fireman sam with me.Im in charge today.

few ideas

1) when i bought mrs p her car I picked the model she was after then looked for the ten best deals from the Kia dealers,then waited until the end of the month and emailed them all for best price.got her car for roughly 40% less than the highesdt priced.well worth identifying any time sensitive sellers.

2) worht finding the postcodes you like,check the transaction levels in the postcode on RM,then divide the amount of stock on RM by the transaction levels in the postcode.gives a decent guide as to oversupply/undersupply.I would say 6-10 months is average.Over 10 months is a buyers market etc.

3) We rent,it has some upsides with prices where they are.Has down sides too but owrth consdiering your purchase timframe ie ten years + or less.If under ten years,you want to be buying something liquid you can sell on quickly.no point buying the cheapest hosue with poor resale potential.

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1 hour ago, Barnsey said:

Lending criteria tightens considerably in a recession and we’re probably at 80% LTV right now, not the 75% and below they lend to in such times of crisis. Other half is Finnish but with settled status,

That is the absolute dream for buying a house at a cheaper price, i just think the BoE will do all it can to make sure banks have mortgage debt available, as they're socialist cunts. 

If you've a good credit rating the banks will easily lend you 80% from prices that have dropped, as i doubt they envisage a 20% drop from these prices let alone a lower price.

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image.png.454c5926a744d6aa63804528c4faf575.png

I have to say I don't think that graph is anything other than wishful thinking by an inept Building Society which pays its Directors far too much money and savers far too little!

How the F**k did they get that red line? House prices are way out of touch with real wages and are just propped up by cheap debt and HTB. If you see a load more of that coming down the line, or your wages double, buy in. If not stand well clear.

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On 12/01/2020 at 19:36, No One said:

Best buy some silver now from Estonia whilst you can. Or have some delivered to wherever you go in Europe as a holidays destination so it arrives when you are there.

Found clarification... some good news...

Looks like the 0% vat rate for silver coins etc, purchased from the EU will not change during the UK's agreed withdrawal agreement plan time frame - currently this is 31st Dec 2020 (and can even be extended up to 2-years beyond that).

https://www.avalara.com/vatlive/en/vat-news/uk-to-leave-eu-vat-regime-31-dec-20200.html

Edited by JMD

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1 hour ago, NogintheNog said:

image.png.454c5926a744d6aa63804528c4faf575.png

I have to say I don't think that graph is anything other than wishful thinking by an inept Building Society which pays its Directors far too much money and savers far too little!

How the F**k did they get that red line? House prices are way out of touch with real wages and are just propped up by cheap debt and HTB. If you see a load more of that coming down the line, or your wages double, buy in. If not stand well clear.

I always thought the blue graph was inflation adjusted and the stupid red line trend price.

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3 hours ago, sancho panza said:

2) worht finding the postcodes you like,check the transaction levels in the postcode on RM,then divide the amount of stock on RM by the transaction levels in the postcode.gives a decent guide as to oversupply/undersupply.I would say 6-10 months is average.Over 10 months is a buyers market etc.

Great point Sancho, hadn’t really thought about this aspect much. Much to my horror, looks like there’s only about 4-6 months of stock (depending on postcode) going by the 12 month figures, so a tight market as things stand.

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5 hours ago, Barnsey said:

Sorry to keep banging on about housing, but do you think I’d be mad for offering 2010 price (when current owners bought in the dip) + RPI on a house I’ve seen which has probably had an extra £20k at least spent on it? Thankfully there’s tons of new builds around at a similar price to what their asking, which I hope I can use as a bargaining chip, even though in reality they’re pretty crap, but are the mid 90s built homes much better?

Everyone has an idea of what they’re willing to pay for a house, and I still feel like a bit of a numpty for already looking before recession, but if I can get 10-15% off a house in an area that’s “only” risen just above RPI in the past decade (which seems to be the standard measure of HPI) then maybe not a disaster providing I get a long mortgage fix below 3%. VERY conflicted right now but my patience is wearing incredibly thin. On the other hand could I live with myself if I committed now and then house prices even in a non bubbly area like this dropped 25%+

 

If it's a place you like as long term and were going to offer 10% off, try a lower offer to test the water.

I cannot see where 25%+ nominal drops are going to come from with the party of HTB securing such a large majority. After the election result I was expecting to see more sales and they have started to come through now. Some of the stuff hanging around for ages has shifted and a new on the market gone in 2 days.

Media/Estate agents will soon be pushing the Boris bounce which won't help you.

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Barnsey - As you are not buying an investment but a house to live in and develop in with your family find the best house in the best area within your budget. There is never a wrong time in life to start a family, buy a home etc. Just got on with life and enjoy it. To many people are putting their life on hold. Ignore how much something is but focus on the amount of debt you will have, how long will it take to pay off and will you be able to service the debt in the years ahead. If we are heading for an inflationary period get the best long term fixed mortgage and let the bond holder take the hit if inflation runs high. Hedge some of your debt within your ISA/SIPP with inflationary shares, gold and silver. Once a home debt free owner your perspective and out look on life changes. Wishing you and your family well 

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2 hours ago, NogintheNog said:

image.png.454c5926a744d6aa63804528c4faf575.png

I have to say I don't think that graph is anything other than wishful thinking by an inept Building Society which pays its Directors far too much money and savers far too little!

How the F**k did they get that red line? House prices are way out of touch with real wages and are just propped up by cheap debt and HTB. If you see a load more of that coming down the line, or your wages double, buy in. If not stand well clear.

You won't be surprised that Nationwide are using RPI for that red line, whereas real wage growth is measured by CPI, and even using this lower inflation figure they are still under that of the previous recession! So where I am, house prices over the past decade are about 3% above RPI, or 15% above CPI. I think 2010 was as good as it gets for house price reversion hence why I measure everything against that year.

Edited by Barnsey

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16 minutes ago, Barnsey said:

You won't be surprised that Nationwide are using RPI for that red line, whereas real wage growth is measured by CPI, and even using this lower inflation figure they are still under that of the previous recession! So where I am, house prices over the past decade are about 3% above RPI, or 15% above CPI. I think 2010 was as good as it gets for house price reversion hence why I measure everything against that year.

Bad though it is, that graph would be even worse on a per square foot basis...uk being the only western country where houses have 'shrunk' in recent decades.

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49 minutes ago, Agent ZigZag said:

Barnsey - As you are not buying an investment but a house to live in and develop in with your family find the best house in the best area within your budget. There is never a wrong time in life to start a family, buy a home etc. Just got on with life and enjoy it. To many people are putting their life on hold. Ignore how much something is but focus on the amount of debt you will have, how long will it take to pay off and will you be able to service the debt in the years ahead. If we are heading for an inflationary period get the best long term fixed mortgage and let the bond holder take the hit if inflation runs high. Hedge some of your debt within your ISA/SIPP with inflationary shares, gold and silver. Once a home debt free owner your perspective and out look on life changes. Wishing you and your family well 

I have said this many times before but it is worth repeating. Most of this stupid house price inflation started in 1996, i was 26 years old, i am now 50.

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16 minutes ago, Bobthebuilder said:

I have said this many times before but it is worth repeating. Most of this stupid house price inflation started in 1996, i was 26 years old, i am now 50.

It took me a while to work out how the game was to be  played were before  I sat on my hands twiddling my thumbs thinking about work progression and such rubbish. It is inaction that wastes time rather that getting on and having a go. The eureka moment for me came in about 2000, and I started to follow the money into property and have done very well out of HPI and property as a whole from buying selling refurbishing etc. If the next cycle is inflationary and migrates to industry I might change  course in my work and follow the money again. Health & Safety Officer doing Method Statements would suit be just fine. I would even consider moving North. The market is what it is and the ability to adapt to it and make the most is what is important.

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19 minutes ago, Agent ZigZag said:

It took me a while to work out how the game was to be  played were before  I sat on my hands twiddling my thumbs thinking about work progression and such rubbish. It is inaction that wastes time rather that getting on and having a go. The eureka moment for me came in about 2000, and I started to follow the money into property and have done very well out of HPI and property as a whole from buying selling refurbishing etc. If the next cycle is inflationary and migrates to industry I might change  course in my work and follow the money again. Health & Safety Officer doing Method Statements would suit be just fine. I would even consider moving North. The market is what it is and the ability to adapt to it and make the most is what is important.

Thats very true and comes down to interest rates and where governments direct spending.Rates have come down to nothing from 1982 and the Blair/Brown government directed the printed money to tax credits,housing benefit etc that sucked money into BTL.History will show the disaster that Brown was,but our job is to try to work out how it unravels.As the pendulum swings back we have to consider only how far rates go back up (after more cutting/QE first) and where government directs the printed money this time.The politics are pointing the way,but most people arent listening.

 

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