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

[MrXxxx]

21 minutes ago, Transistor Man said:

They’ve sold them, haven’t they? At a big loss. Should never have been allowed.

Oh well, they can only start to improve now then! :-)

[Transistor Man]

1 hour ago, MrXxxx said:

Oh well, they can only start to improve now then! :-)

80 million pound loss. 

[BoSon]

2 hours ago, MrXxxx said:

Don't know if I have got this completely wrong, but the Government embark on a massive spending/development plan (or propose to) and so the interest rate drops just in time to fix their borrowing at a low rate...then twelve months time and forward when the projects start wages/inflation/interest rates will start to rise...could you not pick a worst time to buy a property, as a best a 2-3yr fix will end at just the wrong time?!

Can get a 10 year fix for around 2.5% (though fees need to be taken into account) then look to overpay it significantly, so if interest rates do shoot up by the end of the fixed term the impact will be less than if on variable rate much sooner. If interest rates do rise significantly in a few years, put any surplus cash in savings at those higher rates and use to pay off the mortgage when the fixed term ends. Is this an idea worth pursuing?

What will force interest rates to rise? Whatever it is there's been no sign of it for over 10 years now. Why can't they keep things going as they are for another 10 years?

[Democorruptcy]

24 minutes ago, BoSon said:

Can get a 10 year fix for around 2.5% (though fees need to be taken into account) then look to overpay it significantly, so if interest rates do shoot up by the end of the fixed term the impact will be less than if on variable rate much sooner. If interest rates do rise significantly in a few years, put any surplus cash in savings at those higher rates and use to pay off the mortgage when the fixed term ends. Is this an idea worth pursuing?

What will force interest rates to rise? Whatever it is there's been no sign of it for over 10 years now. Why can't they keep things going as they are for another 10 years?

In the Tory manifesto

Quote

We will encourage a new market in long-term fixed rate mortgages which slash the cost of deposits, opening up a secure path to home ownership for first-time buyers in all parts of the United Kingdom

There's talk of a lifetime fixed rate mortgage might be something about it in the budget?

[TheCountOfNowhere]

32 minutes ago, BoSon said:

What will force interest rates to rise? Whatever it is there's been no sign of it for over 10 years now. Why can't they keep things going as they are for another 10 years?

Currency collapse, the £ the $ or the RMB. Any yuan of them should do it. 

 

[headrow]

New River Reit which has had a few mentions on this thread reported today . Good to see that dividend is going to be maintained next year , which was a worry to me. I like the quarterly dividend which was one of the reasons i have a few too many NRR shares. I think they are a very well run company too.

 

Real estate investment trust NewRiver maintained its third quarter dividend on Wednesday following a "resilient" operational performance during the period.

 

 

 

 

NewRiver REIT 

193.40

11:35 22/01/20

3.09%

5.80

Over the three months ended 31 December, NewRiver saw continued stability in its operational metrics - with an increase in retail occupancy to 96.1%, footfall outperforming the UK benchmark by 60 basis points and a healthy demand for the group's retail space after signing deals across 152,000 square feet, with long-term deals on terms ahead of previous passing rent and ERVs.

Over at the group's pub unit Hawthorn Leisure, NewRiver said like-for-like earnings before interest, taxes, depreciation and amortisation had risen 4.9% year-to-date, while pub occupancy inched forward to 97.9% from 96.9% at the end of the previous quarter.

As a result of the group's solid performance, NewRiver maintained its quarterly dividend of 5.4p per share, in line with the year before.

Chief executive Allan Lockhart said: "We were pleased with the robust Christmas trading performance of a number of our top 15 tenants, including Sainsbury's, B&M, Primark, Next and Iceland.

"With a clear strategy and a portfolio focused around occupiers providing convenience, value and services, we feel well-positioned to navigate our way through these challenging market conditions."

As of 0840 GMT, NewRiver shares were up 2.88% at 193p.

 

[BoSon]

Quote

 

In the Tory manifesto

There's talk of a lifetime fixed rate mortgage might be something about it in the budget?

 

Cool. Hopefully the rates go to zero or negative by the time these products are available. 

[TheCountOfNowhere]

It's a bubble after all. 

 

https://propertyindustryeye.com/uk-housing-market-is-a-bubble-with-help-to-buy-pushing-up-prices-warns-bank-strategist/

[BoSon]

2 hours ago, TheCountOfNowhere said:

Currency collapse, the £ the $ or the RMB. Any yuan of them should do it. 

 

Isn't it a managed global collapse of currencies so no one nation is affected any worse than the rest of the debt junkie riddled nations?

[TheCountOfNowhere]

35 minutes ago, BoSon said:

Isn't it a managed global collapse of currencies so no one nation is affected any worse than the rest of the debt junkie riddled nations?

Coulda been... But how do you account for the US raising/tightening 

[Barnsey]

7 hours ago, Sideysid said:

If DB is correct on interest rates dropping and holding for 18 months we can expect more of the same. Stagnation.

Without recession, yes, but we're well overdue one, all this bull about "the economic boom and bust cycle is over" is so incredibly dangerous that it makes my conviction even stronger that it will end in a deflationary bust. Question is, how much further can this record long expansion go on? I'll be the first to admit i've been absolutely worn out by it since the initial turbulence in 2016, little did I think 4 years on i'd still be sitting on my hands waiting for things to turn.

https://www.bloomberg.com/news/articles/2020-01-22/bridgewater-co-cio-bob-prince-says-boom-bust-cycle-is-over

Quote

Bob Prince, who helps oversee the world’s biggest hedge fund at Bridgewater Associates, says the boom-bust economic cycle is over.

The tightening of central banks all around the world “wasn’t intended to cause the downturn, wasn’t intended to cause what it did,” Prince, the co-chief investment officer of Bridgewater, said in an interview with Bloomberg TV at the Swiss resort of Davos. “But I think lessons were learned from that and I think it was really a marker that we’ve probably seen the end of the boom-bust cycle.”

 

[headrow]

Berkeley Group share price flying today. 10 years ago you could pick them up about 700p a share , 5547p today , only 2 months ago they were about 3500p. Amazing run up.

I presume it was quite a shorted share at one point , wouldn't like to be on the wrong side of that trade.

[DurhamBorn]

2 hours ago, TheCountOfNowhere said:

Coulda been... But how do you account for the US raising/tightening 

We had a fantastic talk about this about a year ago and the conclusion we came to was the Fed did it to give the dollar another cycle as the reserve currency.Inflict pain,but kills off talk of any new reserve currency.

3 hours ago, BoSon said:

Isn't it a managed global collapse of currencies so no one nation is affected any worse than the rest of the debt junkie riddled nations?

I think the next cycle will be yes,almost all currency will go down against assets,apart from maybe a few resource currencies.Its not managed though,its simply that everyone has the same problems.

[DurhamBorn]

Just did my oil road map today and its still showing as $43 target.Iv got ladders set in the oil stocks and some service ones,no need to change any and so that target doesnt matter really,just putting it out there again as thats the figure im seeing.Its based on liquidity flows and GDP moves v production and some other cross market data.There is a big snap back down the road as supply falls speed up past the demand fall though and its hard to pin down when that is.In affect the road map is saying set ladders to buy,expect falls ,but all ends well.Its a very tricky set up because you dont want to be out of the sector going forward,but there is danger before the cyclical turn.On those situations  im happy to take some losses on holdings and have ladders in place.Only real option to cover the bases.

DYOR etc etc.

[Calcutta]

20 hours ago, MrXxxx said:

And to cite the decline of another classic, has anyone seen what Lonely Planet guides are like since they were taken over by BBC publishing?...well at least the So-Called BBC are consistent, as their programmes are shite nowadays as well!

The LP used to be decent, it'd gone a bit shit but was still worth buying before Google maps. Then auntie bought it with my fucking money and stopped updating anything. Gave up with them after spending all day hiking around a Jakarta slum looking for a ferry booking office that had been misplaced on the map. Idiots. Threatened to go into their London office and shoot a load of them, got my Facebook deleted. 

[Noallegiance]

2 hours ago, Barnsey said:

Without recession, yes, but we're well overdue one, all this bull about "the economic boom and bust cycle is over" is so incredibly dangerous that it makes my conviction even stronger that it will end in a deflationary bust. Question is, how much further can this record long expansion go on? I'll be the first to admit i've been absolutely worn out by it since the initial turbulence in 2016, little did I think 4 years on i'd still be sitting on my hands waiting for things to turn.

https://www.bloomberg.com/news/articles/2020-01-22/bridgewater-co-cio-bob-prince-says-boom-bust-cycle-is-over

 

Is Bob Prince Scottish? With one eye?

[MrXxxx]

7 hours ago, BoSon said:

Can get a 10 year fix for around 2.5% (though fees need to be taken into account) then look to overpay it significantly, so if interest rates do shoot up by the end of the fixed term the impact will be less than if on variable rate much sooner. If interest rates do rise significantly in a few years, put any surplus cash in savings at those higher rates and use to pay off the mortgage when the fixed term ends. Is this an idea worth pursuing?

What will force interest rates to rise? Whatever it is there's been no sign of it for over 10 years now. Why can't they keep things going as they are for another 10 years?

Very wise BoSun, but how many buyers stretch themselves to the limit of borrowing?..can see them having anything spare at the end of the month to pay extra down, and that at all time low rates..what happens when they start to rise?

[Don Coglione]

Anyone know what happened to K&S today?

Should be another ladder hit, at least!

[headrow]

1 hour ago, Ponty Mython said:

Anyone know what happened to K&S today?

Should be another ladder hit, at least!

Berenberg had a broker note on it , gave it a 10 euro price target

 

[Lightscribe]

5 hours ago, Barnsey said:

Without recession, yes, but we're well overdue one, all this bull about "the economic boom and bust cycle is over" is so incredibly dangerous that it makes my conviction even stronger that it will end in a deflationary bust. Question is, how much further can this record long expansion go on? I'll be the first to admit i've been absolutely worn out by it since the initial turbulence in 2016, little did I think 4 years on i'd still be sitting on my hands waiting for things to turn.

https://www.bloomberg.com/news/articles/2020-01-22/bridgewater-co-cio-bob-prince-says-boom-bust-cycle-is-over

 

Exactly that and I agree with you. However you have to take into account the sheer denial of what the last decade has brought us with easy borrowing and low interest rates. It will come, but will painfully protracted out in the death throes, the majority of the population wants HPI forever and they have short memories. They can only go on what's been ingrained by others and the media. It's a slow oil tanker changing course.

[sancho panza]

On 21/01/2020 at 09:52, Ponty Mython said:

Blimey, Sancho, is that what they do at those Leicester hospitals?!

Circumspection,circumcision...... one small slip of the keyboard .......one large difference for the patient.

On 21/01/2020 at 11:32, DurhamBorn said:

HS2 is insane.Local metro systems on a loop would be far better linking provincial towns..The irony is they sell it as people wanting to get to London 20 minutes faster,when in 20 years it will be people wanting to be out of London 20 minutes faster.

Saw a news report saying the cost is going over£100bn......and thats before the actual overruns..politicians have forgotten the millenium dome.

DIn's suggestion below is bang on.

On 21/01/2020 at 12:14, DoINeedOne said:

https://audioboom.com/posts/1699786-rory-sutherland-at-the-spectator-s-stop-hs2-debate
 

Always been a big fan of Rory and his way of thinking, he is the vice chairman of Ogilvy Advertising and has some good books too on thinking differently, his view on HS2 why get there faster just put decent WIFI on trains be so much cheaper 

https://twitter.com/rorysutherland worth a follow if on twitter

 

On 21/01/2020 at 12:20, DoINeedOne said:

 

I've noticed big oilies selling off last few days.Exxon at $67..RDSB below £22.......hopefully there's more to come

On 21/01/2020 at 12:59, reformed nice guy said:

People are upgrading their phones less frequently. In my opinion phones seem to be one thing that people upgrade first. Most would rather have a good phone even if their garden is a mess, their furniture is getting a bit tatty and the wallpaper is starting to peel at the edges.

 

an old Hodges post

https://www.icis.com/chemicals-and-the-economy/2019/11/the-next-billion-phone-users-will-be-buying-10-smart-feature-phones-not-1000-iphones/

The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones

Smartphone sales are also seeing important shifts in market shares:

• Samsung has never recovered its 32% share in 2013 and is now around 21%
• Apple’s share has slid gently downwards from 18% in Q4 2016 to 12% today
• Low-cost Chinese companies, particularly Huawei, have been the big winners

The Top 3 Chinese companies’ share has nearly trebled from 12% in 2013 to 34% today.  And Huawei has gone from just 5% in 2013 to 18% in the same period.

 

[sancho panza]

 

On 21/01/2020 at 17:20, Starsend said:

They're not voting against the system by voting for the Tories, the Tories are part of the system. They think they're voting for change but they're voting for more of the same.

Thyeve voted against the sytem and the Tories were the beneficiaries on this occasion.Lot of Tories I know think they plaed a brilliant game but as per the analysis in the political betting thread @Democorruptcy a lot of the tories wins were jsut tory numbers going up slightly or staying flat but collapsing labour vote.

 

Personally I think the UK will get another populist right party.Tories aren't it. 

On 21/01/2020 at 19:14, Bobthebuilder said:

I do agree with you but,

For the tories to win so many traditional labour seats in the North was as close to a bloodless UK polictical revolution as you can get, only 1 bigger in my 50 years i think. Now if they do anything to help those ex labour areas remains to be seen but i do think a infrastructure revolution may come of all this.

Ps. I do think they were voting for something else as well but i will leave that for another thread.

I think we're headed for a period of political flux as long time tribal allegiances get left behind.lot of Northern/midlands labour voters are far more socialy conservative than the metorpolitian elite.

[sancho panza]

On 21/01/2020 at 00:40, DurhamBorn said:

@sancho panza   ,love that term in the article, "de-complexify".I keep saying you want to be at the basic stage in a reflation,but iv never really thought of it in the terms of de-complexify,but that really does explain the same thing.If your selling the potash you dont give a toss how Supermarkets set up their supply chains or who goes under.A lot of what we see from a macro point on a reflation is money pulling back from say a factory in China,to  someone laying fibre cables in Kendal.Iv never looked at that as anything other than a macro situation based on political need and the point in a cycle,but actually that as well is a "de-complexify" situation.Really fascinating way to look at it.Im going to try to think of some way to put this in to cross market work,maybe a score on complexity,lower the complexity,higher the score.

and @Democorruptcy

I thought on that articale a lot yesterday as I was driving around..Baby Panza has chicken pox hence off nursery.Took her to a local farm park which was quiet and ended up chatting with the farmers son who runs the place(30 odd,chemistry grad).Had an intersting chat (I used to work on  a dairy farm 25 years ago) about how the milking inudstry has gone really down hill, also how the grains side of their business has struggled.On the latter point he was saying that even when the crop was poor a couple of years back,the prices of grains stayed low because the gubbermint jsut went abroad and imported a lot..Hence why they opened a imho impressive little farm park with play area-nice catchment area for the wealthy bits of the county.Very tidy operation-they're fencingwas immacualte.Also talked about how shops can import fresh veg from Egypt and South africa ie low transport costs

 

Crucaily,he said some the prices  are similar in nominal terms to what they were getting in the 1970's.Seriously.......as we discussed,why would anyone farm in this country.

 

Which brings me to my point.Decompelxity.....basically,my view is that we are headed to much more regional markets primarily down to increased transport costs.This article has really altered the way I'm gauging the future in that as you allude DB,the way to trade this is not to worry about who's retail supply chain is more optimal,but rather protect yuourself witha decent position in the commodities that underpin the industry.

 

My big big take home from my chat with that farmer,is that I think we're long overdue a period of rampant food price inflation.The govt is worreid about a debt deflation hence they're facing the worng way.Their solution to prevent a debt deflation almost guarantees food price inflation at some point.

Potash and oil....potash and oil....

 

[Bobthebuilder]

19 minutes ago, sancho panza said:

.lot of Northern/midlands labour voters are far more socialy conservative than the metorpolitian elite.

Twas the same in the early 1980s, so many working class people voted for the milk snatcher.

On another note SP, what do you think of the 40% overdrafts coming in to force in April? Likely to pull a bunch of cash out the system?

[sancho panza]

2 minutes ago, Bobthebuilder said:

Twas the same in the early 1980s, so many working class people voted for the milk snatcher.

On another note SP, what do you think of the 40% overdrafts coming in to force in April? Likely to pull a bunch of cash out the system?

Intrigued Bob,hadnt heard about it.Whats the 40% for?any links?