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

[sancho panza]

 

 

2 hours ago, Agent ZigZag said:

Odey asset management up 10% last month. They were betting against the market for a fall. The media in my opinion is over playing this virus

 

[Democorruptcy]

8 hours ago, sancho panza said:

But we didn't get price inflation in the things people buy with cash particularly and this iw ehre the devil is in the detial of the inflation figures.Before I go full Shaun Richards,what I mean is that when food and fuel start going up relentlessly,the itcan't be ignored.When it's the price of shitty sofas bought on credit or clothes bought on plastic.

You cannot be in the DOSBOD's skinflinterati or maybe you were on a long holiday abroad? 

UK pump prices Aug 2010 Petrol 1.15 Diesel 1.17, gradual climb all the way through to Apr 2012 Petrol 1.42 Diesel 1.48

I felt everything (except the interest rate on devalued savings) was shooting up including food.

[BearyBear]

Good explanation on how the repo market works

 

[onlyme]

8 hours ago, sancho panza said:

But we didn't get price inflation in the things people buy with cash particularly and this iw ehre the devil is in the detial of the inflation figures.Before I go full Shaun Richards,what I mean is that when food and fuel start going up relentlessly,the itcan't be ignored.When it's the price of shitty sofas bought on credit or clothes bought on plastic.

Mentioned high end extension builder mate of mine on another thread, met him the other day and asked about his business - good client base and busy, problem he said was material cost up 65% in two years. Now he uses a lot of expensive and difficult to get materials - quality natural stone and alike, each job is bespoke and priced individually so he will know the pricing. Insulation is a ridiculous price and the requirements keep going up for that. There has been price inflation in all sorts in waves across many sectors over the last couple of decades, just not hit us in one fell swoop. Where price have kept low the product quality is often shocking - recent experience with a fair bit of plumbing - flimsy crap that needs loads of additional work to support, products that need additional work to finish them off properly so they work or additional pieces / workarounds - things like seals (junk being supplied that doesn't work), all a bi tof a nightmare, 50% of the time you are buying something at the cheap end that you know is not going to work out of the box.. Lot of price gouging across the trade suppliers, shop around and you can get reasonable pricing but a lot of additional hassle. Around 2000 cars were very cheap from the new breed of trade sales outlets, compare pricing from then to now, PCP's are cheap but RRP's and retail prices are way above what they were.

[Harley]

8 hours ago, Bear Hug said:

That suggests to me that a lot of their business is annuities rather than life insurance etc. 

LG has been "buying" company pension books.  Higher mortality can be good for them.

[Bobthebuilder]

20 minutes ago, onlyme said:

the product quality is often shocking - recent experience with a fair bit of plumbing - flimsy crap that needs loads of additional work to support, products that need additional work to finish them off properly so they work or additional pieces / workarounds - things like seals (junk being supplied that doesn't work), all a bi tof a nightmare, 50% of the time you are buying something at the cheap end that you know is not going to work out of the box

This.

You can buy a Flowplast p trap for £3.50 the chances are its going to leak, or a Mcalpine one for £14 that will not leak ever.

I noticed up thread people were discussing boilers, Worcester v Baxi etc. I think the best boiler on the market is Vaillant Ecotec plus 800 series, not only is it a great boiler but easy to service and repair, lots of upgrade parts available.The Baxi 600 is a good budget boiler but whats brass in the vaillant is plastic on the Baxi. Twice the price though.

[Majorpain]

https://www.bbc.co.uk/news/business-51746564

I did say that the "bailout" was a waste as good businesses don't get into such dire situations in the first place.  2 months later and Flybe is out of cash again....

Granted a certain virus isnt helping.

[DurhamBorn]

10 hours ago, Bear Hug said:

@DurhamBorn you have previously mentioned life insurers.L&G supposedly had good results today - made some money on mortality being heavier than expected. Bounced up a little, then drifted down again.

That suggests to me that a lot of their business is annuities rather than life insurance etc. 

However, in the industry, it looks like mortality improved last year, so position could end up worse once the figures feed through into assumptions. None of this allows for coronavirus. If it ends up spreading, then certainly pensions funding would improve. That also includes the likes of bt

When gilts hit 10% companies that get through the bust should be able to get their pensions under control.Thats why they are all trying to link increases to 5% max,or lower etc.Insurers will be big winners in a reflation,the problem is getting through the bust.I dont own any and wont be buying at this stage.

[DurhamBorn]

2 hours ago, Democorruptcy said:

You cannot be in the DOSBOD's skinflinterati or maybe you were on a long holiday abroad? 

UK pump prices Aug 2010 Petrol 1.15 Diesel 1.17, gradual climb all the way through to Apr 2012 Petrol 1.42 Diesel 1.48

I felt everything (except the interest rate on devalued savings) was shooting up including food.

Broccoli went crazy back then,went to £1 in Morrisons,thats when Aldi got a real boost when they had it at 65p.

[DurhamBorn]

1 hour ago, Harley said:

LG has been "buying" company pension books.  Higher mortality can be good for them.

Yes and given they have the data better than anyone it is another sign we are nearing the end of the interest rate/gilt cycle.They would love a good old virus spreading ,there is a book in there somewhere,insurance company buys up all the pensions,then kills the pensioners with a mystery virus developed in a factory in China.

[Democorruptcy]

8 minutes ago, DurhamBorn said:

Broccoli went crazy back then,went to £1 in Morrisons,thats when Aldi got a real boost when they had it at 65p.

Morrisons seem think all fruit and veg should be a £1 minimum, 50% more expensive than Aldi is quite common.

Noticed a bit of shrinkflation this week. McVitie's Gold Bars (one for @Errol) still 7 in a pack but now 18.3g from 22.7g so a 16% price increase disguised.

[Harley]

1 hour ago, Bobthebuilder said:

You can buy a Flowplast p trap for £3.50 the chances are its going to leak, or a Mcalpine one for £14 that will not leak ever.

100%.  Plumbing parts like that are probably the most noticeable sign of this phenomena.  Oh, and thin copper pipe and meat pies!

[Harley]

11 hours ago, sancho panza said:

OIH at 20 year low.Impressive piccy.

M, W, and D technicals still weak but must bottom soon, although MCAD still not at its historic low!  I'm soooo bored waiting!

PS: FTSE down today as expected.  Each of my income stocks is being taken out around back.  ITV today.  I should be trading this as would have done well but I've got to work on the allotment!

[DurhamBorn]

1 hour ago, Harley said:

100%.  Plumbing parts like that are probably the most noticeable sign of this phenomena.  Oh, and thin copper pipe and meat pies!

Meat pies.My local butcher does amazing large pies £3.50,mince,steak and corned beef.Buy loads of them as they are full of quality meat.Works out a cheap meal with a load of veg are i make my own steeped peas).

Im not a chartist Harley,but a 15% bounce by August isnt out of the question in the indexes.A lot of my indicators are simply too stretched now.This might take down a few companies though as we would expect.Too much debt meets a quick snap down in demand.

Im sticking to my ladders though and iv added a few new ones.

[Democorruptcy]

1 hour ago, Harley said:

M, W, and D technicals still weak but must bottom soon, although MCAD still not at its historic low!  I'm soooo bored waiting!

PS: FTSE down today as expected.  Each of my income stocks is being taken out around back.  ITV today.  I should be trading this as would have done well but I've got to work on the allotment!

Your veg is becoming a lot more expensive than Morrisons.

[sancho panza]

 

5 hours ago, Democorruptcy said:

You cannot be in the DOSBOD's skinflinterati or maybe you were on a long holiday abroad? 

UK pump prices Aug 2010 Petrol 1.15 Diesel 1.17, gradual climb all the way through to Apr 2012 Petrol 1.42 Diesel 1.48

I felt everything (except the interest rate on devalued savings) was shooting up including food.

My apologies,I didn't mean to demean anyone's expereince of those times.That was a period of considerable dollar weakness rather a period of rising input costs more genreally eg labour.

4 hours ago, onlyme said:

Mentioned high end extension builder mate of mine on another thread, met him the other day and asked about his business - good client base and busy, problem he said was material cost up 65% in two years. Now he uses a lot of expensive and difficult to get materials - quality natural stone and alike, each job is bespoke and priced individually so he will know the pricing. Insulation is a ridiculous price and the requirements keep going up for that. There has been price inflation in all sorts in waves across many sectors over the last couple of decades, just not hit us in one fell swoop. Where price have kept low the product quality is often shocking - recent experience with a fair bit of plumbing - flimsy crap that needs loads of additional work to support, products that need additional work to finish them off properly so they work or additional pieces / workarounds - things like seals (junk being supplied that doesn't work), all a bi tof a nightmare, 50% of the time you are buying something at the cheap end that you know is not going to work out of the box.. Lot of price gouging across the trade suppliers, shop around and you can get reasonable pricing but a lot of additional hassle. Around 2000 cars were very cheap from the new breed of trade sales outlets, compare pricing from then to now, PCP's are cheap but RRP's and retail prices are way above what they were.

It's interesting to hear these anecdotals.My alram chap has refused to buy and install an outsdie light(you know the movement sensor ones) beacuse he says they're all shit (mainly leaky seals)and he'll only have to come back and replace it.Told me to buy one,he'll fit it when he does the maintenance.

Onshoring will ramp up psot corona virus stand down.

[sancho panza]

2 hours ago, Majorpain said:

https://www.bbc.co.uk/news/business-51746564

I did say that the "bailout" was a waste as good businesses don't get into such dire situations in the first place.  2 months later and Flybe is out of cash again....

Granted a certain virus isnt helping.

Interesting to see what's going to happen to some regional airports

[onlyme]

5 minutes ago, sancho panza said:

It's interesting to hear these anecdotals.My alram chap has refused to buy and install an outsdie light(you know the movement sensor ones) beacuse he says they're all shit (mainly leaky seals)and he'll only have to come back and replace it.Told me to buy one,he'll fit it when he does the maintenance.

Onshoring will ramp up psot corona virus stand down.

They are a real hassle, especially as when they fail often they will trip whole house electrics (RCD), not predictably either and is a cause of lots of nuisance tripping - any electrics outside are a major case of that. A few things you can do. Don't wire in a light direct to the the outgoing feed - wire in via an IP65 sealed enclosure - they are generally good, even the cheap ones, increases the clutter and looks a little unsightly but it makes changing the light easier and quicker - you can wire up a suitable tail to the light on the ground and much easier to do a proper job rather than up on the ladder. Second install the light under a deep overhang where possible or put a metal hood over the light to prevent direct rain hitting it. Third go for a sealed/potted unit - the newer led type, with a pig tail sealed (hopefully properly) from the factory - this type needs the enclosure  to make a easy sealed connection. Another thing to do is fit an isolating switch (fan switch) inside the house, if the outside light fails and becomes wet you can then safely isolate the light and it won't cause the RCD to trip. Making the whole lot serviceable as above will increase the initial cost but reduce any ongoing maintenance cost.

[sancho panza]

2 hours ago, Harley said:

M, W, and D technicals still weak but must bottom soon, although MCAD still not at its historic low!  I'm soooo bored waiting!

PS: FTSE down today as expected.  Each of my income stocks is being taken out around back.  ITV today.  I should be trading this as would have done well but I've got to work on the allotment!

OIH contains larger proportions of the bigger stocks .7 top stocks are 55% of the ETF.SLB 20%.....XES is more spread out.I've looked at these cahrts on the monthlies and see no reason to buy yet,I'd rather the bottom was behind us.

 

Does make you wonder if it's worth sticking to the companies over $5bn MC

XOP?FCG have a similar problem,supsect a good few will go under leaving the profitable ones to prosper

 

 

 

[sancho panza]

Worth noting that The United Grand Lodge of England have asked the Brethren(Freemasons) to stop shaking hands due to Coronoa Virus.....................you couldn't make this up.

[BearyBear]

13 minutes ago, sancho panza said:

Interesting to see what's going to happen to some regional airports

 

Terrifying..! Thanks for posting.

[Loki]

On 27/02/2020 at 16:04, DurhamBorn said:

My oil work when it was $60 said $60,$43,$71,$18,$280

Oil goes below $18 in the above during the deflation ,the paper market that is,and very short term,maybe a day,maybe an hour,maybe a week.Gold i havent re-done but my roadmap is roughly $1700,$1050,$9700,Silver $22,$9,$270

I was just having a look at some other bits and pieces and noticed this chart

Is there a chance we've already had the rise and fall, or is your roadmap system firmly forward-facing? 

[Bobthebuilder]

Two articles in this months gas engineer magazine about converting to Hydrogen. Tests currently underway on a 80% to 20% mix on existing boilers and tests on conversion kits to run existing on  100% .

States all new boilers from 2025 to be hydrogen ready but will work fine on natural gas if the infrastucture is not ready in time.

Also mentions green hydrogen from steam methane reformation and blue hydrogen from electroiysis. New boilers will be able to work on both.

Ends saying hydrogen will become part of our ongoing training in the gas industry. (phew).

[DurhamBorn]

39 minutes ago, Loki said:

I was just having a look at some other bits and pieces and noticed this chart

Is there a chance we've already had the rise and fall, or is your roadmap system firmly forward-facing? 

Im doing nothing on gold at the moment.My old road map says $1700ish then down to $1100,but iv dont nothing on it for ages and wont be.Im more interested in oil and energy at the moment.Obvious the deflation crash is ongoing now,and there must be massive amounts of debt about to fail.The CBs should give the markets a jump up before the real fun and games,but not certain.

Brutal out there,and due to the dis-inflation cycle being so long,companies simply dont have the margins to cover them.Survival is the key now.Get through and its inflation all the way.

[JMD]

2 hours ago, sancho panza said:

Interesting to see what's going to happen to some regional airports

Flybe's routes will be taken up by others as most were profitable, unlike Flybe itself which many in the industry think, despite FlyBe's dominance, still chose to operate a peculiarly aggressive ticket pricing policy. The 'joke' for many years has been that domestic fights were cheaper than using the train - well it was Flybe that was mostly responsible for that situation. Perhaps this will mean investment opportunities in regional airport companies/competitor airlines, particularly when ticket prices rise once the competitor airline takes over the old routes? 

Then again - and a much more interesting question - much depends on our new government's policy. Most regional airports say they could expand their business if given permission to extend runways in order to take larger planes. So with the Heathrow expansion dead - It will be very telling to see what government thinking on the future of air travel actually is - i.e. it would seem very politically prudent to boost regional (airport) economies, especially in the north. But will this be possible with XR/legal rulings, etc, in the nay corner ...I'm still left wondering if any future road/airport infrastructure projects will ever be built again in the UK?