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

[Castlevania]

1 hour ago, Bricormortis said:

Got 2 arms.

Nah its one upstairs and one downstairs.  That's what I do.

That’s a bit extravagant.

[Harley]

2 hours ago, kibuc said:

They got £10k from inharitance some time ago, so obviously they spent it all on two cordless vacuum cleaners, new bikes and expensive holidays aaaaaaand it's gone.

5% div on £10k should buy you a decent vacuum cleaner, each year, forever!

[Democorruptcy]

Fuel duties are 4% of total governbankment receipts, so they will have to replace that.

If you are driving to work in the rush hour you don't pay as much tax because you pay tax when you get there? 

It would focus the mind about off peak fun runs in a car.

Quote

 

Britain needs a new approach to taxing motorists as the move toward electrical vehicles threatens billions of pounds of government revenue, a think tank warned.

Fuel duties raise 28 billion pounds ($35 billion) - almost 4% of total government receipts - and all of that will disappear in coming decades unless action is taken, the Institute for Fiscal Studies said in an analysis published Friday.

The commitment to reaching zero net emissions by 2050 represents “a huge long-run fiscal challenge” for the government, which has already foregone almost 20 billion pounds a year by freezing duties to help people struggling with the cost of living, the IFS said.

A further 1 billion will be lost if reports that Boris Johnson is planning to cut duties by 2 pence per litre of fuel prove correct.

New motoring taxes should reflect distance driven and vary according to when and where journeys take place, the IFS said.

https://www.hl.co.uk/news/2019/10/4/billions-at-risk-as-britain-moves-away-from-fuel-burning-cars

 

 

[Barnsey]

 

[Democorruptcy]

1 hour ago, Bricormortis said:

Got 2 arms.

Nah its one upstairs and one downstairs.  That's what I do.

Do you use the upstairs one for just the top half of the stairs and the downstairs for the bottom half? Otherwise there seems little point.

[sleepwello'nights]

2 hours ago, kibuc said:

 

Didn't have Harrods in Poland, but used to look in the bedroom window of my neighbour. Wouldn't fancy dropping by and trying some now though, probably way past the expiry date...

Pervert!, well peeping tom at least 

[sleepwello'nights]

12 minutes ago, Harley said:

5% div on £10k should buy you two decent vacuum cleaners, each year, forever!

Fixed

[sleepwello'nights]

Is this the start or a false dawn? I suspect a false dawn. 2020 is when the consensus seems to suggest the inevitable downturn starts. We seem to be wishing it on, maybe we are seeing straws in the wind though.

I was listening to an interview on Kitco this morning and the interviewee speculated on what would happen if Trump was not elected in the next presidential election. In his opinion if a Democratic candidate like Elizabeth Warren won then apart from the social unrest the economy would be subjected to increases in government expenditures.

Maybe some of the expenditure would be directed to infrastructure projects. Isn't this something that Trump has proposed anyway. Perhaps civil engineering companies would make sensible companies to invest in?

How would Trump losing affect our investments in the UK? I have no real wish to invest outside the UK, I don't even know where or want to start looking. 

Again I am in the dilemma of whether to commit some more cash into stock picking or whether to keep on the side lines until there is a sharper fall. Just like I've done for so long now, kicking myself for missing the surge in 2016!

DB you've suggested UK cyclical stocks at present, these are all dependent on consumer expenditure, if a recession occurs then consumer expenditure will fall. I don't understand your perspective? https://uk.tradingview.com/markets/stocks-united-kingdom/sectorandindustry-sector/consumer-cyclicals/ 

[onlyme]

49 minutes ago, sleepwello'nights said:

Is this the start or a false dawn? I suspect a false dawn. 2020 is when the consensus seems to suggest the inevitable downturn starts. We seem to be wishing it on, maybe we are seeing straws in the wind though.

I was listening to an interview on Kitco this morning and the interviewee speculated on what would happen if Trump was not elected in the next presidential election. In his opinion if a Democratic candidate like Elizabeth Warren won then apart from the social unrest the economy would be subjected to increases in government expenditures.

Maybe some of the expenditure would be directed to infrastructure projects. Isn't this something that Trump has proposed anyway. Perhaps civil engineering companies would make sensible companies to invest in?

How would Trump losing affect our investments in the UK? I have no real wish to invest outside the UK, I don't even know where or want to start looking. 

Again I am in the dilemma of whether to commit some more cash into stock picking or whether to keep on the side lines until there is a sharper fall. Just like I've done for so long now, kicking myself for missing the surge in 2016!

DB you've suggested UK cyclical stocks at present, these are all dependent on consumer expenditure, if a recession occurs then consumer expenditure will fall. I don't understand your perspective? https://uk.tradingview.com/markets/stocks-united-kingdom/sectorandindustry-sector/consumer-cyclicals/ 

Could be quicker than that if impeachment sticks, didn't the DOW puke when Clinton was impeached?

Looks like it recovered afterwards but thie recovery was during the massive tech boom associated with Y2K and the vast numbers of people (and companies) that joined the internet at the time. You could argue to potential social situation with  a Trump impeachment would dwarf any effect the Clinton one had. 

 

[Majorpain]

25 minutes ago, onlyme said:

Could be quicker than that if impeachment sticks, didn't the DOW puke when Clinton was impeached?

Looks like it recovered afterwards but thie recovery was during the massive tech boom associated with Y2K and the vast numbers of people (and companies) that joined the internet at the time. You could argue to potential social situation with  a Trump impeachment would dwarf any effect the Clinton one had. 

 

Impeachment is a godsend for Trump IMO, he can pin the market crash (which is coming anyway) on the Democrats who are walking into a giant neon sign lit trap.

Don't interrupt your enemies when they are making a mistake!

[CVG]

40 minutes ago, Majorpain said:

Don't interrupt your enemies when they are making a mistake!

Absolutely. That's why Churchill didn't support assassination attempts on Hitler in the latter half of the war.

[janch]

https://www.zerohedge.com/geopolitical/will-drive-devalue-dollar-lead-plaza-accord-20

I had to look up what the Plaza Accord was:

"The Plaza Accord is a 1985 agreement among the G-5 nations—France, Germany, the United States, the United Kingdom, and Japan—to manipulate exchange rates by depreciating the U.S. dollar relative to the Japanese yen and the German Deutsche mark."

 

 

@DurhamBorn Do you think anything like this could happen again and how would this affect the roadmap?  Would we still get a collapse?

 

 

               

[sancho panza]

19 hours ago, Castlevania said:

Shorting is a medium term game. Even if you pick the right dogs you can be short for a good few years before anything happens. Then it happens all at ounce.

I tend to only stay in for a month with stops generally around 10% off.Ladder in as well..Same with short term longs though 

14 hours ago, Errol said:

Probably the biggest news of the day:

 

RUSSIA'S ROSNEFT SETS EUROS AS DEFAULT CURRENCY IN ALL ITS EXPORT CONTRACTS || ROSNEFT ASKS FOR EURO PAYMENTS FOR EXPORT GOODS INCLUDING OIL, OIL PRODUCTS, PETROCHEMICALS, LIQUEFIED PETROLEUM GAS || ROSNEFT STARTED TO ASK FOR EURO AS DEFAULT CURRENCY FROM SEPTEMBER

https://www.bloomberg.com/news/articles/2019-10-02/russian-oil-giant-rosneft-asks-traders-to-pay-in-euros-for-crude

It's a sign of the times but I don't see the full dollar crisis starting until this next big recession is over.Canary in the colamine though.

 

7 hours ago, Ash4781b said:

The much discussed Intu Plc looks to have had a torrid time recently. So-called is today pushing a news article that John Lewis are after rent/service charge reductions so this will be the ‘prime’ sites. Whether any Intu properties are involved i’m not sure.

 

How the mighty are fallen.Still wouldn't touch them at this level Ash.

2 hours ago, sleepwello'nights said:

Is this the start or a false dawn? I suspect a false dawn. 2020 is when the consensus seems to suggest the inevitable downturn starts. We seem to be wishing it on, maybe we are seeing straws in the wind though.

 

 

Recessions sometimes only become evident 6 months after they've started.I'm with you on the 2020.Don't think it's now and that's the way we're positioned as well.

Buying some more oilies/potash/oil services today.

1 hour ago, Majorpain said:

Impeachment is a godsend for Trump IMO, he can pin the market crash (which is coming anyway) on the Democrats who are walking into a giant neon sign lit trap.

Don't interrupt your enemies when they are making a mistake!

Agreed MP.He's a chameleon and will turn the situation around on the opposition every time.It's amazing that the Dems are wlaking into his trap with this impeachment attempt.Wouldn't surprise me if the whistelblower wasn't really a whistelblower.

[sancho panza]

@DurhamBorn  @Harley @anyone else.

 

 Am keen to buy some CDI's for foreign stocks.Any idea how I locate them on sites like Interactive and HL?

Just keep getting offered the foreign stocks.Doesn't bother me if I can convert into dollars like on II but otherwise it's 1% a side in forex fees.

 

Looking at setting up interactive and saxobank as well but would like to buy CDI's if I can.

 

Thanks in advance fi you can shed light

 

 

 

https://wolfstreet.com/2019/10/03/as-orders-collapse-heavy-truck-manufacturers-start-layoffs/

Orders of Heavy Trucks Collapse, Layoffs Start

by Wolf Richter • Oct 3, 2019 • 6 Comments • Email to a friend

“Fleets are nervous. The latest manufacturing and construction numbers are concerning. The trade issue with China looms.”

Layoff decisions by heavy-truck manufacturers are trickling out. A couple of days ago, it was Daimler-owned Freightliner, which said in a statement to WBTV that it would “adjust its production output in line with lower market demand and release approximately 450 production workers [out of 2,878 employees] at its Cleveland manufacturing plant based in Cleveland, North Carolina, and approximately 450 workers [out of 1,714 employees] in Mt. Holly, North Carolina, effective October 14, 2019.” These layoffs represent 16% and 26% of the workforce at the respective plants.

Orders for heavy trucks, after a red-hot period that ended in the fall of 2018, have been in a horrific plunge. In September 2019 compared to September last year, truck makers received about 12,100 orders for Class-8 trucks, down 71% from a year ago, according to preliminary estimates by FTR Transportation Intelligence. It was the 11th month in a row of year-over-year declines, including July and August plunges of 80%:

“Fleets are moving around, or canceling orders previously placed but are not ordering many new trucks for Q4 delivery,” FTR said in the statement. “Carriers have not begun ordering for 2020 requirements yet, due to the tariffs and the economic uncertainty.”

Class-8 orders “are stuck at the bottom of the cycle,” said FTR vice president, commercial vehicles, Don Ake, adding: “Fleets are nervous. Freight growth continues to ease back. The latest manufacturing and construction numbers are concerning. The trade issue with China looms. In this environment, fleets see no reason to begin ordering for 2020 until Q4.”

The shipment boom in 2017 and 2018, as a result of front-running potential tariffs, triggered rumors of a “capacity crisis” among trucking companies, which then engaged in a historic ordering boom in 2018 to expand their capacity to be able to handle the shipment boom. But then in late 2018, overall freight shipments in the US suddenly began to fall, and have fallen ever since, and it was over.

The chart shows this boom in orders for Class-8 trucks and then the sharp drop-off in orders down to historically low levels where they appear to have gotten “stuck”:

As a result of the historic ordering boom in 2018, truck makers accumulated an equally historic backlog for building 2019 models, and the subsequent collapse in orders that started late last year was buffered by this backlog, and truck deliveries hit record highs months after orders had begun to collapse.

Truck makers recognize a sale when the truck is delivered to the customer, which is months after the truck was ordered. For the industry overall, truck sales, as measured in deliveries, surged during 2018 and into 2019, to hit 47,300 deliveries in July (seasonally adjusted), surpassing the peak before the Financial Crisis, according to data by the  Commerce Department.

But in August, deliveries fell, and in September deliveries fell again, to 41,800 (seasonally adjusted), down 4.6% from September last year, the first year-over-year decline since the March 2017. These deliveries are still all 2019 models for which orders closed some time ago:

Truck makers don’t disclose their order backlogs. But when production cuts and layoffs start, it’s safe to assume that much of the order backlog has been built and delivered. Now deliveries are declining, and the layoffs are starting.

This is likely what is happening at Freightliner, where layoffs are set to begin on October 14. The company said in its statement to WBTV, referring to the order boom last year, and its untimely end:

This levelling-off in the market requires us to adjust our production levels to meet the normalized demand and therefore reduce our current build rates and employment levels at these locations. We have already witnessed some of our industry competitors making changes in their production plans and employment levels to accommodate.

Daimler also owns Western Star, and their industry competitors are Peterbilt and Kenworth, divisions of Paccar [PCAR]; Navistar International; and Mack Trucks and Volvo Trucks, divisions of Volvo Group. Navistar already announced layoffs in its medium-duty truck division.

What’s next for truck makers? Note Freightliner’s description of “normalized demand.” This is probably an accurate description of a market that had been totally distorted by the tariff-frontrunning boom, and now struggles with the harsh return to “normal.” The cyclicality of this industry is legendary, but even for this cyclical industry, the ordering boom in 2018 and the current order collapse is extreme.

As the backlog dwindles further, there will be further production cuts and layoffs until capacity is roughly in line with incoming demand for trucks.

The level of orders over the past five months in the 10,000 to 13,000-unit range is catastrophically low – about half of the industry capacity – and is likely a counter-reaction to the boom. At some point, the excesses will be worked off, and this catastrophically low level of orders will tick higher. But the cloud 9 that truck makers had been on until summer this year will likely not return anytime soon.

[Bricormortis]

3 hours ago, Democorruptcy said:

Do you use the upstairs one for just the top half of the stairs and the downstairs for the bottom half? Otherwise there seems little point.

I have numatic vacuum downstairs it's very bulky and heavy. I was gifted a lighter vax by someone returning to Sweden, so now I'm living the dream.the vax is upstairs.   Being a bloke I avoid vacuuming stairs. If I really need attend to the stairs i will likely only do half at any one time.

[Harley]

32 minutes ago, sancho panza said:

Am keen to buy some CDI's for foreign stocks.Any idea how I locate them on sites like Interactive and HL?

Very nice to have you back.  Are these GDRs (Global Depository Receipts)?  I use Trading View to get stock symbols and they list GDRs, indeed all market listings for a given company.  Not sure  you need a sub but I'll do it if needed.

[JMD]

19 hours ago, Democorruptcy said:

I don't think it's quite the same. For one thing a utility company could be nationalised and shareholders paid below market value.

re. dividend paying utility stocks as bond proxies...

Democorruptcy, I genuinely appreciate the feedback if I've said something stupid there. But in the context of this forum I had genuinely considered this to be one of my take-aways from visiting here. Am I wrong?

I admit my use of the term 'proxy' is pretty loose (maybe should have used the 'alternative' safe word!). But the next cycle, along with big gov. spending projects, will greatly favour telecoms/energy providers/etc, with these types of companies being the sector bedrock. As always selecting which ones, and getting them cheap/unleveraged is the challenge.

     

      

[sancho panza]

7 minutes ago, Harley said:

Very nice to have you back.  Are these GDRs (Global Depository Receipts)?  I use Trading View to get stock symbols and they list GDRs, indeed all market listings for a given company.  Not sure  you need a sub but I'll do it if needed.

I'm after foreign shares that can be traded in sterling.Would that be GDR's?

Appreciate any help.

 

eg this investing.com listing for Reposl

https://www.investing.com/equities/repsol-ypf?cid=948827

 

 

[spygirl]

US job figures are still coming in very strong.

US has run out of employable people.

Companies are doing job fairs in prisons.

[sancho panza]

14 minutes ago, Harley said:

Very nice to have you back.  Are these GDRs (Global Depository Receipts)?  I use Trading View to get stock symbols and they list GDRs, indeed all market listings for a given company.  Not sure  you need a sub but I'll do it if needed.

Cheers Harley.Was spending too much time on here.......

[JMD]

16 hours ago, dgul said:

I'm actually quite frightened by what might happen.

See, the theory is that you can't miss what you've never had -- hence TPTB have supported things like asset prices (ie, people don't see losses), but have let people without assets suffer (ie, those people don't really miss things like houses or pensions that they've never had).

This time we'll see people losing houses and pensions -- that's bad enough.

But we'll also see those people that 'didn't have anything' losing their access to nice cars etc.  

I think crime will go through the roof.

Don't worry I think the government has got our backs!... what with those extra 20,000 police in next 3 years (was Boris an early adopter with his London water cannons?). Then again, I dought such big spending/reversal commitments are just down to recent crime spikes... its almost as if they know 'troublesome events' are ahead... perhaps we should be frightened after all.

 

 

[CVG]

9 hours ago, DurhamBorn said:

You got Drax Barnsey?

Too late now! Just up 13% today!

Shares of some UK power companies gain after Reuters
report the European Commission set to approve UK billion-pound
power backup plan
    ** Drax Group  DRX.L  jumps >10%, Centrica  CNA.L  rises
2.8% and SSE  SSE.L  adds 2.2%
    ** European Commission is set to give go-ahead for power cos
to get roughly 1 bln pounds  ($1.23 billion) to help bear
maintenance cost in case of outages, Reuters report citing
sources  urn:newsml:reuters.com:*:nL5N26P2SM

[Harley]

1 hour ago, sancho panza said:

I'm after foreign shares that can be traded in sterling.Would that be GDR's?

Appreciate any help.

 

eg this investing.com listing for Reposl

https://www.investing.com/equities/repsol-ypf?cid=948827

I had a look.  Not on Trading View but I found a weekly EQS list on the LSE website which contains it:

https://www.lseg.com/areas-expertise/our-markets/london-stock-exchange/equities-markets/trading-services/domestic-trading-services/european-quoting-service

Gives the code but not sure which brokers would trade it.

Me, I use a broker which supports multi-currency accounts and buy closer to the real exchange, although you can't hold currency balances in an ISA (but can buy stocks on a "recognised" exchange) but can in a SIPP.

58 minutes ago, CVG said:

Too late now! Just up 13% today!

Shares of some UK power companies gain after Reuters
report the European Commission set to approve UK billion-pound
power backup plan
    ** Drax Group  DRX.L  jumps >10%, Centrica  CNA.L  rises
2.8% and SSE  SSE.L  adds 2.2%
    ** European Commission is set to give go-ahead for power cos
to get roughly 1 bln pounds  ($1.23 billion) to help bear
maintenance cost in case of outages, Reuters report citing
sources  urn:newsml:reuters.com:*:nL5N26P2SM

Poo, been umming about that one for a while.

[DurhamBorn]

4 hours ago, sleepwello'nights said:

Is this the start or a false dawn? I suspect a false dawn. 2020 is when the consensus seems to suggest the inevitable downturn starts. We seem to be wishing it on, maybe we are seeing straws in the wind though.

I was listening to an interview on Kitco this morning and the interviewee speculated on what would happen if Trump was not elected in the next presidential election. In his opinion if a Democratic candidate like Elizabeth Warren won then apart from the social unrest the economy would be subjected to increases in government expenditures.

Maybe some of the expenditure would be directed to infrastructure projects. Isn't this something that Trump has proposed anyway. Perhaps civil engineering companies would make sensible companies to invest in?

How would Trump losing affect our investments in the UK? I have no real wish to invest outside the UK, I don't even know where or want to start looking. 

Again I am in the dilemma of whether to commit some more cash into stock picking or whether to keep on the side lines until there is a sharper fall. Just like I've done for so long now, kicking myself for missing the surge in 2016!

DB you've suggested UK cyclical stocks at present, these are all dependent on consumer expenditure, if a recession occurs then consumer expenditure will fall. I don't understand your perspective? https://uk.tradingview.com/markets/stocks-united-kingdom/sectorandindustry-sector/consumer-cyclicals/ 

Leads and lags.Cyclicals go up when its still horrible as long as sterling is going up.Not all cyclicals are consumer stocks,the transports etc fit in there,delivery companies etc.Take the transports,they lock in fuel 5 years out,so if its on its arse they are locking that in.

[DurhamBorn]

52 minutes ago, CVG said:

Too late now! Just up 13% today!

Shares of some UK power companies gain after Reuters
report the European Commission set to approve UK billion-pound
power backup plan
    ** Drax Group  DRX.L  jumps >10%, Centrica  CNA.L  rises
2.8% and SSE  SSE.L  adds 2.2%
    ** European Commission is set to give go-ahead for power cos
to get roughly 1 bln pounds  ($1.23 billion) to help bear
maintenance cost in case of outages, Reuters report citing
sources  urn:newsml:reuters.com:*:nL5N26P2SM

I bought across 4 accounts i run yesterday,im only half in for myself though so would rather they kept going down to get two more ladders.15% of the market where Drax plays is the most interesting in the next cycle.