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


spunko
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1 hour ago, Craig said:

House price crash postponed as HSBC pump another £35bn into the market:

https://www.theguardian.com/business/2019/sep/02/hsbc-mortgage-borrowers-uk-market

Noticed HSBC offering a very generous £175 to switch to their advance bank account, they're really going 100% for sucking folks in, again another bank I'd stay well clear of until we're out the other side of all this.

This is classic end of cycle panic lending, which will inevitably be followed by a withdrawing of credit as things blow up, although I expect funding for lending to make a big comeback and faster than last time. This however won't stop 12-18 months of the property market being on it's arse. US house prices and sales falling quite noticeably now too despite rates heading back down by quite a bit. Pissing in the wind.

1 hour ago, dgul said:

You might both be right.

The 'purpose' of a recession is to re-balance an economy.  The current problem with the economy is that people have more call on wealth in the future (own assets including pensions) than they actually have offered in the past, present and future as labour.  This can be resolved through labour getting more worthwhile and/or 'saved calls on future labour' becoming worth less.

Unfortunately by prolonging the onset of the inevitable they've almost guaranteed something much worse than 2008.

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1 hour ago, Craig said:

Was written with tongue at least partly in cheek, but pray tell oh great one.

From FT:

Ian Stuart, HSBC UK’s chief executive, said the bank intended to continue expanding its mortgage book so that its overall share of the market increases from roughly 7 per cent to 10 per cent.

A lot of it is dick waving - HSBC have much lower costs and much cheaper funding than the whats left of he UK's mortgage banks.

HSBC mortgage operating costs are much lower, well over 1%

Idiot UK banks have relied of taking on huge IO BTL risks at skinny margins and the liks of term funding to keep their costs down.

What lefts of UK mortgage banks are being screwed by HSBC's cheaper funding and cheaper operating costs.

And its looking likely that there only idea on making monye - IO BTL and other nuts lending -is backfiring, as Labour look to basically outlaw the UK private rental sector.

The likes of nationwide Cov BS shold have never  entered IO BTL. Way too risky.

 

 

https://www.ft.com/content/ff4cddfc-ca55-11e9-a1f4-3669401ba76f

CEO dismisses claims bank is distorting the mortgage market



Rivals have claimed that HSBC’s rapid expansion is a major factor in an escalating price war that is putting pressure on profit margins, with some warning that too much competition could pose a risk to the health of the banking sector. The intense competition has forced some lenders, such as Tesco Bank, to quit the mortgage market.

Paul Lynam, chief executive of Secure Trust, a specialist lender, recently told the FT: “HSBC in particular is trying to hoover up market share and [is] driving prices down.” Executives at larger competitors have repeatedly expressed similar views, albeit privately.

 

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5 minutes ago, Barnsey said:

Noticed HSBC offering a very generous £175 to switch to their advance bank account, they're really going 100% for sucking folks in, again another bank I'd stay well clear of until we're out the other side of all this.

This is classic end of cycle panic lending, which will inevitably be followed by a withdrawing of credit as things blow up, although I expect funding for lending to make a big comeback and faster than last time. This however won't stop 12-18 months of the property market being on it's arse. US house prices and sales falling quite noticeably now too despite rates heading back down by quite a bit. Pissing in the wind.

Unfortunately by prolonging the onset of the inevitable they've almost guaranteed something much worse than 2008.

HSBC are a vry good bank. Well run, profitable, v efficient.

Ive almost halfway thru a 5 year fix at some stupid APR - sub 2%.

 

 

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39 minutes ago, Chewing Grass said:

Nationwide have been plugging the virtues of saving in TV adverts with the theme 'put it away on payday'.

Its almost as if they need more money on their books.

I’ve just drawn every penny I have out of the nationwide. xD

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44 minutes ago, Chewing Grass said:

Nationwide have been plugging the virtues of saving in TV adverts with the theme 'put it away on payday'.

Its almost as if they need more money on their books.

Hmmm..... That wouldn't have something to do with their savings accounts starting at 0.8% interest would it?

Maybe if they paid more interest, or even beat the rate of inflation, people would be more incentivised to save?  Crazy i know.

You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.

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12 minutes ago, Majorpain said:

Hmmm..... That wouldn't have something to do with their savings accounts starting at 0.8% interest would it?

Maybe if they paid more interest, or even beat the rate of inflation, people would be more incentivised to save?  Crazy i know.

You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.

When I was with Tesco Bank 2 years ago I did speak to a guy who was responsible for daily reconciliation and he said there is very little incentive to pay savers more as they can get funds cheaper from elsewhere... I've just got a letter from them saying they're lowering interest rate on my saving account from 0.55% to 0.35%, so I bet it's still the same.

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Gordie Lastchance
27 minutes ago, One percent said:

I’ve just drawn every penny I have out of the nationwide. xD

Would you mind me asking where you've put it? Although I realise, from your other postings, it may be to pay builders/workmen at your house.

I just ask because I'm a "saver" with the Nationwide and am aware of other posters' thoughts on this site and ToS about its financial stability owing to its BTL lending.

I'd like to shift what little I've got out of Nationwide - but don't know where to put it.

 

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Just now, Gordie Lastchance said:

Would you mind me asking where you've put it? Although I realise, from your other postings, it may be to pay builders/workmen at your house.

I just ask because I'm a "saver" with the Nationwide and am aware of other posters' thoughts on this site and ToS about its financial stability owing to its BTL lending.

I'd like to shift what little I've got out of Nationwide - but don't know where to put it.

 

Try marcus.co.uk - GS should be safe.

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13 minutes ago, Gordie Lastchance said:

Would you mind me asking where you've put it? Although I realise, from your other postings, it may be to pay builders/workmen at your house.

I just ask because I'm a "saver" with the Nationwide and am aware of other posters' thoughts on this site and ToS about its financial stability owing to its BTL lending.

I'd like to shift what little I've got out of Nationwide - but don't know where to put it.

 

Spent it. xD  all of it on the house. 

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40 minutes ago, BearyBear said:

When I was with Tesco Bank 2 years ago I did speak to a guy who was responsible for daily reconciliation and he said there is very little incentive to pay savers more as they can get funds cheaper from elsewhere... I've just got a letter from them saying they're lowering interest rate on my saving account from 0.55% to 0.35%, so I bet it's still the same.

I don't doubt it, there is plenty of money sloshing around the global system looking for any return.  Id bet a lot of it comes from negative rate Europe where even 0.35% is at least positive...

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Bobthebuilder
12 hours ago, spunko said:

Thanks Sancho, ultimately this website doesn't cost me much to run, probably about £15 a month. So I don't mind offering it for free - I may do another 'wishlist' this Christmas for Amazon, a few people very kindly bought me things off it last time I did one. :Beer:

Please do stick up a Xmas list, i will buy you something. More than happy to donate cash if you need it.

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@DurhamBornHere are the SCS scores for the ETF's I've filtered thus far.Point taken re SLX DB ,I had a quick look at some of the 08 peaks in there,uncannily good play on DXY back in the day.

FCG

DVN 18

CLR 17

CXO 19

XEC 18

ECA 18

EQT 17

CNX 19

AR 18

ERF 21

SRCI 18

ENBL 18

HESM 18

 

XES

CLB 17

SLB 17

BHGE 17

HP 20

PUMP 18

RPC 21

HLX 18

OIS 17

SOI 18

NR 18


OIH

SLB 17

BHGE 17TS 20

CLB 17

PTEN 17

HP 20

RPC 21

CJ 17

OIS 17

 

XOP

CRZO 17

DVN 18

CXO 19

EQT 17

OAS 17

PE 19

XEC 18

DEV 20

CPE 19

AR 18

CNX 19

PXD 18

 

SOIL

YARA 17

MOS 17

NUT 18

IPL 19

ICL 17

SQM 18

K+S 17

IPI 18

 

SLX

TX 18

VALE 18

RS 17

TS 21

X 17

MT 17

CLF 18

PKX 17

CMC 17

 

COPX-still got some to go through on this one

 

IVN 18

OZL 21

ANTO 18

SCCO 17

BOL 18

TECK 19

FCX 18

GLEN 17

FM 18

......

SEA

Mearsk 19

ENAV 18

SFL 18

TGP 17

SSW 19

GOGL 18

DHT 17

KNOP 18

CMRE 18

 

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3 hours ago, Gordie Lastchance said:

Would you mind me asking where you've put it? Although I realise, from your other postings, it may be to pay builders/workmen at your house.

I just ask because I'm a "saver" with the Nationwide and am aware of other posters' thoughts on this site and ToS about its financial stability owing to its BTL lending.

I'd like to shift what little I've got out of Nationwide - but don't know where to put it.

 

Also check out Santander 123 bank account and linked credit card.

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9 hours ago, spygirl said:

The only way out of the mess the UK is in is wage growth in the private sector.

Inflation won work as the public sector spend and pension are index linked - although slightly less since the changes ~5 years ago.

Booting out the non citizen who are drawing benefits and using public services is the first step.

Youll see ~3m dwelling free up.

 

 

I heard on the radio the presenter talking about Brexit affecting 3.6 mn EU nationals living here and 1.3 mn Brits living over there.I was surprised the imbalance was so substantial.

9 hours ago, Barnsey said:

I'm seeing plenty of nominal falls already, and unemployment hasn't even started ticking up yet into recession. What happens once it does? FWIW I'm seeing around 5% falls YOY for semi and detached homes in areas around the Midlands. Anything above 300k really struggling, on/off/relisted with another agent/sold stc/back on etc, although I'd say that's been a very recent development in the Midlands, past 3 months or so. Now schools are almost back and we head into Autumn I'm starting to see panic reductions of chain free homes. Remember many of the media numbers being heavily skewed by zombie families waltzing naively into new builds through deposit incentives.

Interesting to hear this Barnsey,any particualr areas of the Mids or are you talking genereally?

Edited by sancho panza
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7 hours ago, reformed nice guy said:

Here is a question that came up during an argument I had.

With the ongoing currency war, the goal that all of the central banks are aiming for is a weakening of their currency relative to others. Even Trump has tweeted about it.

Hasnt Brexit, by weakening our currency, achieved what the big brained economists in central banks have FAILED to achieve?

I dont think it is necessarily a good thing in the long term but hasnt Brexit done what Carney et al were trying to do and yet still they attack Brexit?

 

It's like the wrong leaves on the line excuse from the railways a few years back.

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13 hours ago, feed said:

It’s likely already started in marginal areas.  This average house prices adjusted by RPI.   Real terms they’ve not touched the 2007 high, doubt they ever will. And last ten years, they’ve done almost nothing, inflation adjusted.

06-May-10    £227,692
07-May-15    £228,920
08-Jun-17    £247,980
01-Apr-19    £241,499

And that’s RPI, if inflation is running higher as many people here suggest.  They’ve likely been falling for some time now. 

Next few years, if we get inflation at 6/7 % with house prices static and doesn’t take many years for prices to have fallen by 50%

These are averages though, so locally, YMMV.  Some areas will obviously do worse than others.  
 

image.png.4ae7d8fb093a557324f2b8f42e313e73.png

There needs to be wage inflation otherwise houses remain unaffordable and everything else also becomes unaffordable as well.

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7 hours ago, sancho panza said:

 

 

I heard on the radio the presenter talking about Brexit affecting 3.6 mn EU nationals living here and 1.3 mn Brits living over there.I was surprised the imbalance was so substantial.

Interesting to hear this Barnsey,any particualr areas of the Mids or are you talking genereally?

Waiving red rag ....

See my psot 10m -+2m EUers....

There were ~3m EUers i nthe UK *before* EE ascension.

The idea that theres only ~1m more EUers is laughable.

Ive heard the odd 5m being pitched, as people can see who many more EUers there i nthe uK and 3m sounds a bit low.

I reckon theres ~5m EEers in the UK when you start counting their kids, who are drawing public services. Each family is costing ~20->30k in services and benefits.

Theyve been joined by another 1m-2m Spanish, Italian and Portuguese since 2008/2011. These are mainly working but theres a naotable number inc. a couple of Portguese at mrsspys school whove come over when their benefits run out at home.

The number of UKers in Europe has probably fallen 500k, giving a ration of 1 UK: 6 to 10 EUers.

 

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What ladder strategy do people use?

Was thinking of buy limits at successive lows, to average at more advantageous prices. 

Danger with this is if the first hit was the low then you only end up with a fraction of your wants.....

Place subsequent higher buy limits and although price trend is confirmed you miss out on having bought at a better deal. 

Any other strategies? 

Edited by Paulie
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Gordie Lastchance
On 01/09/2019 at 22:54, sancho panza said:

 

@spunko I donate to a few sites I frequent regularly eg Wolf Ricther and would be grateful to have the chance to offer some support given how frequently I dwell in the basement and how much I appreciate the discussion.Thanks as ever for your efforts and time.

 

On 02/09/2019 at 08:02, spunko said:

Thanks Sancho, ultimately this website doesn't cost me much to run, probably about £15 a month. So I don't mind offering it for free - I may do another 'wishlist' this Christmas for Amazon, a few people very kindly bought me things off it last time I did one. :Beer:

 

11 hours ago, Bobthebuilder said:

Please do stick up a Xmas list, i will buy you something. More than happy to donate cash if you need it.

Howzabout members sponsoring Spunko's costs (paying for a fortnight or a month) - with the benefactor perhaps getting a wee mention on the front page for that duration?

There are a good number of members, so coughing up £7.50 or £15 shouldn't be too hard on the pocket, as stumping up should come round pretty infrequently if my rithmetic is right!

Put me down for a month, if it's a goer. I think it's great value - from these amazing financial threads to the help I got last year on laying a patio (pictures to follow), and the dating adventures, the dedicated jokes thread, the advice, the good-natured debate and all-round brilliant banter!

 

 

 

 

 

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8 hours ago, Starsend said:

There needs to be wage inflation otherwise houses remain unaffordable and everything else also becomes unaffordable as well.

Unaffordable for whom?   If talking affordability, you need also recognise the fall in the value of the currency it's priced in.   For foreign investment capital, UK property looks pretty affordable compared to the last ten years or so.   

image.png.4698691cbde18c00a4d184066e8705be.png

 

And surely this is entirely the point of this thread.  Wealth preservation. 

So don't save in GBP and don't, if you can help it, get paid in GBP.    

 

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GBPUSD lowest since Jan 2017... will be interesting to watch if it finds buyers at this level. Glad I'm still holding my USD denominated longs on PMs. Speaking about PMs...

Gold is trapped in a small range 1518 - 1533, but it's forming some sort of ascending triangle, should break to the upside soon.

Silver is slowly preparing for an attack of 18.65 level. Above that, the key resistance is far far away at $26 with some minor levels at $20.00 and $21.00 so expect a quick ride.

Happy trading everyone!

Edited by BearyBear
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