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

[Don Coglione]

19 minutes ago, Barnsey said:

Here we go...

 

Well-placed government mouthpiece?

It looks like our purchase is slipping from a late February completion into March, I suspect this will go to the wire, so not altogether unwelcome news...

[Democorruptcy]

1 minute ago, Talking Monkey said:

But that's a chunk of revenue they miss out on, can they afford to do that 

I just pictured the governbankment as a downhill skier deliberately knocking down the marker posts that all have a sign on them saying "Can we afford this?". It's a steep hill and there's no signs of slowing down.

[Hancock]

10 minutes ago, kibuc said:

And I can only keep my fingers crossed that it happens, because Stamp Duty is pure theft. There's no basis for it other than that's easy money for the taxman so why not grab it. It's a tax on market activity.

But if they dont take this tax they'll need to take it elsewhere, as its abundantly clear theyre not going to spend less.

Looks as if shutting down estate agencies for lockdown is going to be the reason they give themselves to extend it.

I hope they bring it back for all, as it was said to be temporary; at some point they govt have got to stick to their word instead of this constant flip-flopping.

 

[Democorruptcy]

12 minutes ago, kibuc said:

And I can only keep my fingers crossed that it happens, because Stamp Duty is pure theft. There's no basis for it other than that's easy money for the taxman so why not grab it. It's a tax on market activity.

The problem is the cash not spent on it gets leveraged and increases house prices. Since the holiday prices have gone up on average more than the maximum saving. I'd vote for no stamp duty if lending was limited to 3x Main income plus 1x Second income.

[kibuc]

Just now, Democorruptcy said:

The problem is the cash not spent on it gets leveraged and increases house prices. Since the holiday prices have gone up on average more than the maximum saving. I'd vote for no stamp duty if lending was limited to 3x Main income plus 1x Second income.

I hear you, but the problem with the market going bubbly should be fixed at the source (too much moolah in the system - loose lending, govt props, Asian hoarders etc), not by applying a band-aid solution that creates more problem than it solves (reducing market activity) and being simply unfair: what exactly did you do by moving houses that deserves to be taxed?

[Democorruptcy]

15 minutes ago, Talking Monkey said:

But that's a chunk of revenue they miss out on, can they afford to do that 

Of course their other consideration is can they afford not to keep it going? Via Help to Buy liabilities they have tens of billions of equity 20% regional and 40% London in new builds. First tranche was £12bn, then £10bn, then more since. If removing the holiday resulted in a dip in house prices, it costs them anyway. That's apart from their argument it creates jobs, removals, upgrading houses etc

[Barnsey]

2 minutes ago, Democorruptcy said:

Of course their other consideration is can they afford not to keep it going? Via Help to Buy liabilities they have tens of billions of equity 20% regional and 40% London in new builds. First tranche was £12bn, then £10bn, then more since. If removing the holiday resulted in a dip in house prices, it costs them anyway. That's apart from their argument it creates jobs, removals, upgrading houses etc

Great point, they now have a huge stake in help to buy and the gains they'll make when buyers sell.

[Democorruptcy]

2 minutes ago, kibuc said:

I hear you, but the problem with the market going bubbly should be fixed at the source (too much moolah in the system - loose lending, govt props, Asian hoarders etc), not by applying a band-aid solution that creates more problem than it solves (reducing market activity) and being simply unfair: what exactly did you do by moving houses that deserves to be taxed?

I agree with the first bit that's why I mentioned lending. I don't like taxes at all because it seems to be something the truly wealthy can largely avoid paying.

[Democorruptcy]

6 minutes ago, Barnsey said:

Great point, they now have a huge stake in help to buy and the gains they'll make when buyers sell.

In the earlier days of HTB I asked some questions via a freedom of information request to the Treasury who didn't know the answer, so they batted me over the Homes and Communities dept. I posted the Q and A's on ToS. I asked how many houses had been re-sold at a loss and how much the governbankment had to pay in compo to banks. They had paid banks over £1m but they said it didn't matter because they had made £20m on those re-sold at a profit.

[JMD]

3 hours ago, Castlevania said:

I’m surprised by the number of financial exchanges they own. It’s like a who’s who. CME; ICE; Euronext; Deutsche Borse; Singapore Exchange.

I'm not sure. Horizon Kinetics are mostly long term next cycle value type investors, but i do know they also like to identify short term trends/hated stuff which i think they trade in/out of. eg some of their funds last year had lots of gambling/resort businesses, which i don't particularly like, but maybe the exchanges are an example of that trade.

But they do come up with interesting ideas, for example, recent discussion from them that caught my interest was: caci (low debt), saic (high debt, which is bit unusual for them) - defense contractors specialising in cyber warfare/crime.  

[JMD]

3 hours ago, jamtomorrow said:

Somewhat inclined to give it a miss based on that *but* is there an argument that "bourse" fits DB's oilie template of "encumbent player in declining sector with pricing power".

Or put another way: if financial services shrinks back as a consequence of decomplexification, who in their right mind will be investing in new bourse "capacity"? Hence the pricing power for the encumbents.

Unfortunately I'm no expert in company financials, but i do know one of Horizon Kinetics main investment themes is to find stable/profitable companies - but ones that will benefit next cycle from increasing future cash flow.

[Hancock]

34 minutes ago, kibuc said:

I hear you, but the problem with the market going bubbly should be fixed at the source (too much moolah in the system - loose lending, govt props, Asian hoarders etc), not by applying a band-aid solution that creates more problem than it solves (reducing market activity) and being simply unfair: what exactly did you do by moving houses that deserves to be taxed?

But they're not going to stop the underlined, surely by now you must be aware of this. So people like me (of which there are millions) who are waiting for a correction of sorts need them to bring SDLT back.

Besides ftbers are exempt up to several hundred grand.

[kibuc]

11 minutes ago, Hancock said:

But they're not going to stop the underlined, surely by now you must be aware of this. So people like me (of which there are millions) who are waiting for a correction of sorts need them to bring SDLT back.

Besides ftbers are exempt up to several hundred grand.

I just like things being as they should be, instead of fixing one wrong with another. Yes, money saved on SDLT goes into the property market but that money actually belongs there. There are much largers sums from other sources that should've never made it there.

Whether the props stop or not (and if they don't, will they still be effective?) remains to be seen. Govt hand might be forced by excessive deficit.

[JMD]

2 hours ago, Castlevania said:

They all consolidated in the 2000’s. They’ve run up a lot over the past 10-15 years. Look at the LSE’s share chart. They’ve all moved into clearing and data analytics. The big banks trade through them and then they sell that data back to the banks. 

There’s not much competition and the costs/barriers to entry are such that I can’t see any new entrants.

Sorry for another post on them... i don't work for Horizon Kinetics, promise!!

But just saw your analysis and It reminded me of why i think this fund manager is interesting. They do all manner of deep dives to find value in international stocks, and one of their favorites is indeed to find cost/barriers to entry. I bought Clarkson, one of those 'ancient' UK shipping brokerages, it has a near exclusive/extensive shipping db, plus i like the shipping sector. Anyway, worth visiting the HK website i think - i personally use fund managers/funds, those which chime with this thread's investment ethos, to help find/filter interesting stocks. 

[sancho panza]

11 hours ago, Cattle Prod said:

Sancho, I'm getting vibes that countries could open up very quickly after minimal vaccination. I think they've realised they overplayed their hand and killed their economies. A final hurrah before crack up. It's spooky how the bones of this were foretold by our macro yodas, like db, before the virus was an itch in a Chinese throat.

We've had Bill DeBlasio, Hancock, Biden etc all out with "we must vax and open" messages in the last few days. Spain looks like it needs some tourists. I'll go if they don't hassle me on the way there or the way back!

I'd agree,especially about the macro yodas..........I mean what did they know.Look at Hunter.People laughed and scoffed at his 4500 call......

Andrew Cuomo,Gov New York State,after bearing down on Trump over lack of masks/lockdown/other things that might actually make things worse,issued the following Tweet.

Aside from the fact that Joe Biden is now installed,little has changed except that the political necessity for keeping this fiasco running has gone,in the US at least.Now the reality is dawning that the left have committed economic Harikiri on an epic scale.

Cuomo won't have been unaware of the Wolf St type news above,retail properties vacant,apartments vacant,people opting to leave NYC,work from home etc etc.Cuomo and the Dems have screwed NYC.

In Europe we have the broadly left wing dystopia (I include the Tories in that-no offence to anyone but they are essentailly a centrist left wing party these days) and the political class are starting to realise that the lockdown/furlough/debts/business closures/suppression of freedom have been a) pointless b) totally counter productive.

The evidence is starting to emerge.Countries that didn't lockdown eg Sweden have seen largely unusual years in terms of all cause mortality.That's nothing besides the fact that they've mostly kept their healthcare systems running,so the UK will likely see a rise in all cause mortality as a result of the lockdown of the NHS.And that's before we come to the economic costs.

 

Sweden,deaths adjsuted for population 1850-2020

https://twitter.com/jhnhellstrom/status/1348923657754652672/photo/1

In a conversation I was having with @dnb24 I was discussing with him,the increase we're seeing in covid patients.But then it struck me that a fair few of the covid +ve pts we're seeing were only going to the covid +ve section because they were covid+ve even though they were suffering from other illnesses.

I think we're in the space now where our political class are doubling down on failed policy because they just don't want to face the fact that they got their response horribly,horribly wrong.Chris Whitty the other day was telling anyone who'd listen that we'll need to lockdown next winter.It's a viable policy for him as he can use the police to suppress dissenters.The problem is that a growing number of the public and a larger proportion of clinical professionals are starting to question what's happened and what we're doing.

I'll leave this with a Mahyar Tousi video of Police nicking beach walkers somewhere in the UK.Minutes 2-5 are almost surreal (especailly when the camera pans to a separate incident where a middle aged lady is being nicked by 4 coppers for sitting on a bench-the interesting quote was when the lady with the phonecam warned the coppers 'you've got to choose your sides').Even more interesting are the comments(Tousi mainly has a Tory/light libertarian following).Things are going to go downhill here.

 

 

For us from a trading perpsective,I think we need to see that the political class are going to lift the lid soon and we're going to get the sugar rush.

[JMD]

1 hour ago, kibuc said:

And I can only keep my fingers crossed that it happens, because Stamp Duty is pure theft. There's no basis for it other than that's easy money for the taxman so why not grab it. It's a tax on market activity.

But might they use the demise of Stamp Duty as an excuse to introduce capitol gains on house sale profit? Controversial, but 'Covid needs' must. And very gently at first (slowly-slowly, catchy monkey!) - say rate of 0.0005%/number of years property owned.

[sancho panza]

3 hours ago, Castlevania said:

They all consolidated in the 2000’s. They’ve run up a lot over the past 10-15 years. Look at the LSE’s share chart. They’ve all moved into clearing and data analytics. The big banks trade through them and then they sell that data back to the banks. 

There’s not much competition and the costs/barriers to entry are such that I can’t see any new entrants.

They have run up a lot and appear to be carrying a fair bit of debt.

LSE.Market cap £32bn,net income £412mn.

[JMD]

1 hour ago, Hancock said:

But if they dont take this tax they'll need to take it elsewhere, as its abundantly clear theyre not going to spend less.

I hope they bring it back for all, as it was said to be temporary; at some point they govt have got to stick to their word instead of this constant flip-flopping.

But i understand that 'flip-flops' are Boris's favorite footwear.

[JMD]

1 hour ago, kibuc said:

I hear you, but the problem with the market going bubbly should be fixed at the source (too much moolah in the system - loose lending, govt props, Asian hoarders etc), not by applying a band-aid solution that creates more problem than it solves (reducing market activity) and being simply unfair: what exactly did you do by moving houses that deserves to be taxed?

Indeed. Moreover the US is an example of country that actually benefits from a more mobile workforce. Btw, i'm not talking 'open-borders' of course!!... 'everything in moderation', as the ancient Greeks used to say.  

[sancho panza]

2 hours ago, Barnsey said:

Here we go...

 

Caught betweena rock and hard place,need the moeny but also don't want the furlough to end and see tens of thosusands of EA's hit the dole queue given that their transferable skills of overpaying Rightmove and showing people around empty homes aren't really that ...ahem..'transferable'.LE7 is a great example of the problems govt faces.

Firstly,the'yre getting very little stamp duty compared to Aug 2019,transactions down 65%.

Secondly,there are roughly 150 Estate agent  shops in Leicestershire employing possibly 1000, then add on the removal people,solicitors,builders doing renovations ewtc etc.Bigly numbers of people that need transactions.

1 hour ago, kibuc said:

I hear you, but the problem with the market going bubbly should be fixed at the source (too much moolah in the system - loose lending, govt props, Asian hoarders etc), not by applying a band-aid solution that creates more problem than it solves (reducing market activity) and being simply unfair: what exactly did you do by moving houses that deserves to be taxed?

It's also a matter of allowing the market to be transparent with pricing.Low volumes create huge potential problems for buyers/sellers.

As you say though,K the issues run deeper than stamp duty.

[Hancock]

1 hour ago, kibuc said:

I just like things being as they should be, instead of fixing one wrong with another. Yes, money saved on SDLT goes into the property market but that money actually belongs there. There are much largers sums from other sources that should've never made it there.

Whether the props stop or not (and if they don't, will they still be effective?) remains to be seen. Govt hand might be forced by excessive deficit.

I wholly agree to all the changes you say, it is they not SDLT that has priced me and 2 generations of people out of the market, but we have to deal with reality and they are not going to put a stop to any of them.

[JMD]

1 hour ago, sancho panza said:

I'd agree,especially about the macro yodas..........I mean what did they know.Look at Hunter.People laughed and scoffed at his 4500 call......

Andrew Cuomo,Gov New York State,after bearing down on Trump over lack of masks/lockdown/other things that might actually make things worse,issued the following Tweet.

Aside from the fact that Joe Biden is now installed,little has changed except that the political necessity for keeping this fiasco running has gone,in the US at least.Now the reality is dawning that the left have committed economic Harikiri on an epic scale.

Cuomo won't have been unaware of the Wolf St type news above,retail properties vacant,apartments vacant,people opting to leave NYC,work from home etc etc.Cuomo and the Dems have screwed NYC.

In Europe we have the broadly left wing dystopia (I include the Tories in that-no offence to anyone but they are essentailly a centrist left wing party these days) and the political class are starting to realise that the lockdown/furlough/debts/business closures/suppression of freedom have been a) pointless b) totally counter productive.

The evidence is starting to emerge.Countries that didn't lockdown eg Sweden have seen largely unusual years in terms of all cause mortality.That's nothing besides the fact that they've mostly kept their healthcare systems running,so the UK will likely see a rise in all cause mortality as a result of the lockdown of the NHS.And that's before we come to the economic costs.

 

Sweden,deaths adjsuted for population 1850-2020

https://twitter.com/jhnhellstrom/status/1348923657754652672/photo/1

In a conversation I was having with @dnb24 I was discussing with him,the increase we're seeing in covid patients.But then it struck me that a fair few of the covid +ve pts we're seeing were only going to the covid +ve section because they were covid+ve even though they were suffering from other illnesses.

I think we're in the space now where our political class are doubling down on failed policy because they just don't want to face the fact that they got their response horribly,horribly wrong.Chris Whitty the other day was telling anyone who'd listen that we'll need to lockdown next winter.It's a viable policy for him as he can use the police to suppress dissenters.The problem is that a growing number of the public and a larger proportion of clinical professionals are starting to question what's happened and what we're doing.

I'll leave this with a Mahyar Tousi video of Police nicking beach walkers somewhere in the UK.Minutes 2-5 are almost surreal (especailly when the camera pans to a separate incident where a middle aged lady is being nicked by 4 coppers for sitting on a bench-the interesting quote was when the lady with the phonecam warned the coppers 'you've got to choose your sides').Even more interesting are the comments(Tousi mainly has a Tory/light libertarian following).Things are going to go downhill here.

 

 

For us from a trading perpsective,I think we need to see that the political class are going to lift the lid soon and we're going to get the sugar rush.

SP, as you know i am deeply sceptical about the government covid response/lockdowns. However, i was 'troubled' to see the UK total death stats yesterday which showed a massive increase in 2020. Troubled because i dont think such an increase can be explained by the NHS closing down, as surely the knock on effects of such closure will only be felt over next few years, due to late diagnosis, etc. Do you have an explanation why these death figures have spiked?

BBC report, but does contain the interesting/troubling graph...

Covid: 2020 saw most excess deaths since World War Two - BBC News

 

 

[janch]

Comment on another site I visit and either it'd someone from here or could it be @DurhamBorn's friend:

Charlie said...

The FED isn't even trying to sound hawkish right now. They've stated that they are going to run IRs behind inflation. There's no chance we'll get away with the last nine months without inflation, because that's the only thing that's going to save fiat. It doesn't matter how generous you think CBs can be, because they've promised to be more generous even than that. I expect they are about halfway through what's going to be printed.

Bond holders are going to pay for Covid. Which means pension funds. Which means ordinary people who don't have a SIPP, but are in a crap NEST scheme (just sold out of big oil at generational lows).

There is no comparison with 08.

(discl: I'm very, very overweight the big integrated oil and gas companies)

[sancho panza]

23 minutes ago, JMD said:

SP, as you know i am deeply sceptical about the government covid response/lockdowns. However, i was 'troubled' to see the UK total death stats yesterday which showed a massive increase in 2020. Troubled because i dont think such an increase can be explained by the NHS closing down, as surely the knock on effects of such closure will only be felt over next few years, due to late diagnosis, etc. Do you have an explanation why these death figures have spiked?

BBC report, but does contain the interesting/troubling graph...

Covid: 2020 saw most excess deaths since World War Two - BBC News

 

 

No offence,but excess deaths are heavily politicised.As are covid deaths stats.

You need to look at all cause mortality and adjust for population size.I don't have the ONS data and I find it rahter hard to look through.

https://www.macrotrends.net/countries/GBR/united-kingdom/death-rate

 

This is a decent chart that gives a realsitic pciture.You have to look for the underruns as well as the overruns.1999/2000 and 1997 look to have been way worse per capita.You can also see that that in the run up to covid(there was an epidemic in Mar/Apri) mortality was significantly lower than previous years on average.

https://www.nuffieldtrust.org.uk/chart/weekly-deaths-1993-2020

[sancho panza]

12 hours ago, AWW said:

They're not going to reduce PCR cycles, they're going to move testing over to lateral flow tests.

Lateral flow tests are currently getting a kicking in the more Marxist media outlets because they are "not as good" as PCR tests - they "miss lots of cases".  In reality, LF is simply more accurate, as it doesn't pick up dead bits of that cold you had last year, like a 45 cycle PCR test does.

Moving to LF tests should reduce "cases" by 60-70% on its own.

Work have given me a load of lateral flow tests.I asked what happened if I tested positive,they said come in for a PCR.

I pointed out that the false postive rate on Lateral flow was 0.3%,false postive on PCR circa 0.8%,so what's the point of confiming the positve on a less accurate test?Bizarre.