Credit deflation and the reflation cycle to come (part 3)

[Frog]

55 minutes ago, Festival said:

Frog thanks I had a go at this and found it helpful. What I couldnt see and probably its hidden in the model itself is what the assumptions were regarding investment return and inflation rate. I dont know if you know at all what assumptions they use?

It's based on the 4% rule, which came out of the Trinity Study.  This article explains in more detail.

https://www.gocurrycracker.com/you-will-die-before-you-run-out-of-money/

 

 

[MrXxxx]

1 hour ago, Democorruptcy said:

How are they going to get at it, without making it less attractive so prices drop lower, then there would be less to get at? Help to Buy meaning they own equity in a lot of houses, could be a start. It seems nuts that people with equity in a big house could also be claiming benefits. I'm trying to think of an "Help" name, that means they give you a loan for some equity, instead of benefits.

I have noticed a lot of pro equity release articles in both the printed and radio media recently....perhaps this is how they plan to get the money back into the economy without crashing house prices?

[planit]

1 hour ago, DurhamBorn said:

Hope your all enjoying your Playtech profits ,i think there might be a counter bid yet,looks too cheap to me,a 4 bagger for the thread from the March lows so far.World leading gambling sector all being taken out is sad for the country and another government disaster,but at least we multiplied our capital.My dad got a lot as well cheap ,but he is moaning,reckons they are worth £10 at least 

This is a result of companies getting caught up in the renewables shift where the label is ESG. It means the funds want the ESG label and therefore sell anything that doesn't comply.

A quick google search brings up the following ( I was actually searching for companies that ESG funds drop ):

 

 

 

It is not a surprise that ESG type shares are beating their non-ESG rivals when you look at the amount of money involved. The question is at what point does the tide turn - where the new investors in these non-ESG companies outweigh the selling going on.

My own opinion is that we have already gone past the peak flow and are heading towards the tide turning but not there yet. This should mean there is no immediate rush and patience will be needed before the non-ESG securities start out-performing.

I have come up with:

Fossil fuel companies

Gambling /casinos
Military
Guns
Sex
Tobacco/Cannabis
Stem cell research bio tech for those who are anti religious
Alcohol
Sugary/Unhealthy foods
Fast food

 

 

 

[HousePriceMania]

27 minutes ago, MrXxxx said:

I have noticed a lot of pro equity release ponzi scam articles in both the printed and radio media recently....perhaps this is how they plan to get the money back into the economy without crashing house prices?

FTFY

[HousePriceMania]

What's this gonna do for mortgages ?

 

If you look at the end of the railway mania, the dot com bubble or the trigger for the great wall street crash, this is what you see:

https://en.wikipedia.org/wiki/Railway_Mania

As with other bubbles, the Railway Mania became a self-promoting cycle based purely on over-optimistic speculation. As the dozens of companies formed began to operate and the simple unviability of many of them became clear, investors began to realise that railways were not all as lucrative and as easy to build as they had been led to believe. Coupled to this, in late 1845 the Bank of England increased interest rates. As banks began to re-invest in bonds, the money began to flow out of railways, undercutting the boom.

 

https://en.wikipedia.org/wiki/Dot-com_bubble
 

In 2000, Alan Greenspan, then Chair of the Federal Reserve, raised interest rates several times

 

https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

The failure set off a worldwide run on US gold deposits (i.e. the dollar) and forced the Federal Reserve to raise interest rates into the slump

 

Each time, they are raising interest rates just when the fan is starting to turn brown, sounds familiar ?

 

Shit storm dead ahead.

 

[Hancock]

22 minutes ago, HousePriceMania said:

What's this gonna do for mortgages ?

Shit storm dead ahead.

Not a lot yet, wait until it back up above 3%.

The shit storm is behind us, well it is for people who didn't borrow absurd sums to buy a pretty shite house.

As for those who did, fuckem!

[kibuc]

Apparently, the market has already priced in two 2022 hikes by Fed and four (!) 2022 hikes by BoE. I'll believe it when I see it.

In other news, looks like the junior miners universe got tired of the old, played out financing along the lines of "Microcap Metals announces financing of up to $10mil via placing of 100mil shares at $0.10 per share" and instead enjoys a veritable clusterfuck of a deal such as this one:

"Vancouver, British Columbia--(Newsfile Corp. - October 18, 2021) - Equity Metals Corporation  (TSXV: EQTY) (OTCQB: EQMEF) ("Equity") announces that it proposes to undertake a non-brokered private placement of securities to raise total gross proceeds of up to $6,000,000 (the "Offering").

The Offering will be comprised of a combination of: (i) non-flow-through units (the "NFT Units") to be sold at a price of $0.14 per NFT Unit for gross proceeds of $1.0M; (ii) flow-through units (the "FT Units") to be sold at a price of $0.15 per FT Unit for gross proceeds of $3.0M; and (iii) flow-through charity units (the "Charity Units") to be sold at a price of $0.185 per Charity Unit for total proceeds of $2.0M. Each NFT Unit will be comprised of one non-flow-through common share and one-half (0.5) of one warrant. Each FT Unit and Charity Unit will be comprised of one flow-through common share and one-half (0.5) of one non-flow through warrant. The warrants for all units will be the same with each whole warrant entitling the holder thereof to purchase one non-flow-through common share for a period of 2 years at a price of $0.20. The exact number of NFT Units, FT Units and Charity Units sold will be determined at closing."

I'm still reading through it and trying to unpack it, although it seems like I'm the slowest kid in the class because the market seems to have understood it fully and is loving it already. Or, perhpas, it's because they didn't understand it at all. Or both. Perhaps they only read until they saw "NFT" and started spamming the buy button immediately.

[DurhamBorn]

On SIPPS v ISA spread i look at my SIPP as providing 100% of income between 55 and 67 because you can withdraw £16700 a year tax free.From the year state pension kicks in i only want £3k a year from SIPP as that and SP equals no tax.I want around £17k+ pa so ISA then will have to do around £5k income.

At the moment my ISA is providing all my income,and if it was roughly the same to down 20% by 55 that will be very very good.At 55 most divs will be re-invested until 67 as the SIPP then kicks in and id need nothing from ISA until 67.Week before state pension il go in full drawdown and put 25% tax free cash into my ISA ,or if Inheritance tax close,give to the kids to invest in their SIPPs to get tax relief and some bullion.

As @Democorruptcy says its similar for most,but with tweaks depending on life etc and the inheritance tax implications need thinking about where ISAs etc are very large and SIPPs smaller etc.

 

[geordie_lurch]

Would anyone recommend the SIPPs at hl.co.uk as I already have an account there or should I look elsewhere for these specifically?

[DurhamBorn]

Here is what the government and BOE have done.

Iv just been in Lidl and a very old lady in front of me at the till.She asked the girl on the till if she could tell her when the bill reached £27.23 as thats all she had and she would have to put back anything over that "everything is just going up so much".Got to a few items left and hit her target,she said oh the cheese ,i needed that,no its ok thankyou.

Lovely decent old lady likely only has the pension.

On a brighter note i bought the lady the cheese,i insisted,

[DurhamBorn]

8 minutes ago, geordie_lurch said:

Would anyone recommend the SIPPs at hl.co.uk as I already have an account there or should I look elsewhere for these specifically?

My SIPP is there and superb value if you dont hold funds.My fees are less than 0.05%

[janch]

21 hours ago, DurhamBorn said:

The critical part is if government deal with welfare spending and government worker costs including pensions.If they dont this cycle we are entering ends in systemic collapse.There is a small risk of it happening before that.

This budget will be critical to see if the government actually understand this.Watch for welfare uplifts,they usually go up with September CPI,if he does that they understand nothing,if he increased below inflation they know.

Since most people believe the CPI figure and that the government is there to look after them, Rishi may likely use it to pay increases in bennies etc but of course real inflation is much higher especially for people who spend most of their income on food, fuel and a roof over their heads.  So he can still run inflation faster than the welfare bill and gradually reduce welfare as a proportion of government spending.  That way he doesn't upset people so much as they think they're getting an increase even though their bills are all going up faster than the increase.

We all know true inflation is much higher than the official figure.  Does you roadmap put any figures on the inflation needed if he does increase the benefit bill by CPI?  I'm sure he would love to freeze benefits but he wouldn't dare.  I can imagine the screaming from the MSN if he did or if he increases at lower than CPI.

He can freeze some things eg winter fuel allowance (£200) and the £10 Christmas bonus for pensioners......

[planit]

15 minutes ago, Cattle Prod said:

Well I am just shocked, I tell you...

 

Kuwait, being a small country, is a large exporter. When I was doing my DD on OPEC spare capacity about three years ago funnily enough, I'd flagged Kuwait as orange, as the vast majority of its production comes from one enormous field, Burgan, which is ancient. It started production after WWII, and has been drilled so much you can see the outline from space:

Zoom in:

Each one of those white dots is a drill pad, with multiple wells going down from it.

Kuwait goes on the red (declining) list now, after a very long innings. That's big one. They consume half a million barrels a day, so 2mbpd left for export. It was 2.5m just three years ago. I think I saw something recently about OPEC being in 114% overcompliance. Has every single energy analyst in the world forgotten about OPEC cheating? Why aren't they cheating at $85 a barrel?! Well, it's because they can't.

I think stocks and futures need a pullback here, but this thesis is finally starting to play out in public. Burgan is the second biggest oil field in the world, by quite a margin.

Thanks for this and all the other information CP. (and to all the other amazing posters on here)

My reasons for investing in oilies are based mainly on obvious information people can agree about. But when I also add in the extra reasons where the markets are expecting shale to suddenly bounce back and OPEC haiving 3mmbpd++ spare then it just really worries me. The insanity and lack of backup plans in place regarding something as important as energy availability is mind blowing. They shouldn't be playing recklessly with something that has caused so many wars and starvation in the past.

 

 

 

[Loki]

I wish I had some Peabody in my ISA, not just my SIPP.

[Starsend]

1 hour ago, DurhamBorn said:

Here is what the government and BOE have done.

Iv just been in Lidl and a very old lady in front of me at the till.She asked the girl on the till if she could tell her when the bill reached £27.23 as thats all she had and she would have to put back anything over that "everything is just going up so much".Got to a few items left and hit her target,she said oh the cheese ,i needed that,no its ok thankyou.

Lovely decent old lady likely only has the pension.

On a brighter note i bought the lady the cheese,i insisted,

I bet she does the same every week, probably got a fridge full of free cheese 

[Democorruptcy]

2 hours ago, DurhamBorn said:

On SIPPS v ISA spread i look at my SIPP as providing 100% of income between 55 and 67 because you can withdraw £16700 a year tax free.From the year state pension kicks in i only want £3k a year from SIPP as that and SP equals no tax.I want around £17k+ pa so ISA then will have to do around £5k income.

At the moment my ISA is providing all my income,and if it was roughly the same to down 20% by 55 that will be very very good.At 55 most divs will be re-invested until 67 as the SIPP then kicks in and id need nothing from ISA until 67.Week before state pension il go in full drawdown and put 25% tax free cash into my ISA ,or if Inheritance tax close,give to the kids to invest in their SIPPs to get tax relief and some bullion.

As @Democorruptcy says its similar for most,but with tweaks depending on life etc and the inheritance tax implications need thinking about where ISAs etc are very large and SIPPs smaller etc.

 

I'm thinking that I don't want to draw from the SIPP at least until state pension kicks in. By then your chances of missing out on the inheritance tax free from the SIPP have diminished because you have lived longer! It also means that if you are willing, fit enough in mind and/or body to do a bit of work, you can still top the SIPP up more than the £4k limit because you haven't started drawing it down. It all depends on how they move the goalposts. I think the 67 retirement age will be a goner before you get there, you youngster!

[Loki]

At the risk of getting a "NO SHIT SHERLOCK"...other countries putting up interest rates even by a fraction of a percent is enough to start the DXY decline?

[DurhamBorn]

I think for the thread the question is who else gains from long term higher energy costs?.I think i was right on the transports,but lockdowns hammered them,and working from home.Of course producing closer to consumption will matter we know that.

Improved insulation is going to be massive though,so cross market says we go there.

What products have the best thermal conductivity? ie the lowest,,

Polystyrene down to Aerogel.

So i want a company supplying the solutions,maybe under the radar,

 

Cabot Corp ticker CBT fits the bill (i worked in the Chem industry so know what a lot do)

https://www.cabotcorp.com/solutions/applications/construction/building-insulation

Quick balance sheet or COMA score would be good anyone then,then il buy it,start with them.

 

 

[Noallegiance]

1 minute ago, DurhamBorn said:

I think for the thread the question is who else gains from long term higher energy costs?.I think i was right on the transports,but lockdowns hammered them,and working from home.Of course producing closer to consumption will matter we know that.

Improved insulation is going to be massive though,so cross market says we go there.

What products have the best thermal conductivity? ie the lowest,,

Polystyrene down to Aerogel.

So i want a company supplying the solutions,maybe under the radar,

 

Cabot Corp ticker CBT fits the bill (i worked in the Chem industry so know what a lot do)

https://www.cabotcorp.com/solutions/applications/construction/building-insulation

Quick balance sheet or COMA score would be good anyone then,then il buy it,start with them.

 

 

And of course to get poly to styrene needs oil in the first place.

Best get cracking on the biomass or we won't have the material for plastic replacements or insulation!

[Loki]

3 minutes ago, DurhamBorn said:

Cabot Corp ticker CBT

Doesn't seem eligible for HL ISA or SIPP

[DurhamBorn]

Best building material is Cross Laminated Timber.

So who gains there,?

Stora Enso ticker STE R 

 

[Noallegiance]

8 minutes ago, Loki said:

Doesn't seem eligible for HL ISA or SIPP

You sure? Comes up on the app.

Cost analysis includes SIPP and ISA figures.

[Loki]

4 minutes ago, Noallegiance said:

You sure? Comes up on the app.

Cost analysis includes SIPP and ISA figures.

Just saying what I see!

[DurhamBorn]

7 minutes ago, Noallegiance said:

You sure? Comes up on the app.

Cost analysis includes SIPP and ISA figures.

Just tried to buy it in my SIPP ,wont let me,share account only.

[Bobthebuilder]

Available in my Halifax ISA.

Edit. No its not, came up in the search, then computer says no.