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

[DurhamBorn]

10 minutes ago, Loki said:

@Cattle Prod that pic is quite something.  A key infrastructure point of the "Most powerful country in the world" and it has all the safety and appearance of some Brazilian favela  

Yeah,but those in the favela have mobiles with Vivo and send me divis and im upping their prices 

 

[Loki]

3 minutes ago, DurhamBorn said:

Yeah,but those in the favela have mobiles with Vivo and send me divis and im upping their prices 

 

Sensible move buying the carriers/service providers, seeing as the phones probably got looted off that train 

 

Edit: I bought some VIV the other day, cheers for the info on them.

[Hancock]

19 minutes ago, Cattle Prod said:

I find this interesting, because it's the kind of unrest and anarchy that scares the shit out of the elites. It's the kind if thing inflation forces. They need inflation to tackle the debt, but they need to keep handing out "don't rob me" money too. Game theory says they'll do both. This talk of tapers and interest rate rises will be short lived unless they keep handing out money. They've made a generation depended on bailout economics, and if they don't get it, they're gonna take it.

My inner anarchist loves it, my inner prepper is screaming "I'm not ready yet"!

Do wonder if we're just going to continue in the world where central banks raise interest rates a little to pretend they're competent, then when the stock markets/economy crashes it gives them a reason to print again ... rinse and repeat as they've already done!

A kind of Groundhog day economics.

 

[DurhamBorn]

2 minutes ago, Loki said:

Sensible move buying the carriers/service providers, seeing as the phones probably got looted off that train 

 

Edit: I bought some VIV the other day, cheers for the info on them.

Look good and if they drift can add more, TIMB look a good entry price as well.I prefer VIV but a few TIMB as well.About a 6% yield i think after tax on VIV and looks well covered going forward.

[Loki]

1 minute ago, Hancock said:

Do wonder if we're just going to continue in the world where central banks raise interest rates a little to pretend they're competent, then when the stock markets/economy crashes it gives them a reason to print again ... rinse and repeat as they've already done!

A kind of Groundhog day economics.

 

I think hyperinflation would happen before the rate rises had done their work

[Hancock]

12 minutes ago, Loki said:

I think hyperinflation would happen before the rate rises had done their work

Isnt the premise of a deflationary bust on the basis that the inflation created by the last 20 months worth of helicopter money turns to deflation .... thus requiring a further injection of money into the economy.

 

[Loki]

3 minutes ago, Hancock said:

Isnt the premise of a deflationary bust on the basis that the inflation created by the last 20 months worth of helicopter money turns to deflation .... thus requiring a further injection of money into the economy.

 

Yes but a whole new economic cycle, from disinflation to reflation so technically not groundhog economics 

[AWW]

2 hours ago, Errol said:

I still hold the Shell purchased at £9.78 and the BP purchased at £2.02. We are a long way from any top.

Similar here. RDSB at 863 and BP at 196. And Repsol at half of today's price. Are any of you sitting on similar gains but still finding it in yourselves to add more? I am still 50% in cash and kicking myself for not going all in at those prices.

[Hancock]

35 minutes ago, AWW said:

Similar here. RDSB at 863 and BP at 196. And Repsol at half of today's price. Are any of you sitting on similar gains but still finding it in yourselves to add more? I am still 50% in cash and kicking myself for not going all in at those prices.

On the basis a BK happens then hopefully you'll get another crack at sub £3.

Did you buy all your RDSB/BP shares at those prices?

[23rdian]

1 hour ago, Loki said:

Sensible move buying the carriers/service providers, seeing as the phones probably got looted off that train 

 

Edit: I bought some VIV the other day, cheers for the info on them.

EDIT: I see my question re yield was already covered. 

Please delete

[Hancock]

1 hour ago, Loki said:

Yes but a whole new economic cycle, from disinflation to reflation so technically not groundhog economics 

There is the possibility of things not going that route, Japan has long been trying to get high inflation.

[Loki]

3 minutes ago, 23rdian said:

What's the situation with divs on VIV at the moment. Did they get cut? The info seems all over the place on the web? Bought some, might top up too if the divs still seem okay?

No idea I just YOLO'd in, sorry,  it's worked OK for my SIPP so far though if that helps.  (ARCH, Peabody, Thungela)

[AWW]

19 minutes ago, Hancock said:

On the basis a BK happens then hopefully you'll get another crack at sub £3.

Did you buy all your RDSB/BP shares at those prices?

About 80% of my holdings. I had some small nibbles at £12 and £10 in RDSB and a few BP at somewhere above £2.

I'm at the point where I'm more worried about most of the cycle's inflation arriving very early on than I am about an impending BK. I suppose on that basis, 50% cash is probably about right.  Feeling slightly paralysed - don't want to sit on my hands, don't want to pay twice as much for something as I did last year.

[Hancock]

49 minutes ago, AWW said:

About 80% of my holdings. I had some small nibbles at £12 and £10 in RDSB and a few BP at somewhere above £2.

I'm at the point where I'm more worried about most of the cycle's inflation arriving very early on than I am about an impending BK. I suppose on that basis, 50% cash is probably about right.  Feeling slightly paralysed - don't want to sit on my hands, don't want to pay twice as much for something as I did last year.

Thats cracking timing.

As i;ve said many times i wish i went in with about 70k on BP at 290ish. If it goes back then all is good, if not then there will be other opportunities. Though oilies are a relaxing one to be invested in with a huge chunk of money as the entire economy is based on what they sell.

But look at the posts from @ThoughtCriminalearlier, now i know its twitter, but the bloke he quoted does have a point at how insane the market is right now.

 

 

 

[Barnsey]

ZH I know, but makes sense...

 

[MrXxxx]

Interesting overview on the Asia Mega developers, and how they may have to sell unfinished assets in London

https://www.reuters.com/world/china/chinas-property-woes-put-prestige-global-projects-play-2021-10-31/

 

and the first real admission that the current inflation spike may not be temporary

https://www.reuters.com/article/usa-rates-goldman-sachs/goldman-sachs-brings-forward-u-s-rate-hike-projection-by-a-year-idUSL8N2RS1DI

[HousePriceMania]

UK Bonds jump....I guess in anticipation of the BoE not raising interest rates  

 

 

 

[Barnsey]

China also going big on infrastructure spending vice consumer...

 

[DurhamBorn]

12 hours ago, 23rdian said:

EDIT: I see my question re yield was already covered. 

Please delete

Too be honest understanding Brasil divis is one of the worlds mysteries.They seem to have two parts.One part is the normal divi that has no withholding tax then another they seem to work out monthly called interest on capital that is taxed.

I think on the 2nd it adds up until it goes ex div,but im not 100% on how it works.The only real way is to hold over a 12 month period and see what arrives.My TEF Brasil div iv only had one and it was 80% of what i had worked out.Not sure if that was tax on the monthly interest on capital or the way it adds up.Id love to actually know how it works if anyone feels like contacting their stock exchange or some way.

[Majorpain]

20 minutes ago, Barnsey said:

China also going big on infrastructure spending vice consumer...

 

And of course, if everyone in the world starts splurging on infrastructure, what does that do to energy/material prices?

https://www.constructionenquirer.com/2021/11/01/industry-to-be-hit-with-16-cement-price-hike/

"A precast user said: “The shocking thing is we are being told that there is no point in trying another supplier because all the key producers are putting up prices by similar amounts. We’re being told it’s basically non-negotiable.

“The industry is used to 3% and 5% increases but this is unprecedented. Taking into account rises already this year it will mean cement has soared 30% on a year.”"

Cement requires a lot of energy to produce, there no price cap for business, so its suck it up buttercup and pay the going rate for all consumers.

[jamtomorrow]

(It's the Dacia Sandero, in case you were wondering)

https://www.telegraph.co.uk/business/2021/10/31/britains-cheapest-car-now-costs-1900-used-does-new/

[HousePriceMania]

11 minutes ago, Cattle Prod said:

There's an awful lot of chatter about the market pricing in rate hikes, and that the Fed is going to have to ramp up it's hike schedule etc...I'll just leave this here:

There's an awful lot of chatter since 2010.

Inflation 5%

House price inflation 20%

They sit and do nothing.

These people are crooks.

[jamtomorrow]

9 minutes ago, Majorpain said:

“The industry is used to 3% and 5% increases but this is unprecedented. Taking into account rises already this year it will mean cement has soared 30% on a year.”"

Cement requires a lot of energy to produce, there no price cap for business, so its suck it up buttercup and pay the going rate for all consumers.

I've been keeping an eye on hydrogen-based reduction for iron/steel manufacture. Volvo are giving it a try out in production: https://www.bloomberg.com/news/articles/2021-10-17/volvo-s-dump-truck-takes-shape-from-world-s-first-green-steel

The kicker is it costs 20% to 30% more than coked iron to produce. That probably looked like a deal-breaker back in pre-shortage times, but now looks increasingly like a side-issue when suddenly all you care about is securing any steel at all.

I wonder where in the UK is going to have the best supply of blue-green hydrogen when this takes off.

[Axeman123]

Yes, this is the real hypocrisy here...

 

[DurhamBorn]

34 minutes ago, HousePriceMania said:

There's an awful lot of chatter since 2010.

Inflation 5%

House price inflation 20%

They sit and do nothing.

These people are crooks.

They have fallen into the trap of funding government deficits due to dis-inflation where everyone could consume with less and less doing the work.Now that is in reverse they are stuffed.Once QE stops governments cant fund the deficit.Thats why the snakes might increase rates but still print .Sunak's nut job budget assumes the BOE will continue lots of QE and inflation so they can tax assets.Zero reform from this government,public voted for right of centre reforms,but got the opposite.