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

[WICAO]

18 minutes ago, HousePriceMania said:

Sadly, there's 99% of the country feeding it

Every little helps...

[sancho panza]

2 hours ago, Pip321 said:

Interesting find. I have just posted a reply in another thread about something like this….it’s interesting and sounds like another ‘we need more help from the government’ type thing.

Lack of property is always a problem….it’s all about prices, if a house cost £20k to buy or £2k a month to rent then rental demand would plummet.

Over the past 20 years we have seen 2/3 million BTL landlords buy houses and remove millions of them from the owner occupier supply side. This has contributed to buying prices rising making them unaffordable and created a higher rental demand. Interest rates and lots of government props also at play of course. No new physical properties were created in this process rather the demand was shifted to rentals.

The above report simply suggests that this is being reversed…so let’s just remove the dozens of ‘government housing props’ and let prices settle to a true supply/demand position.

Was mentioned on this thread old landlords form the 70/80’s were ex civil servants but my experience is the opposite. Back then they were limited in number, full time LLs  and were miserable, penny pinching, wealthy old misers who cut corners, moaned about tenants and didn’t have friends (other than other landlords)…..but they knew what they were. Didn’t pretend anything else, honestly dishonest. 

Nowadays BTL landlords feel the government owe them the world for being ‘housing providers’ when they are no more than middle men creaming off the top (myself included). They seem to think they are Joseph Rowntree and some sort of benevolent provider to the poor.

The legislation is a pain in the arse and I will sell up as my places become empty…..but I won’t moan about it and expect something to happen. It is what it is. 

If the government want me to spend excessive amounts of money on energy efficiency and it’s not worthwhile I will serve notice….and sell at the market value, and a house is released back into owner occupation.

The house sold from rental doesn’t disappear from ‘supply’ but it changes to whom it is supplied. 

In the short term though it will cause price issues with rents. Eggs/omelette. 😉

Pip,I'd be interested on your take on this parliamentary paper on BTL landlords.

Interesting stats pulled out below.It appears from this relatively out of date data that between 2010 and 2018,BTL LL's increased both the size of their portfolio's and the size of their detbs.Many likely not realsing that the equity in their own home is at the end of the default chain(my expereince admittedly small sample).

It seems to me that there's a decent size structural issue that could affect liquidity in this market ie most are all the same age and ageing ,msot are carrying similar levels of leverage(cash owned is cash owned) and there's the distinct possiblity that a lot try and exit the market at the same time?Or do you think they operate generally independently from the broader sector very much focsuing on their own finacnes>?

Do you think that msot LL's are in touch with others and that when one starts selling it could lead to a more general move for the exit? Clearly this has huge implications for some UK banks.

Decl:Reason I'm interested as looking to short to the right financial isntituions at the right time

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/775002/EPLS_main_report.pdf

There are approximately 3.4 million live deposits registered with one of the
three government-backed Tenancy Deposit Protection (TDP) schemes that
operate in England. These correspond to an estimated 1.5 million landlords,
only some of whom (about 360,000) had registered the deposits themselves.

 94% of landlords rent property as an individual, 4% as part of a company and 2%
as part of some other organisation.
While almost half of landlords own just one property, half of private rented
sector tenancies are let by the 17% of landlords with five or more properties.
 45% of landlords have just one rental property. This represents 21% of the
private rented sector9. A further 38% own between two and four properties
(representing 31% of the sector). The remaining 17% of landlords own five or
more properties, representing 48% of the private rented sector.
 Ignoring the methodological differences, since 2010, the proportion of landlords
with just one property has declined from 78% to 45% or from 40% to 21% of the
sector. Meanwhile, the proportion of landlords with five or more properties
increased from 5% to 17% or from 39% to 48% of the sector.
Landlords are, on average, older and less ethnically diverse than the general
population10. Most have been landlords for some time.
 Over half (59%) of landlords are aged 55 years or older. Not surprisingly, given
the older age profile, a third (33%) of landlords are retired. The majority (89%) of
landlords are White.

[harp]

Guinness Global Energy Fund. It’s an animal! Thanks CP for that one. £200k in that is now nearly £380k. 

[reformed nice guy]

52 minutes ago, sancho panza said:

 45% of landlords have just one rental property.

 

 Over half (59%) of landlords are aged 55 years or older. Not surprisingly, given
the older age profile, a third (33%) of landlords are retired.

On the above point, something that I have heard a few times recently is that people that normally rent out a property have been giving them to their children instead. A relative did this because their daughter + husband couldnt afford a house. A friend said he knows a few people that have done this.

 

[belfastchild]

1 hour ago, Starsend said:

I watched it all last night, pretty interesting, worth the time. I think he may have gone a bit too far with some of his predictions, particularly his claims that Russia won't stop until they've taken back half of Poland, half of Romania, Lithuania etc, just don't see how they're going to do that. As he correctly points out NATO would obliterate them in conventional warfare.

Might not need war.
Couple of months of no power/heat and some places may vote to join Russia.

[Lightly Toasted]

4 hours ago, wherebee said:

really good video, worth a watch.

However, he clearly has swallowed the official line on i) ukraine and ii) covid/vaccines.  So... what else is he wrong about?
 

Didn't he say the Treaty of Westphalia was in 1066?

I think there was another date he got wrong too. Wish I'd noted the timestamps now, as interesting as much of it was, I'm not going to sit through it again 

Overall he seems overly confident about the USA to me. He dismissed the woke (snowflake, specifically) problem as something that is over now and was never that significant anyway. The immigration problem will be solved by demographics in the people-exporting countries. US workforce is high-quality, hard-working, better than China. Either ignores or disbelieves the fraud/corruption in their political and judicial systems.

I dunno, it all seems a bit Panglossian to me.

 

[Loki]

1 minute ago, Lightly Toasted said:

Didn't he say the Treaty of Westphalia was in 1066?

I think there was another date he got wrong too. Wish I'd noted the timestamps now, as interesting as much of it was, I'm not going to sit through it again 

Overall he seems overly confident about the USA to me. He dismissed the woke (snowflake, specifically) problem as something that is over now and was never that significant anyway. The immigration problem will be solved by demographics in the people-exporting countries. US workforce is high-quality, hard-working, better than China. Either ignores or disbelieves the fraud/corruption in their political and judicial systems.

I dunno, it all seems a bit Panglossian to me.

 

He thinks Russia decided to "starve a billion people" just cos

[JMD]

1 hour ago, sancho panza said:

As @Castlevania explained,OXY did a bad deal on Anadarko at the wrost time.We bought a load of small US stocks eg Devon,Occi etc but bailed out of them in Feb 20 as Covid loomed.Sadly,hung onto the largest one-Occi and then got a few ladders in but I'd say our average price was circa $30.Was glad to see them go tbh.

On reflection,failing to buy them back at the bottom was a mistake in some ways but then you live and learn.Instead I opted to invest in some XOM/BP/Shell calls instead and did so a few times up until the beginnign of 22 with some BP 380's and Shell 1800/2000.Leaving them now.

Generally,I run 'spray n pray' like an inverted pyramid.Top line is biggest,so XOM/CVX/BP/RDSB/Total,second line was the likes of EQNR/Rep/ENI and then thrid and foruth line ie smallest hodligns are our leveraged plays as it were.Fifth line would be things like rockhopper

Having said that,once Occi had reached $40 on the bounce I'd have converted it into a strong divi payer for reasonable money eg one of my top line plays which were still super good value in Jan.

With those bottom line holdings you have to be really careful to spread your risk.WHat I got wrong with Occi was seeing that Buffet was investing and thinking I was piggy backing him when in reality he was piggy backing retail traders like me.Live and learn.He obviously cut himself a super deal when they were int rouble.

Thanks SP. Interesting to read about your prices and timings as this provides the proper background buying decision context. Devon was another I grabbed back in 2020 and has 6x for me, it's also a shale extraction one, hence my earlier query about these company types with shale exposure/production doing well.                                                                                                                                                                               I think discussing some stock specifics, fundamentals, prices, etc is useful, even here on this macro thread. I think it helps crystalise what type of (next cycle) stocks too look for. Up until a year or two ago, whilst the thread was still 'accumulating', it was a regular discussion point, but crucially it never dominated or turned the thread into a trading platform. Anyway just my thoughts.                                                                            I too use the inverted pyramid, but am moving to a 3(safe)-5(broad market)-2(risk) formation, because I wanted a method to 'force myself' into simplifying my portfolio. 

[feed]

Along the path of EV’s are a change in the business model not a change in tech.  

Plans within the large autos are now being implemented to move from the Franchise model that has existed for decades to tighter OEM control.  It’ll take 5 years to get there and franchise will likely retain servicing and used for the foreseeable, but I would expect that will move pretty quickly after the new car sales are done. 

I don’t expect anyone here would be directly invested in the franchises, but EV passenger vehicles as a service with pricing tightly controlled by the majors isn’t that far away.   
 

[Axeman123]

5 minutes ago, feed said:

...EV passenger vehicles as a service with pricing tightly controlled by the majors isn’t that far away.

I expect the resulting death of older used cars as a transport option would be their holy grail. 3 year lease when new, followed by maybe 5 years lease as a manufacturer approved used vehicle, and then recycle. No more privately owned vehicles means they can enforce end of life to ensure strong demand for new ones. Private transport could be about to become out of reach for a lot of people.

[M S E Refugee]

Ukraine to halt coal and gas exports https://www.rt.com/business/556801-ukraine-halts-coal-gas-exports/

Zelenski putting sanctions on the West.

[feed]

8 minutes ago, Axeman123 said:

I expect the resulting death of older used cars as a transport option would be their holy grail. 3 year lease when new, followed by maybe 5 years lease as a manufacturer approved used vehicle, and then recycle. No more privately owned vehicles means they can enforce end of life to ensure strong demand for new ones. Private transport could be about to become out of reach for a lot of people.

Pretty much. Longevity of recent ICE and secondary market outside of the manufactures control creates competition, they just don't want.  And the franchise model has been hated for as long as i've been in the industry, 25 years plus. Seems they've found a way to dismantle it.  

So if you want to own an ICE for long term, buy one now. 5 years and franchise dealerships are done and so will be options to buy one, unless you're wealthy.   

EU that is, there are competition laws in the US that give the franchise owners more power.   
 

[Bobthebuilder]

4 hours ago, Pip321 said:

The legislation is a pain in the arse and I will sell up as my places become empty…..but I won’t moan about it and expect something to happen. It is what it is. 

Interesting, I thought a while ago that the new EPC regs were going to push LL into a "I've had a good run, time to get out" mindset.

I do a lot of LL gas safety certificates, the bigger companies are business as usual, and they are still buying properties and renovating them. I am hearing less and less from the "I've got one or two" brigade, its quite noticeable here in London, I have never been so quiet in years. 

[Loki]

8 minutes ago, M S E Refugee said:

Ukraine to halt coal and gas exports https://www.rt.com/business/556801-ukraine-halts-coal-gas-exports/

Zelenski putting sanctions on the West.

WTF??!

[M S E Refugee]

3 minutes ago, Loki said:

WTF??!

He says the Ukrainians need the Energy for next Winter but it looks like a way of sticking it to the West.

[Loki]

6 minutes ago, M S E Refugee said:

He says the Ukrainians need the Energy for next Winter but it looks like a way of sticking it to the West.

This is clearly Putin's fault

[AlfredTheLittle]

17 minutes ago, Loki said:

This is clearly Putin's fault

It says they're a net importer anyway, it's not really news.

[janch]

GB News were pushing hard yesterday (presenters and guests) for Boris to move swiftly to the right if he wants to hang on as PM.  They were tallking about reversing net zero, reversing green levies on fuel bills, lowering taxes etc.  The line was that now all the parties are more or less the same then there is a space to move into ie moving to the right.  All were warning if he doesn't then he will lose the red wallers and will be toast.  At last some sane MSM to counteract all the other woke stuff.  It'll be interesting to see if he takes any notice and he hasn't got long to act.

Meanwhile in the real world we have a rail strike to look forward to so it seems the 70s playbook may be starting up again with strikes and a wage price spiral.  I can see a winter ahead with various shortages and maybe demand destruction of energy by rolling blackouts.

[janch]

Another interesting piece fro Shaun Richards today.  India is raising interest rates to 4.9% and also benefitting from Russian oil and gas:

https://notayesmanseconomics.wordpress.com/

In May alone, India imported over 24 million barrels of Russian crude, compared to 7.2 million barrels in April, which was the previous record high, according to data from Refinitiv Eikon cited by Reuters last week.

Indian imports of Russian crude are set to further jump in June, to around 28 million barrels, per Refinitiv Eikon oil flows data.

They are banning wheat exports too and are suffering food and fuel inflation.  CPI in March was 7.0% and rose to 7.8% in April.  Wholesale onion prices have increased by 35% in the past three weeks.

 

[snaga]

1 hour ago, Axeman123 said:

I expect the resulting death of older used cars as a transport option would be their holy grail. 3 year lease when new, followed by maybe 5 years lease as a manufacturer approved used vehicle, and then recycle. No more privately owned vehicles means they can enforce end of life to ensure strong demand for new ones. Private transport could be about to become out of reach for a lot of people.

If, and it's a big if, FSD works, owning a car won't be necessary, or even desirable. We'll all be booking rides in driverless cars.

[AlfredTheLittle]

10 minutes ago, janch said:

GB News were pushing hard yesterday (presenters and guests) for Boris to move swiftly to the right if he wants to hang on as PM.  They were tallking about reversing net zero, reversing green levies on fuel bills, lowering taxes etc.  The line was that now all the parties are more or less the same then there is a space to move into ie moving to the right.  All were warning if he doesn't then he will lose the red wallers and will be toast.  At last some sane MSM to counteract all the other woke stuff.  It'll be interesting to see if he takes any notice and he hasn't got long to act.

Meanwhile in the real world we have a rail strike to look forward to so it seems the 70s playbook may be starting up again with a wage price spiral.  I can see a winter ahead with various shortages and maybe demand destruction of energy by rolling blackouts.

There are so many problems with the government, it's interesting that the media always focuses on energy and green levies and not much else.

I'd say immigration at record levels, housing market completely broken, all the public sector completely broken and taxes going up so you get less for more money.

They're all huge issues, but for me the massive one is the public sector. If the police and courts don't work people will soon cotton on, and then everything breaks down. Nothing else in the public sector is working either, my son has barely been at school for 3 years now, at 13 years old he doesn't even have a school and there's little sign that he's going to get one. That wouldn't have happened pre covid and pre Boris. I can't get him into school by taking the local authority to court, because the courts have long delays too.

[JMD]

6 hours ago, Pip321 said:

Interesting find. I have just posted a reply in another thread about something like this….it’s interesting and sounds like another ‘we need more help from the government’ type thing.

Lack of property is always a problem….it’s all about prices, if a house cost £20k to buy or £2k a month to rent then rental demand would plummet.

Over the past 20 years we have seen 2/3 million BTL landlords buy houses and remove millions of them from the owner occupier supply side. This has contributed to buying prices rising making them unaffordable and created a higher rental demand. Interest rates and lots of government props also at play of course. No new physical properties were created in this process rather the demand was shifted to rentals.

The above report simply suggests that this is being reversed…so let’s just remove the dozens of ‘government housing props’ and let prices settle to a true supply/demand position.

Was mentioned on this thread old landlords form the 70/80’s were ex civil servants but my experience is the opposite. Back then they were limited in number, full time LLs  and were miserable, penny pinching, wealthy old misers who cut corners, moaned about tenants and didn’t have friends (other than other landlords)…..but they knew what they were. Didn’t pretend anything else, honestly dishonest. 

Nowadays BTL landlords feel the government owe them the world for being ‘housing providers’ when they are no more than middle men creaming off the top (myself included). They seem to think they are Joseph Rowntree and some sort of benevolent provider to the poor.

The legislation is a pain in the arse and I will sell up as my places become empty…..but I won’t moan about it and expect something to happen. It is what it is. 

If the government want me to spend excessive amounts of money on energy efficiency and it’s not worthwhile I will serve notice….and sell at the market value, and a house is released back into owner occupation.

The house sold from rental doesn’t disappear from ‘supply’ but it changes to whom it is supplied. 

In the short term though it will cause price issues with rents. Eggs/omelette. 😉

You say you'll sell your properties as/when tenants vacate. Is that a new decision, only I haven't heard you say that before? A wise decision if you think energy certification will cost too much, uneconomic, unprofitable, etc.                                                                                                                                                                     Sounds like you have run the numbers for doing the necessary upgrades? If it's information you could share on the thread, I would be very interested to hear how the figures pan out for say your 'average' BTL property (3 bed terrace?), the type of work required, etc. But also understand of course if you don't want to divulge this info.

[HousePriceMania]

Life's a Bitchi

 

 

[Axeman123]

Just for laughs...

(Luna went pop, and then so did Anchor shortly after)

[Yadda yadda yadda]

2 minutes ago, Axeman123 said:

Just for laughs...

(Luna went pop, and then so did Anchor shortly after)

Insane gambling.