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

[M S E Refugee]

Royal Mail Managers have voted for Strike action.

I think this could be the first time in history that this has happened.

[Bobthebuilder]

23 minutes ago, Lightly Toasted said:

The closest he got was probably this:

“You know," said Arthur, "it's at times like this, when I'm trapped in a Vogon airlock with a man from Betelgeuse, and about to die of asphyxiation in deep space that I really wish I'd listened to what my mother told me when I was young."
"Why, what did she tell you?"
"I don't know, I didn't listen.”

"being teleported is a bit like being drunk"

"what's wrong with being drunk?" asks Arthur.

"Ask a glass of water".

[Spiney Norman]

9 minutes ago, M S E Refugee said:

Royal Mail Managers have voted for Strike action.

I think this could be the first time in history that this has happened.

RMG shares maybe a good buy very soon?

[spygirl]

Central bank chiefs call end to era of low rates and moderate inflation ECB, Fed and BoE heads warn of painful shift after ‘massive geopolitical shock’ of Ukraine war and pandemic

https://www.ft.com/content/0c686df6-823b-49c2-bf0e-80e119d9e80a

The world’s top central bankers have warned that the era of low interest rates and moderate inflation has come to an end following the “massive geopolitical shock” from Russia’s invasion of Ukraine and from the coronavirus pandemic.

Speaking at the European Central Bank’s annual conference, Christine Lagarde, its president, Jay Powell, chair of the Federal Reserve, and Andrew Bailey, Bank of England governor, called for rapid action to curb inflation.

They said failing to raise interest rates quickly enough could allow high inflation to become embedded and ultimately require more drastic action by central banks to bring price growth back to more moderate levels.

“The process is highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” said Powell.

 

I read that as heads up that rates are going to go a lot lot higher than people were speculating only last month.

SO much for the CB being in charge and tweaking rates.

Fuckwtards.

 

 

[M S E Refugee]

4 minutes ago, Spiney Norman said:

RMG shares maybe a good buy very soon?

They will certainly be cheaper, I'm not sure if they will be a good investment.

[leonardratso]

15 minutes ago, M S E Refugee said:

They will certainly be cheaper, I'm not sure if they will be a good investment.

ive got 2 pcls arriving, can they put it off until ive got them? i promise not to order anymore after these 2 are delivered.

[Boon]

RMG have a lot of property on their books, priced at a discount to book value. Around me I can recall a few old depots being sold off for housing.

The staff thing appears to be their weakness. As of the last annual report they had 178,709 people working for them. Assuming average of 20 hours/week (not sure how many are part/full time) a raise of £1/hour will cost them £185m. What seems pretty small on an individual level ends up being a massive part of the profit.

The only way to offset that is to either charge more for stamps or getting more efficiency from current workers. The latter is difficult enough, raising prices also ends up pushing people towards alternatives. 

[DurhamBorn]

36 minutes ago, M S E Refugee said:

Royal Mail Managers have voted for Strike action.

I think this could be the first time in history that this has happened.

Can they wait a week?,iv got loads of items on the way from the shoplifters.

[feed]

These only one day strike actions though, aren't they. 

[RJT1979]

10 minutes ago, DurhamBorn said:

Can they wait a week?,iv got loads of items on the way from the shoplifters.

Do you know anyone who can steal a 500 quid driver from American Golf? 😆 

[Yadda yadda yadda]

16 minutes ago, DurhamBorn said:

Can they wait a week?,iv got loads of items on the way from the shoplifters.

Do they remove the Boots price labels?

[Lightscribe]

Another anecdotal. Extended family, major haulage firm in the UK. Fixed term contract for HVO fuel fixed for two more years at £1.12 a litre. 

Needs natural gas to produce the energy for hydrogen to create the high flashpoint (blue hydrogen).

How long have we got until supply is taken up with veg oil demand now sunflower oil out the picture (Ukraine) and October when the energy cap rises.

Ticking time bomb in the supply chain.

https://www.fwi.co.uk/machinery/hvo-fuel-what-you-need-to-know

[Joncrete Cungle]

https://www.youtube.com/watch?v=Nf7T5I93i1E

Rick Rule on how to find the best Junior Mining investments

[UnconventionalWisdom]

10 hours ago, Bricormortis said:

Mechanic told me Kia / Hyundai ( same thing more or less ) is the car he expects to repair least.

My mechanic said he went for Kias. Mate who used to work in data at RAC said they were one of the best

[Ash4781b]

7 minutes ago, Lightscribe said:

Another anecdotal. Extended family, major haulage firm in the UK. Fixed term contract for HVO fuel fixed for two more years at £1.12 a litre. 

Needs natural gas to produce the energy for hydrogen to create the high flashpoint (blue hydrogen).

How long have we got until supply is taken up with veg oil demand now sunflower oil out the picture (Ukraine) and October when the energy cap rises.

Ticking time bomb in the supply chain.

https://www.fwi.co.uk/machinery/hvo-fuel-what-you-need-to-know

Yeah cost pressures in supply chains. Seem to be battles going on behind the scenes bubbling out into view. See below re Heinz. Think Tesco is flexing muscle due to market size. Fighting the consumer corner. Well that’s what they say. 

https://www.bbc.co.uk/news/business-61978595

[Chewing Grass]

2 minutes ago, UnconventionalWisdom said:

My mechanic said he went for Kias. Mate who used to work in data at RAC said they were one of the best

The best cars are generally the ones people have low expectations of but are looked after due to the type of ownership.

If they are widely, leased, screwed and abused before hitting the used market then they are expensive and unreliable to own.

[Chewing Grass]

5 minutes ago, Ash4781b said:

Yeah cost pressures in supply chains. Seem to be battles going on behind the scenes bubbling out into view. See below re Heinz. Think Tesco is flexing muscle due to market size. Fighting the consumer corner. Well that’s what they say. 

https://www.bbc.co.uk/news/business-61978595

This is a direct result of Kraft an American scum firm acquiring Heinz in 2015 and effectively resulted in another hand (a greedy one) in the till.

Kraft are a parasite.

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

[M S E Refugee]

1 hour ago, leonardratso said:

ive got 2 pcls arriving, can they put it off until ive got them? i promise not to order anymore after these 2 are delivered.

You can order stuff for a few months yet, you will only notice disruption when the Postmen and Women go on strike.

I received my ballot paper this morning.

[Noallegiance]

1 hour ago, RJT1979 said:

Do you know anyone who can steal a 500 quid driver from American Golf? 😆 

It still won't fix that slice

[spygirl]

1 hour ago, Chewing Grass said:

This is a direct result of Kraft an American scum firm acquiring Heinz in 2015 and effectively resulted in another hand (a greedy one) in the till.

Kraft are a parasite.

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

Wll 3G are a massive fucktarded PE parasite, who merged with Kraft, who are fucktarded parasites.

And now they are trying to push tge cost if true fuckup in consumer.

I reckon it'll fail, and 3g-kraft-heinz will go back to their parts.

https://finance.yahoo.com/news/kraft-heinz-disaster-shows-brutal-224231597.html

https://finance.yahoo.com/news/kraft-heinz-failure-put-3g-144124013.html

 

[sancho panza]

8 hours ago, Axeman123 said:

If they will just be collecting the payments from existing mortgages, then it could be a good or bad idea depending entirely on the price paid. Rising mortgage rates would equal a greater spread over cost of funding. If they are planning to roll out more of this kind of lending it is a disaster.

Random thought: maybe this is a covert bailout of a lender going insolvent, government directed.

Barclays total assets are around£1.4 trillion.QUite why they're buying such a risky mortgage book that peanuts in value to them I don't know.Adding £2bn mortgage book to their outstanding £156bn mortgage book.Even then it's peanuts.

In terms of arbing rising rates,then I'd suspect they'll do better spending the effort on their credit card business.

your random thought maybe closer to the truth.

 

7 hours ago, ThoughtCriminal said:

DXY short then? 😉

there's not enough elverage in that trade to draw me in.I'm currently nursing some humdinging red per centages in our US goldies options trades.

Having said that,weak dollar means rising yellow stuff and there are some shares that look well oversold but I've bored about them before

From the recent April 18th gold-ZG- lower high.Picture paints a 1000 words

[sancho panza]

Mish Shedlock on the rising stupidity/comedy of it all.Western leaders despite all the rhetoric are jsut lining Putin's pockets.

 

https://mishtalk.com/economics/a-laughable-explanation-of-the-g7-oil-price-buyers-cartel-emerges

The Escalating Stupidity of it All

1. The US and EU imposed sanctions on Russian oil and proposed to not buy any. 
2. With supply reduced and supply chains disrupted, the price of oil rose.
3. The US and EU added further sanctions including sanctions on any countries or companies that offered insurance on Russian oil tankers. 
4. With no insurance, supply reduced further, and prices rose again.
5. Sanctions also blocked Biden's ability to get parts, again with the same impact, higher prices. 
6. But sanctions did not stop the flow of oil or natural gas completely. 
7. One result is that Russia made as more money on natural gas selling less of it at higher prices than it did before the sanctions.
8. Russia avoided the oil sanctions by using small tankers, without insurance, to unload oil in the middle of the night to large Chinese oil tankers. So the oil is getting through, but at more expense, and on longer routes, again driving up the price.

Then after Russian tankers get insurance, countries allegedly will refuse to buy the oil above a certain price. 

What a Freaking Hoot!

1. What is going to force Russia to get insurance on its tankers?
2. Even if Russia bought insurance what is going to force China and India to comply?

Regarding point number two, cheating would be massive. 

And if you thought it could not possibly get any stupider, well you were wrong. 

French President Emmanuel Macron actually proposed the same set of rules for all of OPEC!

Politico reported "Macron upended the discussions on Monday by calling for a worldwide price cap on oil prices instead of only targeting Russian oil sales."

After France backed down, the G7 agreed on the above buyer's cartel deal.

Root of the Stupidity

The G7 does not want Russia to sell any oil but if they succeeded, the price has to rise unless production picks up elsewhere or demand drops.

Rather than admit economic fundamentals, G7 leaders, especially Biden and Macron keep doubling down on dumber and dumber ideas.

 

[sancho panza]

Shaun Richards yesterday,same topic,last comment of hsi conclusion sums it all up beautifully.

https://notayesmanseconomics.wordpress.com/2022/06/28/if-g7-get-their-way-we-will-see-even-higher-oil-prices/

If G7 get their way we will see even higher oil prices

 

Comment

The central issue is that we are being led by people who cannot admit their mistakes. Thus they continue to make them. A price cap plan would likely send the oil price even higher and a lot higher as people scramble to buy. In time there would be more production but not for a while because of the anti fossil fuel policies of the same group of politicians. The absolute mess here is highlighted by this from the BBC about my home country the UK.

The Jackdaw field, east of Aberdeen, has the potential to produce 6.5% of Britain’s gas output.
The regulatory approval comes as the UK government seeks to boost domestic energy output following Russia’s invasion of Ukraine.Shell’s proposals were initially rejected on environmental grounds in October.

Thus they seem set to make this even worse.

The G7 leaders were meeting four months into a war in Ukraine which has pushed up the price of food and hydrocarbons, triggering fears of a global recession. ( Financial Times)

We seem to be sanctioning ourselves……

[spygirl]

8 hours ago, Yadda yadda yadda said:

Kensington are the lender offering incredibly low rates on lifetime mortgages. Dodgy as hell.

 

9 hours ago, sancho panza said:

Someone mentioned this a while back but Barclays are shwoing awful timing as ever.This is what ahppens when you bail out failed finacial instituions so that they fail to learn the lessons they need to in temrs of leverage

Remember barclays Dowd Buckner leverage ratio circa 50/1

https://www.moneyexpert.com/news/barclays-to-buy-specialist-lender-kensington-mortgages/

Barclays to Buy Specialist Lender Kensington Mortgages

Barclays has snapped specialist lender Kensington Mortgages for £2.3 billion, part of a scramble for mortgage books as interest rates rise, despite the threat of recession.

Kensington offers loans to customers often declined by traditional high-street lenders, including the self-employed and others with multiple or variable incomes. The Maidenhead-based business also lends to first-time buyers and borrowers over 55. Its 600 employees service an estimated £8.7 billion of third-party mortgages in addition to the firm’s own £1.2 billion mortgage book.

70% of that mortgage book is made up of loans to owner-occupiers, while 30% is buy-to-let.

Barclays has forecast the value of that mortgage book will hit £2 billion when the deal completes in December and says that value will determine the final sale price.

Kensington’s mortgage book will make a rather small addition to Barclays' existing £156 billion of mortgages but will position the bank to serve neglected kinds of borrowers.

However, non-traditional borrowers are also riskier and will be more vulnerable to the ongoing cost of living crisis, potentially pushing up defaults. Additionally, the housing market, superheated since reopening following the first lockdown two years ago, is also showing signs of slowing down and some analysts are warning of an impending crash.

“We wonder about the logic of expanding into a riskier part of the mortgage spectrum at this point in the cycle,” Citigroup analyst Andrew Coombs told the Financial Times.

But Russ Mould, the investment director at AJ Bell, said the acquisition makes sense in the long run. “The timing might seem a bit odd given cracks appearing in the property market. However, Barclays is clearly taking a long-term view and its purchase of Kensington Mortgages together with a book of UK home loans is a logical strategic move,” he said.

I saw this and pondered.

Theres 3 parties involved-

-Barclays a v v v large bank.

-Kensington v2 a specialist mortgage co, owned by a PE

-Kensington borrowers.

Who do you think is the smartest?

UK banks post 08 are v different to pre 08.

PE owners see no point having Kensington.  I'd guess they see no future for specialist lenders now IR are going up a lot.

Kensington v1 stopped lending after after 08. 

https://www.kensingtonmortgages.co.uk/corporate/company-history

I'd guess Barclays reckon they can buy it at a large discount and then screw out costs and higher IR from lenders.

I'd reckon most people whove took out specialist mortgages since 2010 are going to regret them.

Barclays still have a higher appetite for risk than other banks.

 

[Pip321]

1 hour ago, spygirl said:

Wll 3G are a massive fucktarded PE parasite, who merged with Kraft, who are fucktarded parasites.

And now they are trying to push tge cost if true fuckup in consumer.

I reckon it'll fail, and 3g-kraft-heinz will go back to their parts.

https://finance.yahoo.com/news/kraft-heinz-disaster-shows-brutal-224231597.html

https://finance.yahoo.com/news/kraft-heinz-failure-put-3g-144124013.html

 

Bit off topic, but this sets me back a little. What worries me about this is that some of the companies on whom we depend as shareholders are being run in the same way as some governments.

Ie A board of directors are controlling billions of pounds (way above their competence really)….pulling out a ‘justifiable’ few tens of mill each to buy homes, yachts and a lifestyle, throwing some money at shareholders to keep them quiet and then heading for the exit door after 5 years or so. The businesses might be seen as the directors golden ticket and they can fleece the tax man, the customers, the staff and the shareholders. 

I am not talking about a rational analysis on my part here but rather just I remember how corrupt the whole power thing sometimes feels. It was probably this that made me buy physical assets ie property rather than shares back in the day. 

I remember in 2007/2009 when wimpy home builders shares fell from £370 to £7 and it dawned on me that the shareholders weren’t holding a business asset but rather a ‘shell’. By 2008, I was 40 years old, I had bought and sold about 8 houses and was virtually set for life….and I realised Wimpy had built hundreds of thousands of houses but didn’t have a pot to piss in. All their money and profits (like a leveraged BTL landlord) had been spent on the lifestyle….nothing was saved.

Its taken me sometime to come back to investing in shares, but it’s a stark reminder that the governments being influenced by big business is something we know goes on….but big business is influenced by people who are rewarded so massively that their own personal agendas can be skewed. Maybe £100k spent on some secretary’s jewellery or a perk of £500k to pay for theirs kids private education. And many of these directors aren’t gods driving a business but fallible humans and some very fallible.

Maybe some gold tomorrow 🤔😉😂