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

[HousePriceMania]

15 minutes ago, Stuey said:

At some point demand destruction will have to kick in. I reckon from early September people will cut back on everything.

Friend of mine who is worried about their 5 year fix ending in 18 months, just moved to a bigger house, new Audi, shops in Waitrose, said they will have to cut back on essentials now.

This is how it's going to go now.

My children's after school/summer type clubs noticeably fewer kids in them now.

[HousePriceMania]

38 minutes ago, Stuey said:

Our November baseload is £670/MWh

Everyone better prey for global warming.

[HousePriceMania]

 

[Calcutta]

58 minutes ago, geordie_lurch said:

Only in meme stocks but hopefully margin calls for Wall St and then maybe that triggers the BK? This Zerohedge post will get you up to speed: https://www.zerohedge.com/markets/amc-gamestop-bed-bath-soar-meme-stock-frenzy-returns-leaving-hedge-funds-confused-baffled

From the first paragraph...

"For those who made a killing last week after buying and then (hopefully) selling such names as Hong-Kong's recently IPOed, zero revenue AMTD Digital (ticker HKD), which exploded 32,000% to surpass $400BN market cap before plummeting, we have some good news: the most-shorted, meme stock mania is back, as is FOMO."

Still waiting for these little pricks to start buying my airlines. 

[Boglet]

41 minutes ago, HousePriceMania said:

Friend of mine who is worried about their 5 year fix ending in 18 months, just moved to a bigger house, new Audi, shops in Waitrose, said they will have to cut back on essentials now.

This is how it's going to go now.

My children's after school/summer type clubs noticeably fewer kids in them now.

Maybe they've got the right idea. Based on the past, who'd bet against the government somehow bailing out the overborrowed and spreading the cost onto everyone?

[afly]

31 minutes ago, Boglet said:

Maybe they've got the right idea. Based on the past, who'd bet against the government somehow bailing out the overborrowed and spreading the cost onto everyone?

This is a serious issue IMO. They have set so many precedants and created moral hazard everywhere. They paid us to stay home so we wouldn't catch a cold FFS!

How are they going to deal with news features of children being made homeless? Not to mention people being kicked out of their goverment encouraged H2B shit boxes. They will struggle to come up with arguments NOT to bail out.

[Harley]

3 hours ago, DurhamBorn said:

Yes i do think the bond funds are worthy,but i tend to like to leverage things when i have high conviction.I just think someone like Ashmore can leverage the returns if those EM bonds go higher.If i was trying to balance my portfolio more then id likely add a couple of bond funds.

Im still formulating how to play the rest of the cycle.Very happy with the first bit,we got that right,bit more tricky now.

Bought some EM debt this morning and caressed further gains on HL!  Plus a few other funds.  Sold down LA and China funds as looked a tad unhealthy.  Yep things get harder as you get more money or age!  

[Harley]

3 hours ago, DurhamBorn said:

Asian bonds usually rally first,then EM equities in tandom with EM currencies.Watch Turkey their 10 year is down from 26% to 16% in four months.

Interesting.  I took healthy gains on my Turkie ETF today but opened a small position on certain EM bonds.  EM bonds can be risky and so far USD dependent.  Fun thing though was I looked at which countries it was in and just went "resources backed", "resources backed", "resources backed"!

[DurhamBorn]

2 hours ago, HousePriceMania said:

Sunak's decided by the looks of it that he prefers hyper inflation to raising interest rates....

 

 

He really is horrific.He wants more bennies,fuck all for everyone else.Truss is right,this should come from removing the green levy.100% obvious Sunaks elite bosses dont want the green subs removing,its how they extract even more rent from workers.Stick a windmill on your grouse moor,it even saves their gamekeepers shooting all the raptors (because they do).  Seeing Sunak in this leadership election you can see why we are in so much trouble.People can knock Truss all they like but at least she seems to want to help those who actually go to work.I actually get quite aroused by her 

[Harley]

2 hours ago, Axeman123 said:

melt-up?

That's what Patrick was speculating on the Market Huddle. A lowish CPI followed by bonker equities.  IMO a real possibility.

[Starsend]

2 hours ago, M S E Refugee said:

I watched a little bit of Zeihan on Trigonometry and he seemed keen to put the blame on Brexit even though the EU isn't faring any better.

He is a bit full of himself.

He's got one of those fecking annoying voices (is it called an inflection) where he exaggerates the end of sentences. If you were talking to him for too long you'd really want to give him a clout.

I think he's got a lot to say that's very interesting but I think he's got some big blind spots. He's convinced that Russia will not stop until they've taken back Poland, Lithuania, Estonia (all NATO countries) - I'm less than convinced on that one.

[Noallegiance]

2 minutes ago, Harley said:

That's what Patrick was speculating on the Market Huddle. A low CPI followed by bonker equities.  IMO a real possibility.

I don't get that reaction. It's not going to drop like a stone let alone go negative, so whatever the next print is will still be compounding what's gone on for two years prior.

Not saying it won't happen. I'm in the melt-up camp. But a celebratory attitude to inflation rises since June 2020 thus...:

June 2020 0.6%

July 1%

Aug 1.3%

Sept 1.4%

Oct 1.2%

Nov 1.2%

Dec 1.4%

Jan 2021 1.4%

Feb 1.7%

Mar 2.6%

Apr 4.2%

May 5.0%

June 5.4%

July 5.4%

Aug 5.3%

Sept 5.4%

Oct 6.2%

Nov 6.8%

Dec 7.0%

Jan 2022 7.5%

Feb 7.9%

Mar 8.5%

Apr 8.3%

May 8.6%

June 9.1%

.....coming down a tad makes zero sense to me.

Damn that Putin invading in....er......April 2021.........

In fact, the jump between Feb 22 and June 2022 is considerably less than the first 5 months of 2021.

[HousePriceMania]

19 minutes ago, DurhamBorn said:

He really is horrific.He wants more bennies,fuck all for everyone else.Truss is right,this should come from removing the green levy.100% obvious Sunaks elite bosses dont want the green subs removing,its how they extract even more rent from workers.Stick a windmill on your grouse moor,it even saves their gamekeepers shooting all the raptors (because they do).  Seeing Sunak in this leadership election you can see why we are in so much trouble.People can knock Truss all they like but at least she seems to want to help those who actually go to work.I actually get quite aroused by her 

Seems tome Sunak or his billionaire family are spending a lot of money advertising him.

What chance there's a shock results in the end ?

I have every faith in the WASP tory members, this will not elect an Indian as leader.  Racist c**ts....thank god.

[Harley]

5 minutes ago, Noallegiance said:

I don't get that reaction. It's not going to drop like a stone let alone go negative, so whatever the next print is will still be compounding what's gone on for two years prior.

Not saying it won't happen. I'm in the melt-up camp. But a celebratory attitude to inflation rises since June 2020 thus...:

June 2020 0.6%

July 1%

Aug 1.3%

Sept 1.4%

Oct 1.2%

Nov 1.2%

Dec 1.4%

Jan 2021 1.4%

Feb 1.7%

Mar 2.6%

Apr 4.2%

May 5.0%

June 5.4%

July 5.4%

Aug 5.3%

Sept 5.4%

Oct 6.2%

Nov 6.8%

Dec 7.0%

Jan 2022 7.5%

Feb 7.9%

Mar 8.5%

Apr 8.3%

May 8.6%

June 9.1%

.....coming down a tad makes zero sense to me.

Damn that Putin invading in....er......April 2021.........

In fact, the jump between Feb 22 and June 2022 is considerably less than the first 5 months of 2021.

Just a speculation on his part.  That's what you do, you look at all angles and get ready.  The likes of Patrick have been around too long to go hard too soon, but they keep an open mind.  When someone says something, my first question is usually what probability they are assigning.  The next is what's the tripwire.

[Axeman123]

5 minutes ago, HousePriceMania said:

What chance there's a shock results in the end ?

Betfair is implying ~90% chance of Truss, but I suppose anything is possible.

Most members will send their votes back as soon as they get them, and the claim that some might not get them until "as late as" the 11th probably means the vast majority have already had them. There might even be enough votes recieved at Tory HQ to call it already if the split is strongly enough for Truss.

The massive ramp up in Pishy propaganda on twitter starting yesterday implies to me he will essentially stop campaigning by the weekend. Unless there is a strict ban on opening returned votes I expect a leak well before the 5th Sept.

[Lightly Toasted]

2 hours ago, M S E Refugee said:

I watched a little bit of Zeihan on Trigonometry and he seemed keen to put the blame on Brexit even though the EU isn't faring any better.

He is a bit full of himself.

A lot of his analysis is interesting and good but it's not all joined up and he ignores a few elephants IMO.

e.g. he'd clearly be a Remainer while also thinking that Germany and the core EU economies are doomed. He doesn't even go into EMU, which has fault-lines enough before you even consider the collapse of its funders.

As for advantageous US demographics: you might have plenty of younger people but if they include large groups culturally/programmatically more inclined to rob and burn and blame others, than to get their heads down and work, then it's not much use.

[janch]

Problems with renting in London apparently.  People are desperate to secure a place to live.  Perhaps a lot of BTL has been sold already.  The official stats are way behind the curve which affects the  CPI calculation:

https://notayesmanseconomics.wordpress.com/

[Castlevania]

32 minutes ago, Noallegiance said:

I don't get that reaction. It's not going to drop like a stone let alone go negative, so whatever the next print is will still be compounding what's gone on for two years prior.

Not saying it won't happen. I'm in the melt-up camp. But a celebratory attitude to inflation rises since June 2020 thus...:

June 2020 0.6%

July 1%

Aug 1.3%

Sept 1.4%

Oct 1.2%

Nov 1.2%

Dec 1.4%

Jan 2021 1.4%

Feb 1.7%

Mar 2.6%

Apr 4.2%

May 5.0%

June 5.4%

July 5.4%

Aug 5.3%

Sept 5.4%

Oct 6.2%

Nov 6.8%

Dec 7.0%

Jan 2022 7.5%

Feb 7.9%

Mar 8.5%

Apr 8.3%

May 8.6%

June 9.1%

.....coming down a tad makes zero sense to me.

Damn that Putin invading in....er......April 2021.........

In fact, the jump between Feb 22 and June 2022 is considerably less than the first 5 months of 2021.

The narrative will be the peak is in! And we’re off to the races.

Petrol prices are down a reasonable amount and online stores have too much inventory, so think those two will put some downward pressure on US CPI.

[Bobthebuilder]

1 minute ago, janch said:

Problems with renting in London apparently.  People are desperate to secure a place to live.  Perhaps a lot of BTL has been sold already.  The official stats are way behind the curve which affects the  CPI calculation:

https://notayesmanseconomics.wordpress.com/

Big problem with London rental ATM. Tried to find a place for a family member recently divorced, every place we tried wanted £10,000 up front. Complete pain in the arse. It is going to get worse if people return here from the shires for work.

 

[Castlevania]

4 minutes ago, janch said:

Problems with renting in London apparently.  People are desperate to secure a place to live.  Perhaps a lot of BTL has been sold already.  The official stats are way behind the curve which affects the  CPI calculation:

https://notayesmanseconomics.wordpress.com/

I think people are realising to get paid the big London bucks they need to live in London.

[sancho panza]

6 hours ago, ThoughtCriminal said:

We know what usually happens next.

No idea........

4 hours ago, CannonFodder said:

But which is first - fed pivot or recession

Weak dollar pahse then recession.History suggests mroe than likely.Fed fears unemployed BLMers more than bond holders getting hosed.

4 hours ago, ThoughtCriminal said:

The once unthinkable is now the everyday and mundane.

 

I'm a stuck record, I know, but what a self made fucking disaster we're heading for.

Really enjoy and look forward to your twitter posts TC.Saves me scrolling throuhg.and quite often the message is about as succinct as you can get

[sancho panza]

15 hours ago, DurhamBorn said:

This is a decent watch/listen.I think its incredible that so many on here saw the end of globalisation from different positions.Myself macro,but others spotted it for other reasons.More and more are starting to understand the roadmap we are now on.We cant know all the winners and losers,but staying de-complex seems the right policy.This still isnt a lock though,we will likely still have lots of global markets,but nothing like what we have now.The phone calls for jobs have started again,i told two in the last week phone back when the salary is 50% higher minimum.

 

His analysis of demographics is superb,echoing a lot of Paul Hodges work but in one place.Particualrly ref Germany/CHina declining/aging populations

'Gemrnay has a choice (ref Russian energy) either remain industrialized and neutral,or deindustrialize and remain Western.'

Foresees end of cheap labour as there's less young people,good.

End of German manufacturing model due to end of cheap Russian energy..understands the Dr Tim thesis of cheap energy being the only thing that can feed 8 bn people

[sancho panza]

39 minutes ago, Bobthebuilder said:

Big problem with London rental ATM. Tried to find a place for a family member recently divorced, every place we tried wanted £10,000 up front. Complete pain in the arse. It is going to get worse if people return here from the shires for work.

 

if @AWW is right( he said something like 4 flats out of his block of 16 have been put up for sale by LL's trying to exit) ,then we're llooking at the pre panic phase in London LL's.The savvy ones are bailing out(you could argue the savvy ones are gone) but soon there will be a crush at the exit.

Rents will rise for a while now as BTLers withdraw from the amrkets.The rising rents will convince the majority it's jsut a BTFD moment and some will.

Interesting times coming as we head to winter and rising fuel/food bills & unemployment meet rising rents.There's a sh1tstorm coming.

[geordie_lurch]

This is a great Twitter thread that summarises that excellent Zoltan article someone mentioned earlier and chimes with so much discussed here

 

[Boon]

I suppose if you have flexibility in London you should be able to get somewhere by going to a different area. That is mainly for flats though, nice family houses would be in short supply and I think it is there that is the bidding wars.

I don't really track rentals but in my opinion London is combined of lots of different cities and many places have three prongs now.

First being private dwellings (houses and some non-purpose built stuff), these rent well and capable of rent increases
Second being generally the purpose build modern stuff, rent well if near transport but price constrained due to competition
Third is a new one and is the BTR stuff, priced way above market, low occupancy

I read the FT article and the 20% rise claim was made by Zoopla - IMO that won't be off completed prices and just raw listings so I think that could be almost entirely explained by more BTR flats entering the mix. From being hardly anything a few years back they are really common now.

The 40% rise thing I think is spurious and is going to be a case of some long-term tenant who has been in their place years suddenly being repriced at market levels. For instance I knew someone as late as 2017 who was renting a 2-bed in Shepherd's Bush for £1,000 because the landlord never bothered to raise the rent.