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

[Harley]

Had a recent heating oil delivery now the Xmas price hike is over.  All covered by my O&G divs.  Oh the simplicity! 

[kibuc]

Let's start the 2022 with a rates rise, shall we?

Poland is rising its rates from 1.75 to 2.25 as of tomorrow. Still a long way to go to match the official inflation figures (7% I think), while my family reports that food, housing and transportation is easily in double figures.

[spygirl]

2 hours ago, CannonFodder said:

I have the same thoughts, also this whole rabbit warren suburbia thing going on and semi-rural location that requires car ownership or dual car family ownership. 

can see costs of cars and fuel pushing people back to inner population centres. 

Also for rural locations, councils will pull services such as roads repairs. Focusing finite resources to most important parts of network. Already happening with maintenance hierarchies under UKRLG but you aint seen nothing yet. 4x4s for country roads may become more of a thing.

Then there is council tax for rural detached. Then spare police to patrol and respond out of centres. Spare...

i see inner terraced and semis being more desirable in future.

One of the bets financial decision Ive made is designing our life around only needing 1 car.

0 at the mo, but thats another story.

Youd be amazed at how many people go - Oh, only 1 car. You must save a fortune ...

We do, relatively. 2nd car seems to cost families about 4k/y

 

 

[CannonFodder]

1 hour ago, Talking Monkey said:

I've started to rethink my plans of how rural to go when I leave London, some of the points above are why I'm most likely going for a mid sized market town

At risk of going off topic, if leaving London consider which county as some worse than others. Take Herefordshire, mostly farms that dont pay rates in same way, huge percentage of aging retired population, large social care, county will be up creek.

Worcestershire lots of business, lots of income younger pop, denser population, better position by far

IN past, both part of Hereford and Worcester council  before it split.

Other councils already gone bust elsewhere.

A market town in well off county say surrey going to do better than many other similar towns in poorer counties.

 

[janch]

2 hours ago, Lightscribe said:

Some believe the government will tighten and benefits will be frozen and lose in real inflation terms for the foreseeable, all because the government will be forced to do so.

I think they'll choose a middle way ie put up benefits and old age pension by "their" measure of inflation so they can say they've put them up to stop all the wailing but the reality will be that the cost of living will be higher for those on low/middle incomes so there's a more gradual lowering of living standards.

[JMD]

TalkEnergy Podcast, btw that green chicken is the anonymous 'Doomberg', and who apparently writes some of the best energy commentary on Twitter (those on twitter might be able to confirm this?). 

 

The site has lots of podcasts, some others well worth checking out i think...  But picked this one out especially for @Cattle Prod!!!... the podcaster's own father is an oil geologist and he recounts how industry has changed over the years. 

 

 

[janch]

2 hours ago, CannonFodder said:

I see inner terraced and semis being more desirable in future.

I'm not so sure about the large high-ceilinged Victorian houses in most towns and cities so beloved of the middle classes (and Kirsty and Phil) with their "features".  They cost a fortune to heat and are difficult to insulate adequately besides being money pits to refurbish. 

I can see them falling in value and people opting instead for houses built to a higher spec but it's a shame most modern houses are the cramped boxes of the mass house-builders on tiny plots.

Maybe ex council houses are a happy medium in terms of comfort but without much character.......depends what's most important.

[janch]

I'm in profit (yay) with the Scottish share (viz Centrica) and just wanted to share my euphoria

It was the first share I bought in Jan 2019 after taking the plunge to start my investing journey.  Then came March 2020 and the downward spiral.  I hung on until finally giving up and selling at a loss in April 2021.  But I rebought and invested even more when the gas price started to rise in November 2021 (plus I now feel a bit more confident with what I'm doing).

Today I've top-sliced enough to cover my previous losses so now it's profit all the way(until the BK perhaps)

Maybe it can now be taken out of the cupboard and given back it's proper name.

[JimmyTheBruce]

15 minutes ago, janch said:

I'm in profit (yay) with the Scottish share (viz Centrica) and just wanted to share my euphoria

It was the first share I bought in Jan 2019 after taking the plunge to start my investing journey.  Then came March 2020 and the downward spiral.  I hung on until finally giving up and selling at a loss in April 2021.  But I rebought and invested even more when the gas price started to rise in November 2021 (plus I now feel a bit more confident with what I'm doing).

Today I've top-sliced enough to cover my previous losses so now it's profit all the way(until the BK perhaps)

Maybe it can now be taken out of the cupboard and given back it's proper name.

No chance, still another 50% to go 

[Castlevania]

4 minutes ago, MrXxxx said:

But could the same not be said for the Put Option i.e. you know the downside is covered but you haven't restricted yourself on the upside?

Larger corporate entities may go down the options route - although often in conjunction with forward transactions.

In practice it’s easier to budget ahead by knowing exactly how much it will cost so for most a forward will suffice.

[JMD]

This blog is very good, here's one of its articles... musing on value stocks and the how+why they are so often mis-priced by 'irrational markets'.  

The LT3000 Blog: Unravelling value's decade-long underperformance (and imminent resurgence)

 

[Noallegiance]

2 hours ago, janch said:

I'm in profit (yay) with the Scottish share (viz Centrica) and just wanted to share my euphoria

 

You made me look at mine. Didn't realise I'm up 25%! The euphoria is not confined to your corner of the universe!

[sleepwello'nights]

20 minutes ago, Noallegiance said:

You made me look at mine. Didn't realise I'm up 25%! The euphoria is not confined to your corner of the universe!

Yes to my surprise the FTSE100 is now over 7500. 

[DurhamBorn]

3 hours ago, janch said:

I'm not so sure about the large high-ceilinged Victorian houses in most towns and cities so beloved of the middle classes (and Kirsty and Phil) with their "features".  They cost a fortune to heat and are difficult to insulate adequately besides being money pits to refurbish. 

I can see them falling in value and people opting instead for houses built to a higher spec but it's a shame most modern houses are the cramped boxes of the mass house-builders on tiny plots.

Maybe ex council houses are a happy medium in terms of comfort but without much character.......depends what's most important.

We have lots of those.Many are stone built no cavity,limestone,they leak heat and will cost a fortune to heat now.

[Hancock]

He needs to follow @Cattle Prod  on t'internet!

Oil was $80 on 11 Nov.

[planit]

7 hours ago, MrXxxx said:

Just doing some reading and have a question on Forex hedging that someone more informed may be able to help with.

The point made is of a UK trading company that has to pay bill in three months time in US$. It goes through two worked examples [one with exchange going Against, other with exchange going For] showing the difference between doing nothing [paying spot in three months time], buying a Forward contract, and buying a Put Option. In both cases the Put Option once fees have been included falls between the two other figures.

My question: Unless a trading company is in currency speculation rather than just trading, why would it buy the Forward rather than the Put option?...I can only think that you would use the Forward over a) a very short time period AND b) where the currency pair is stable/non-volatile.

Anyone like to confirm?

 

p.s Just added the book [good overview of UK finance system/history] to 'The Library' thread.

You will lose the extrinsic value in the option, on average you will end up with the forward rate less the extrinsic value in the option.

This is the cost of having the 'option' of exercising or not.

 

Also as Castlevania said, if you are running company accounts using the forward will allow final profits/loses to be worked out. There are no mark to market or other potential profits/loses so accounts are simpler and more understandable.

[ONC]

4 hours ago, janch said:

I'm not so sure about the large high-ceilinged Victorian houses in most towns and cities so beloved of the middle classes (and Kirsty and Phil) with their "features".  They cost a fortune to heat and are difficult to insulate adequately besides being money pits to refurbish. 

I can see them falling in value and people opting instead for houses built to a higher spec but it's a shame most modern houses are the cramped boxes of the mass house-builders on tiny plots.

Maybe ex council houses are a happy medium in terms of comfort but without much character.......depends what's most important.

talking of high ceilings and HIGH heating bills, how about this 

https://www.rightmove.co.uk/properties/81588945#/?channel=RES_BUY

But does have lots of space for kids. And a tower to sit in!!  renovations must have cost a fortune, probably never get money back.

 

[AWW]

7 hours ago, MrXxxx said:

Just doing some reading and have a question on Forex hedging that someone more informed may be able to help with.

The point made is of a UK trading company that has to pay bill in three months time in US$. It goes through two worked examples [one with exchange going Against, other with exchange going For] showing the difference between doing nothing [paying spot in three months time], buying a Forward contract, and buying a Put Option. In both cases the Put Option once fees have been included falls between the two other figures.

My question: Unless a trading company is in currency speculation rather than just trading, why would it buy the Forward rather than the Put option?...I can only think that you would use the Forward over a) a very short time period AND b) where the currency pair is stable/non-volatile.

Anyone like to confirm?

 

p.s Just added the book [good overview of UK finance system/history] to 'The Library' thread.

Small corporates will buy a forward when they are certain that they will transact on that future date. They will buy an option when they are not certain that they will transact.

A forward is a perfect hedge against FX risk, an option isn't. Options come with higher balance sheet costs and, of course, the LP charges a premium on the option.

While small corporates are very unsophisticated in their FX risk management, large corporates will often have a treasury function that contributes to the bottom line. I think it's Porsche that makes more profit from trading then it does from selling cars.

[M S E Refugee]

5 hours ago, kibuc said:

Let's start the 2022 with a rates rise, shall we?

Poland is rising its rates from 1.75 to 2.25 as of tomorrow. Still a long way to go to match the official inflation figures (7% I think), while my family reports that food, housing and transportation is easily in double figures.

My Wife and I have been looking at property over there, houses don't appear to selling very quickly.

Hopefully a few more rate rises will yield some bargains.

[wherebee]

7 hours ago, WICAO said:

Even better.  Congrats on that.

I'm ok with my 2.1% as I know I'm deliberately reducing that with things like gold and superannuation where the products within the wrapper act more like accumulation units than income units.

I made 6500 AUD in dividends in 2021 on a startpoint of 190k at Jan 2020.  That's over 3%, according to my shaky maths.  Less than it will be going forward, because I traded in and out a fair bit in the first half of the year, pushing the 190k up to 225k.

I'm aiming for 10k dividends on 200k.  That'll do me, pig.

[wherebee]

7 hours ago, CannonFodder said:

I have the same thoughts, also this whole rabbit warren suburbia thing going on and semi-rural location that requires car ownership or dual car family ownership. 

 

Here in australia for 20+ years the edges of sydney and melbourne, perth and canberra, have been built on with sprawl after sprawl.  very rarely have rail lines been put in - it's all buses and cars.

We bought deliberately within reach of a train station and walking distance to the local shops, because I foresaw a risk of an energy curtailed future where driving would be a near luxury.  The latest gas price rises here in Oz gave the first red flag on that - every morning the radio included stories of how expensive it was, and sob stories from people commuting 100k for their job who suddenly were being spanked pricewise.

I suspect many of these suburban sprawls will become near slums.  Too close together and too little land to attract the rich, to expensive to get to/from for anyone working.

[Axeman123]

1 hour ago, ONC said:

talking of high ceilings and HIGH heating bills, how about this 

https://www.rightmove.co.uk/properties/81588945#/?channel=RES_BUY

But does have lots of space for kids. And a tower to sit in!!  renovations must have cost a fortune, probably never get money back.

They must be taking a loss just on renovations at that price!

I had heard that when it comes to church conversions anythng with a tower is unmortgageable, so that probably means cash buyer only.

[macca]

23 hours ago, Hancock said:

Get over yourself with Corbyn, he lost (twice), he's a crooked commie loser and Labour are traitorous cunts, but there are also plenty of topics about the 2nd coming that couldn't muster up any cum when he had to. 

Is that you Matt.. Can i have a PPE contract.. 

[Hancock]

4 minutes ago, macca said:

Is that you Matt.. Can i have a PPE contract.. 

Look i'm happy to call people out on other threads, but this one is a cut above. Plenty of other places on this website to debate Labour, Corbyn and all manner of cunts.

The only PPE i have is the £5 packet of paper masks i was forced to buy by some jumped up Manc bird at the airport last week, as otherwise she wasn't going to let me get on the flight.. You can have the contract for these for £10 excluding P&P.

Besides i'm not that oddball, i'm a Hollywood actor.

[mcdongle]

https://thediplomat.com/2022/01/indonesia-bans-coal-exports-to-head-off-blackouts/

 

Could be interesting for this part of the world..

NZ burns Indonesian coal