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

[DurhamBorn]

44 minutes ago, goldbug9999 said:

TLDR: Bank of england in hand over fist money printing causes inflation shocker.

Its incredible isnt it how all of a sudden its inflation everywhere and the public are like rabbits in headlights.Utter cunts they are the lot of them at the BOE.Boris pretending the shit show is fantastic for rising wages,ignoring the fact without productivity gains those workers will be getting poorer.Its a distribution cycle upon us and they aint pretty.They never expected cost push inflation because velocity was so low,but they filled the M2 bucket so full it was certain.I notice today they think RPI might hit 7% and i had 6.7% on my inflation roadmap from 2016.BOE think they can sit keep rates on the floor,but the US long bond will force their hands.Love how they keep saying its all fine and the war will be over by xmas.Same old same old.

 

[Hancock]

2 hours ago, DurhamBorn said:

I had to go to Morrisons though,the Pizza Express Passata is on offer 50p thats an incredible price.It wasnt on shelf though,only on top of the shelf,so i went and got one of those ladder things they use and climbed up and got it all.Could be they only selling to online customers,but it went through the till fine at 50p,anyone near Morrisons get stocked up,2 year date on it,so 2 year and 6 months be fine.

https://groceries.morrisons.com/products/pizza-express-passata-566315011

 

At 50p just buy every single tin you can, its the best sauce for spag bol and adding to shepherds pies etc...

Not seen any of it since Tesco stopped selling it a couple of years back, Mutti is good but its not as good. Tyre shop is near Morrisons so will be popping in.

[Bobthebuilder]

 

[JimmyTheBruce]

9 hours ago, Castlevania said:

I was trying to find out why Harmony’s stock dropped by ~10% a month or so ago when other gold miners didn’t take a hit and found an article that explained it well. I just regurgitated what I remembered in my earlier post. Will have a look if I can find it.

I’m also friends with the daughter of one of the union negotiators for a certain platinum mining company. He sleeps with a gun beneath his pillow. The South African mining unions make Scargill’s lot look like amateurs.

Industry insider contacts eh?  Nice one.

The breadth of knowledge and experience in this thread is truly a godsend.  I'd still be shifting cash between 0.5% cash ISA "best buys" if it wasn't for the information and support available here.

[Lightscribe]

21 hours ago, HousePriceMania said:

This might make DB laugh, I had a dream last night that I went round his house and his family were all talking to me but he wasn't, because he wasn't talking I was never quite sure if it was actually him and I was too polite to ask.  I wonder what that means !!!  

I can interpret dreams… first ones free, then a subscription is required.

DB was busy making a carrot and broccoli soup starter in his soup maker and popping a couple pizzas in the old G3 Ferrari (now repaired out of a garage full of spare parts of everything) for a family gathering to discuss their portfolio allocations and it was cheaper in the fuel shortage to just warm them all up at once saving Butane gas. He had even put his M&S gear in the draw for the occasion, and had his best nearly new Ted Baker clothes on.

Along comes a random Dosbodder who scoured the nice parts of Durham (not Redcar wherever that is) to track DB down. You knocked on the door and it was open so you went in. Who’s this on the ponce?  The family was just being polite to buy time while they debated on calling the police. DB wouldn’t talk to you, no chance pal, he didn’t make extra portions of soup for any old Tom, Dick and Harry, hence you got the cold shoulder. You woke up just as DB was getting angry ready to take you to a ASDA car park to give you a pasting.

 

So in summary the interpretation of this dream was indicating to buy shares in Great Panther. Silver will go to the moon and you will be able to afford your own pizza oven, soup maker, house and family.

[Barnsey]

Spotted at Luton Airport in the best seller section of Smiths, TOP!  (for now)

[belfastchild]

10 hours ago, DurhamBorn said:

I had to go to Morrisons though,the Pizza Express Passata is on offer 50p thats an incredible price.

Just to follow up on the fermipan out of date yeast. I have an opened (sealed with a clip) bag of fermipan with original date of 2018 expiry june 2020. Made 15 pizzas last weekend for friends in the outdoor oven using the yeast.
Added a wee bit more in than recipe stated (ok just threw a couple of heaped teaspoons in mix for 5 pizzas at a time) and left overnight to rise without doing the poolish. About 36 hours from initial mix to pizza in the oven and they were grand.
Yeast has been kept at the back of the fridge since opening and is now down to the last 1/4 or so. I probably opened it around the end date as it was part of my brexit stash. Bought a new block during lockdown but was in the catering suppliers last week and its half the price I paid on ebay!
Catering suppliers near me opened up to the public during lockdown, only stipulation was you can only get in after 10:30. I dont use the nearest one but use another one (makro), they were a client for years but last 2 times Ive been in (since they were bought out by tesco) range has been rubbish here in NI. They arent generally cheaper than going round the shops but you can just buy in bulk and freeze. Their reduced bin though, is superb if you can get it. Self employed business should be able to get access to most now I think as they are desperate for customers.

I just use tinned whole tomatoes now for the pizza sauce. I have fancy san marzano ones but hard to come by now but normal tinned tomatoes will do. Couple of fresh basil leaves (grow it on the kitchen window) and maybe a clove of garlic. (cutting and drying the basil now along with mint, oregano and rosemary). I have a hand stick blitzer thing but the key is not to blitz so its smooth, a couple of short bursts (very short, on off type thing) so the tomatoes are just broke up. I sometimes get the catering tins and do it in the tin when I have a lot of people round. When its over I just stick into a freezer bag in an old chinese container so when it freezes its square shaped and sits in the freezer better when I take the chinese container away.

Shouldve sold my royal mail shares a couple of weeks ago, been dropping since. They used to be a client of mine but thought I was too expensive so I bought the shares to make up the difference ;-) Figured their cost cutting would be across the board and would work for a while! Over 200% up at one point!
Toyed with the idea of ditching the nutrien (50%) and mosaic (250%) but glad I didnt, although might do soon. Transferred half my cash isa (doing f all at 0.4%) into my s+s isa (only opened 2 years ago) in case theres a crash. Still have that feeling of dumping everything, had it for a while now. Down in vod and bat (slightly) so trying not to go balls deep into them ;-)

Crossing too many threads but Ive always had a couple of rules with women, no teachers, no nurses, no social workers which rules out about 50% of the women Ive ever met here (then again havent dated an NI woman since I was at Uni. Shagged quite a few but.. anyway..) Coming round to your way of thinking about old age but Im lucky in that one of my siblings is a nurse and a fecking good one too. If theres a crash in property I might see about getting them a house in my street and they and their kids can look after their uncle in his old age ;-) I'll pay them in silver coins ;-)

[DurhamBorn]

8 hours ago, Hancock said:

At 50p just buy every single tin you can, its the best sauce for spag bol and adding to shepherds pies etc...

Not seen any of it since Tesco stopped selling it a couple of years back, Mutti is good but its not as good. Tyre shop is near Morrisons so will be popping in.

Its got the same expire date as the last ones i got from Tesco before they stopped selling it.Looks like they arent making it anymore and found a big supermarket to take the stock in the warehouse.It is really good and at that price amazing value.

[M S E Refugee]

33 minutes ago, belfastchild said:

Shouldve sold my royal mail shares a couple of weeks ago, been dropping since.

They only seem to be down because UBS downgraded them, however there is an insane amount of Covid test kits being processed every week in our office and they all use the Tracked 24 service.

[DurhamBorn]

24 minutes ago, belfastchild said:

Just to follow up on the fermipan out of date yeast. I have an opened (sealed with a clip) bag of fermipan with original date of 2018 expiry june 2020. Made 15 pizzas last weekend for friends in the outdoor oven using the yeast.
Added a wee bit more in than recipe stated (ok just threw a couple of heaped teaspoons in mix for 5 pizzas at a time) and left overnight to rise without doing the poolish. About 36 hours from initial mix to pizza in the oven and they were grand.
Yeast has been kept at the back of the fridge since opening and is now down to the last 1/4 or so. I probably opened it around the end date as it was part of my brexit stash. Bought a new block during lockdown but was in the catering suppliers last week and its half the price I paid on ebay!
Catering suppliers near me opened up to the public during lockdown, only stipulation was you can only get in after 10:30. I dont use the nearest one but use another one (makro), they were a client for years but last 2 times Ive been in (since they were bought out by tesco) range has been rubbish here in NI. They arent generally cheaper than going round the shops but you can just buy in bulk and freeze. Their reduced bin though, is superb if you can get it. Self employed business should be able to get access to most now I think as they are desperate for customers.

I just use tinned whole tomatoes now for the pizza sauce. I have fancy san marzano ones but hard to come by now but normal tinned tomatoes will do. Couple of fresh basil leaves (grow it on the kitchen window) and maybe a clove of garlic. (cutting and drying the basil now along with mint, oregano and rosemary). I have a hand stick blitzer thing but the key is not to blitz so its smooth, a couple of short bursts (very short, on off type thing) so the tomatoes are just broke up. I sometimes get the catering tins and do it in the tin when I have a lot of people round. When its over I just stick into a freezer bag in an old chinese container so when it freezes its square shaped and sits in the freezer better when I take the chinese container away.

Shouldve sold my royal mail shares a couple of weeks ago, been dropping since. They used to be a client of mine but thought I was too expensive so I bought the shares to make up the difference ;-) Figured their cost cutting would be across the board and would work for a while! Over 200% up at one point!
Toyed with the idea of ditching the nutrien (50%) and mosaic (250%) but glad I didnt, although might do soon. Transferred half my cash isa (doing f all at 0.4%) into my s+s isa (only opened 2 years ago) in case theres a crash. Still have that feeling of dumping everything, had it for a while now. Down in vod and bat (slightly) so trying not to go balls deep into them ;-)

Crossing too many threads but Ive always had a couple of rules with women, no teachers, no nurses, no social workers which rules out about 50% of the women Ive ever met here (then again havent dated an NI woman since I was at Uni. Shagged quite a few but.. anyway..) Coming round to your way of thinking about old age but Im lucky in that one of my siblings is a nurse and a fecking good one too. If theres a crash in property I might see about getting them a house in my street and they and their kids can look after their uncle in his old age ;-) I'll pay them in silver coins ;-)

Iv sold most of my Royal Mail.I expected £8 including divs minimum from the cycle but at over £5.60 i decided to re-deploy,at one point it was showing a 5 figure loss,but ended up making a fantastic profit as i added a lot at the bottom it was actually around my 3rd biggest holding.

Telcos are the only real struggle.The market simply doesnt like them because there has been little profit growth for a long time and they mostly have too much debt and very poor ROCE and the big one their returns on cost of capital are very poor.However on the plus side even the indebted have very good debt structures.Some are getting debt down to low levels (Tef Germany,Tef Brasil) and the big ones like Orange SA and even TEF have made good progress.

I see telcos right now as i saw tobacco back in the late 90s.A boring sector that was structurally undervalued about to consolidate.I dont expect the gains tobacco delivered,bit i do think as a sector they will provide nice returns.The key is they keep consolidating,(i think Orange might make a move in Belgium next after the recent Romania move) and that they all increase prices with or above inflation.As TEF Brasil's acounts showed their costs only increased at 40% of the inflation rate and until depreciation laps in 10 to 15 years that should mean much higher free cash.I would expect that to start feeding in from around now,so VOD should see a 5% increase in free cash for instance in its next results.

[AyrshireBoy]

I've been following this thread for a good few years now, thanks to all for sharing your insight and knowledge. Just saw this...

 

[DurhamBorn]

18 minutes ago, M S E Refugee said:

They only seem to be down because UBS downgraded them, however there is an insane amount of Covid test kits being processed every week in our office and they all use the Tracked 24 service.

I think out of everything Royal Mail showed the classic contrarian play.Hated by the market,talk of a long slow death,dividend slashed,workers striking etc.Yet a £10 billion turnover that just needed some inflation to spurt free cash much higher.They key was we spotted the inflation to come.

The irony now is the media are all over inflation that they said was gone for good,but all about the bad affects,you dont see any talk about how it works etc and its only here iv seen understanding of how certain sectors can leverage the returns.

Last year the media and everyone i talked to from factory managers to shop workers told me oil and gas was dead,green init now.BP has returned nearly 100% including divs since.My main worry is that the government etc got it so wrong we have a systemic risk on our hands.Notice now they are trying to blame the Russians 

[Harley]

So when is a rep not a rep?  Or more accurately, how to rep but keep the reason secret?  Just "Bog" it!  Yes, I've seen the (funny) meme but here, when used as a rep (ie. to someone), it can mean anything, which if it was money would make it worthless.  I would best think it means "taken in" but that's just one lone voice of many.  IMO, avoid.  I'll stick with the lurv.  Right back to business and these PM miners.....more to follow tomorrow.

[Harley]

5 minutes ago, AyrshireBoy said:

I've been following this thread for a good few years now, thanks to all for sharing your insight and knowledge. Just saw this...

 

Pomme de terre Rodders, pomme de terre!

[Axeman123]

The mood music is changing, surely preparing the public for what's next:

https://www.dailymail.co.uk/news/article-10075173/Former-chancellor-Lord-Lamont-calls-rate-hike-inflation-rises-3.html

[Castlevania]

10 hours ago, JMD said:

Thanks again Castelvania, and i think I do understand what your saying in terms of the commodity price value of the silver within the fund. However when it came to actually selling, and if the pound for example had risen against the dollar, wouldn't I then get correspondingly 'fewer' pounds if I took settlement in pounds?                                                                                                                                                                                      Isn't this the main reason why investors buy or hold assets in a foreign currency, in order to hedge against the risk of their own currency falling against that other currency? ...Excuse my myopic question, but I had a specific idea in mind (not hedging btw, but merely 'cashing in' the silver fund in future and to exchange for physical gold, after gsr favors that swop) and I'd hate to think my planning was ill conceived, or just plain wrong! Not asking for advice of course, just enquiring about the mechanics of this.

Think of it as if you bought a USD cash fund. You bought a $100 of cash. You have a choice of paying in USD or in GBP. In USD it costs $100 and in GBP it would cost you the current spot rate (1.36) so £73.50.

You then decide to sell in a year’s time. In dollars it’s still worth $100. However, if the GBPUSD rate has increased to say 1.50 then your $100 is now worth £66.67.

My point is it doesn’t matter which currency it’s denominated in I.e. if you buy the fund in USD or in GBP you are still exposed to currency risk when buying anything in a foreign currency to your own.

[Harley]

12 hours ago, Hancock said:

Further data released by the Bank and the Financial Conduct Authority showed that a fifth of UK mortgage holders would be exposed to a rise in the interest rate.

WTF does that mean, like their interest payments might go up 'cause they're not on fixed rates?  And, er yer.......!   Feckin amazing insights these guys got!  Or journalistic brevity to the point of meaningless (which is where they feel most at home)?

[Loki]

1 minute ago, Harley said:

WTF does that mean

It means they are B O G G E D 

[Harley]

12 hours ago, Hancock said:

Which i could afford such luxuries. But i've had a bad week, 2 punctures in 3 days = £200, done my back in at the gym which = £50 for Osteopath  and other £50 in 2 weeks .. bought some dreadful noodles from Wok2go for me and the kid costing £15 that went in the bin and then gave me the trots.

But on the plus side my SIPP might be crashing according to the BOE as interest rates could spike!

https://www.telegraph.co.uk/business/2021/10/08/bank-warns-market-shock-higher-rates-inflation/

Stock markets are at risk of crashing around the world if an investor panic takes hold over stagnation and higher interest rates as prices jump, the Bank of England has warned.

Officials at Threadneedle Street said there is a danger that share prices will "correct sharply" in coming months following a spate of risky bets by investors.

It comes amid fears of an inflationary spiral as labour shortages and a surge in energy costs push up the price of everything from toys to steel. There are signs that increases are becoming embedded in the labour market, with starting salaries rising at their fastest rates in 24 years according to a survey released on Friday by the Recruitment and Employment Federation.

A report by the Bank's Financial Policy Committee (FPC) said that a rally which has pushed share prices to record highs “partly reflects the improved economic outlook, but may also reflect a ‘search for yield’ and higher risk‐taking in a low interest rate environment".

It added: “Asset valuations could correct sharply if, for example, market participants re‐evaluate the prospects for growth, inflation or interest rates.”

Fears are growing that the West will be plunged into a bout of so-called stagflation, where prices rise but economic growth remains sluggish. This risks sparking a cost of living crisis and destroying the value of assets, forcing central banks to combat the increases by raising interest rates.

The US stock market sagged last month, stumbling from record highs amid worries high inflation will prove stronger and longer-lasting than had been expected.

In Britain, households are facing particular pressure as energy prices surge and driver shortages exacerbate supply problems.

On Thursday, the Bank of England’s new chief economist, Huw Pill, warned the duration and scale of price increases was “proving greater than expected”.

Further data released by the Bank and the Financial Conduct Authority showed that a fifth of UK mortgage holders would be exposed to a rise in the interest rate.

More than 21pc of outstanding residential mortgages had variable rates at the end of June which could climb if the benchmark is lifted, piling further cost-of-living pressures on 1.9m households. Collectively, vulnerable households are sitting on home loans worth more than £300bn.

Money markets are pricing in the first rate increase by the end of the year, lifting it off its current all-time low of 0.1pc.

Further increases are expected by September next year, taking the rate to  0.75pc.

UK bond yields hit their highest level relative to German bunds since 2016 on Friday, a signal that traders expect inflation in Britain to outstrip Europe’s top economy over the coming decade.

The Bank added that there are signs that investment banks are beginning to take on more debt, though officials stressed the UK’s financial system is sufficiently resilient to potential shocks.

Its report also warned of a potential spillover from the crisis at Evergrande, one of China‘s biggest property developers, which is facing a default on its debts.

Officials said the company’s troubles “could pose risks to the wider property sector in China with potential spillovers internationally”.

The Bank also warned over a debt time-bomb threatening Britain’s small businesses, saying they have been borrowing at a significantly faster rate than larger companies.

Huge numbers of small companies took on extra debt to weather the pandemic, much of it through government-backed schemes. Their debt levels have jumped by a quarter during the pandemic, versus a rise of just 2pc for large firms, the Bank said.

Companies built up about £80bn in loans overall, some of which they are now beginning to repay.

The FPC said: “Significantly more [small companies] now have debt to service, and while the majority of new debt was relatively cheap due to government loan schemes, this will add to pressure on weaker [businesses]."

It comes amid signs of increasing pessimism over the British economy.

Bank of America’s gauge of UK consumer confidence has continued to slip in the past two weeks, falling to its lowest level since April in a move analysts said was driven by tax hikes, [the] energy crisis, Covid cases, shortages and inflation.

The figures come ahead of new GDP data next week, which economists believe are likely to show that August was a last hurrah for post-lockdown growth before inflation and economic disorder began to bite.

Sanjay Raja from Deutsche Bank predicted monthly growth of 0.3pc, an acceleration from a narrow gain in July.

He said: “We don't think that the pick up in growth will last very long, however – at least not while supply side constraints continue to hamper demand.

“With supply frictions rising, inflation biting, and confidence falling, we expect the rest of the year to see a more notable slowdown in activity.”

Have they run all this by @DurhamBorn, else yer, sure!  Never trust a sage unless they can rustle you up a decent pizza.  That's 99.9% of them gone!

[Castlevania]

27 minutes ago, DurhamBorn said:

Iv sold most of my Royal Mail.I expected £8 including divs minimum from the cycle but at over £5.60 i decided to re-deploy,at one point it was showing a 5 figure loss,but ended up making a fantastic profit as i added a lot at the bottom it was actually around my 3rd biggest holding.

Telcos are the only real struggle.The market simply doesnt like them because there has been little profit growth for a long time and they mostly have too much debt and very poor ROCE and the big one their returns on cost of capital are very poor.However on the plus side even the indebted have very good debt structures.Some are getting debt down to low levels (Tef Germany,Tef Brasil) and the big ones like Orange SA and even TEF have made good progress.

I see telcos right now as i saw tobacco back in the late 90s.A boring sector that was structurally undervalued about to consolidate.I dont expect the gains tobacco delivered,bit i do think as a sector they will provide nice returns.The key is they keep consolidating,(i think Orange might make a move in Belgium next after the recent Romania move) and that they all increase prices with or above inflation.As TEF Brasil's acounts showed their costs only increased at 40% of the inflation rate and until depreciation laps in 10 to 15 years that should mean much higher free cash.I would expect that to start feeding in from around now,so VOD should see a 5% increase in free cash for instance in its next results.

I like the fact that telcos as a whole have gone absolutely nowhere the past 18 months. Gives me room to redeploy gains from other areas.

[Loki]

14 minutes ago, AyrshireBoy said:

I've been following this thread for a good few years now, thanks to all for sharing your insight and knowledge. Just saw this...

 

This means nothing to me.

 

Ah, Vienna looks warm?

[Castlevania]

17 minutes ago, Harley said:

So when is a rep not a rep?  Or more accurately, how to rep but keep the reason secret?  Just "Bog" it!  Yes, I've seen the (funny) meme but here, when used as a rep (ie. to someone), it can mean anything, which if it was money would make it worthless.  I would best think it means "taken in" but that's just one lone voice of many.  IMO, avoid.  I'll stick with the lurv.  Right back to business and these PM miners.....more to follow tomorrow.

Bogged is an euphemism for being controlled by the 0.001%. I apply it for those posts where someone is either being controlled or thinking like those in control. I don’t get the heart rep though. 

[Harley]

46 minutes ago, Castlevania said:

Think of it as if you bought a USD cash fund. You bought a $100 of cash. You have a choice of paying in USD or in GBP. In USD it costs $100 and in GBP it would cost you the current spot rate (1.36) so £73.50.

You then decide to sell in a year’s time. In dollars it’s still worth $100. However, if the GBPUSD rate has increased to say 1.50 then your $100 is now worth £66.67.

My point is it doesn’t matter which currency it’s denominated in I.e. if you buy the fund in USD or in GBP you are still exposed to currency risk when buying anything in a foreign currency to your own.

IMO gold is a currency.  The only debate is whether it's the currency.  I always look at it in GBP 'cause that's what my bills are.  People listening to the talking heads using USD could get fecked from currency moves.

[Harley]

2 minutes ago, Castlevania said:

Bogged is an euphemism for being controlled by the 0.001%.

Think you've nailed it ta.  Like "taken in".  So to all you who've "bogged" me, feck off I have!

[Castlevania]

Just now, Harley said:

Think you've nailed it ta.  Like "taken in".  So to all you who've "bogged" me, feck off I have!

Ah, but sometimes you think like the 0.001% which is always deserving of a “bogged”