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

[Hancock]

19 minutes ago, Loki said:

Are you going to sell/top slice?

No idea mate, i'm not really savvy enough to time things to be a trader .. though when it was 120k i said to myself i'll sell it when it gets to 150k (i did add an extra 15k) ... now i think well if it gets to 180k then i could ditch the more profitable parts at that time.

Kind of see the SIPP money as play money, as its in there for the long haul and i can't touch it .... when it was down about 50% i couldn't have cared less, so same applies when it rises.

Only headache for me is the house money, and if the stock market doesn't implode i could still always just buy a house .... If it does crash and i go balls in i can pretty much retire  .... and then i don't have to deal with tight fisted companies that wont pay for my tea. 

[DurhamBorn]

1 hour ago, Loki said:

Are you worried? 

Do you think the UK could have a BK while US indices continue to rise, which then have their own BK?  I'd assumed it would all happen at once worldwide, which was pretty stupid really.

Our market is different to the UK economy.The risk is the government mostly.It depends how much more they can take from the productive to give away,its very close now.

[Loki]

2 minutes ago, DurhamBorn said:

Our market is different to the UK economy.The risk is the government mostly.It depends how much more they can take from the productive to give away,its very close now.

Thanks.  I guess you're looking at the bond market directly, rather than trusting QE announcements?

[DurhamBorn]

5 minutes ago, Loki said:

Thanks.  I guess you're looking at the bond market directly, rather than trusting QE announcements?

The difference between QE and the structural deficit and the moves in gilt yields.Tell us how much they are struggling to issue gilts.

[Loki]

1 minute ago, DurhamBorn said:

The difference between QE and the structural deficit and the moves in gilt yields.Tell us how much they are struggling to issue gilts.

That makes sense even to me, cheers 

[sancho panza]

Just reading a Lyn Alden piece from Monday.Seriously,not surprised ........goes to show we're not mad.

'Moreover, if the headline CPI was still measured the same way it was in the early 1980s (primarily referring to the fact that the index included housing costs rather than the wonkish substitute metric of owner’s equivalent rent as it does now), then it would be in the low double-digits at the moment.'

[Noallegiance]

1 hour ago, HousePriceMania said:

Any excuse not to raise IRs then.

You can see it coming.

We need to keep rates lower for longer, more QE etc etc etc.

If this comes to pass, let's face it, the system is broken, it aint coming back.  get ready to fight for your lives.

I wouldn't be surprised if this last great bluff is what helps give legs to the melt up.

"We're gonna raise........WE'RE GONNA RAISE!...............................Psyche!"

[Chewing Grass]

8 minutes ago, sancho panza said:

Just reading a Lyn Alden piece from Monday.Seriously,not surprised ........goes to show we're not mad.

'Moreover, if the headline CPI was still measured the same way it was in the early 1980s (primarily referring to the fact that the index included housing costs rather than the wonkish substitute metric of owner’s equivalent rent as it does now), then it would be in the low double-digits at the moment.'

The problem was houses were bought with credit, credit cheap = house expensive, imagine how expensive a house would be now with 7% mortgage rates. They had to remove house prices to keep IR's low.

[Axeman123]

I have heard it said that generally the first interest rate raise is bullish, as markets will price an uncertain raise as it's worst case scenario and the actual first raise will never be as extreme. In the same way perhaps actual taper will be bullish, as the proposed rate of taper becoming certain will remove uncertainty or the possibility of a faster rate.

The proposed (US) rate of taper and no interest rate rise until the middle of next year is pretty pathetic, almost token. The probable +.15% November and +.25% December rises in the UK are the same. Chrystallizing those uncertainties at far from worst case scenario values will surely trigger a rally.

[DurhamBorn]

These rate increases should be inflationary at first because of where we are in the debt cycle.Increases mean higher cost of capital meaning to invest needs higher prices,so people already with the assets increase prices as well and make higher profits.Its a big part of how i expect the cycle to play out.It sounds crazy,but companies in our sectors are more likely to go bust with high debt burdens if interest rates FALL ,and in a much better position if they increase.Thats because prices rise,but their debt service costs dont.

 

[JMD]

7 hours ago, Transistor Man said:

France did. An amazing achievement. But they had existing heavy industry. And it was seen as an event of national mobilisation. Politics was bypassed. No parliamentary approval was sought. Here, I just can’t see it. Heavy forging etc? Not easy to do. 

Interesting discussion. Btw reason I think quick deployment is feasible, barring the usual political stasis of course, is that the smr design doesn't involve heavy forging.

[sancho panza]

4 hours ago, Cattle Prod said:

I had a thunderbolt this morning. I'd wager everyone on this thread is big on personal responsibility. Owning your shit. Learning from mistakes. Trying better. But look around: from politicians down to benefit claimants, no one has a sense of personal responsibility. It's always someone else's fault, always a reason not to do something. It's a cancer in western culture. And this solved the mystery of why Boris is so maddeningly popular: he is the arch responsibility avoider. He he is the alpha of slippery, lazy, two faced wasters, and they see themselves in him.

The reason it struck me like a thunderbolt was because I watched "Night Bombers" on Prime last night. It's the only surviving colour film on the RAF during WWII, it's mesmerising, please do watch it. My God, did they own their shit. Like the 22 year old Lancaster captain who managed to survive his 30 missions, at odds of 3/1, saw out the war, became an accountant and never flew again. Basically volunteered, flattened the Germans, and then got on with life. I bet you he wasn't a complainer or finger pointer.

Sigh. Rant over.

One of the best things I've learned with Paramedicing is the art of reflection-what went right on a job,what could have gone better etc.I've applied it to so much of my life incl investing.

Sadly,I've seen very little reflection from our CMO Whitty or some of the other lockdown zealots who have the brains to know better..

Which brings me to my own thunderbolt for the day,which is why I inherehently distrust the judgements of most highly intelligent people_ I mean the Whitty's of this world-and that's because quite often they aren't possessed of much common sense at all.

Common sense would have made him run a basic cost/benefit analysis of the lockdown before backing it.If he didn't do it at the start then surely common sense would havemade him reflect on it's relative benefits part way through.......No......

Instead,we've focused our entire energies on trying to defeat an airborne virus by wearing paper masks and shutting everything but the shops so we all go shopping together.

[JMD]

6 hours ago, Starsend said:

Completely disagree. I've been robbed of more than enough over my lifetime to pay for everything I'll need five times over. The answer isn't to steal even more, it's to steal less and use it for what it's supposed to be used for i.e. not housing thousands of dingy immigrants a day, people who don't want to work and on and on.

And actually I did work hard for my house and paid for it out of heavily taxed income.

If they don't want to pay for my old age care then I'll have a big chunk of that tax back please and then I'll be fine.

As always people think the answer if to go steal more from those who've been prudent instead of going after the real thieves.

Tbc I also disagree with the policy, but predict that such main residence property cgt's along with other wealth taxes are baked in. After all it is, in all but name, already happening, where long term social care residents have charges put on their home asset by some (not all) councils. The council recoups it's costs after the patient has died. I think being forewarned is forearmed, but I leave it to the more astute on this thread to work out how we might avoid such wealth taxes.

[wherebee]

13 hours ago, Sugarlips said:

My word, once people twig they are soon expected to work past 70 they won’t want to play anymore.

I’m foolishly voluntarily paying NI contributions (since I’ve been MIA overseas for so long) but should pull the plug.

I stopped paying my NI contributions when I left the Uk in the mid 2000's.  My expat mates thought I was mad when I said "the british gvt will never pay me a pension overseas in 2040.  cast iron built in".

Looks like I win again on the cynical old bastard front.

[JMD]

2 hours ago, sancho panza said:

One of the best things I've learned with Paramedicing is the art of reflection-what went right on a job,what could have gone better etc.I've applied it to so much of my life incl investing.

Sadly,I've seen very little reflection from our CMO Whitty or some of the other lockdown zealots who have the brains to know better..

Which brings me to my own thunderbolt for the day,which is why I inherehently distrust the judgements of most highly intelligent people_ I mean the Whitty's of this world-and that's because quite often they aren't possessed of much common sense at all.

Common sense would have made him run a basic cost/benefit analysis of the lockdown before backing it.If he didn't do it at the start then surely common sense would havemade him reflect on it's relative benefits part way through.......No......

Instead,we've focused our entire energies on trying to defeat an airborne virus by wearing paper masks and shutting everything but the shops so we all go shopping together.

Whitty is a technocrat and so by definition he will possess no common sense. He seems possessed by having only an 'autistic drive'. And I don't think it unfair to term him a zealot, after all I think he'd be quite happy playing his Covid fiddle (or fiddling with his covid!) while patiently watching our economy burn. Of course I accept I am not qualified to make these judgements about him, but still think the Whitty is weird!!!  ...Just look at how he spent some of his valuable time, I mean fighting a global pandemic obviously wasn't important enough for him to dedicate his time to, he also had time to produce this strange report on coastal town deprivation (his take on why coastal towns are deprived is almost intellectually illiterate, or maybe we are back to him having no common sense!!)...  https://www.bbc.co.uk/news/uk-england-kent-58665313

[JMD]

9 hours ago, HousePriceMania said:

Everything 

Not 'everything' is to be sold though, after all @DurhamBornhas told us how it is not worth the effort mongering fire pits!!

[jamtomorrow]

11 hours ago, Hancock said:

Im worried that we won't, i get annoyed when i see my SIPP rising, its nearly 160K i want it to crash down to £60k

Im betting my entire life savings on these useless cunts crashing the stock market like its 1929, lets hope they achieve one thing i want.

Eerily resonant of Luke Gromen's observation that the Fed is trying to "ride two horses with one ass".

Which is not a criticism @Hancock, anyone wanting to hold onto their hard/easy-earned is being forced to second-guess the Fed and play the same game (me included).

Maybe that's a possible BK mechanism - as soon as markets see the Fed commit to one horse or the other, they'll pile in and try and get on the same horse. And maybe the Fed know this, hence this ridiculous charade around will-they/won't they taper.

They need the market to follow *slowly* when they commit, hence all the mixed messages and smoke signals.

Stability, the hidden variable.

[HousePriceMania]

15 hours ago, sancho panza said:

 

I'm not sure the scope is there for neg rates in this environement.

 

I agree, the scope for any sane sensible decent person is not there.

Show me the sane sensible decent people in government/the MPC.

That's my worry.

If these people were willing to do what is right we'd not be here talking about how to protect ourselves from their collapsing ponzi scams.

[MrXxxx]

15 hours ago, Cattle Prod said:

I walked through parliament Square in London an hour ago on my way home from work. There was a large protest on, and my heart leapt, given the Coronavirus Act was renewed yesterday with a giggle and laugh in the commons, guaranteeing 6 months more dictatorial powers. I wandered over ...

But it was for refugee rights. "No one is illegal" etc etc. Cars beeping in support. Any MP would just have to look out a window of parliament and burst out laughing. This is the mood of the people in bloody London.

The shires need to rise up, the red wallers need to tell Boris go fuck himself. I saw the Blair and Brown documentary the other day, whatever about them they were good opposition, competent, smart and at least tried to make the country better if flawed. Could Labour please sort its shit out, this is getting really really serious.

I had a thunderbolt this morning. I'd wager everyone on this thread is big on personal responsibility. Owning your shit. Learning from mistakes. Trying better. But look around: from politicians down to benefit claimants, no one has a sense of personal responsibility. It's always someone else's fault, always a reason not to do something. It's a cancer in western culture. And this solved the mystery of why Boris is so maddeningly popular: he is the arch responsibility avoider. He he is the alpha of slippery, lazy, two faced wasters, and they see themselves in him.

The reason it struck me like a thunderbolt was because I watched "Night Bombers" on Prime last night. It's the only surviving colour film on the RAF during WWII, it's mesmerising, please do watch it. My God, did they own their shit. Like the 22 year old Lancaster captain who managed to survive his 30 missions, at odds of 3/1, saw out the war, became an accountant and never flew again. Basically volunteered, flattened the Germans, and then got on with life. I bet you he wasn't a complainer or finger pointer.

Sigh. Rant over.

 

I felt like this 12 months ago, and realizing nothing is going to change decided getting upset was wasted effort. I am now part of the way through 'planning my escape'.

[jamtomorrow]

25 minutes ago, MrXxxx said:

I felt like this 12 months ago, and realizing nothing is going to change decided getting upset was wasted effort. I am now part of the way through 'planning my escape'.

The 0.001% are way way ahead of us. It's why Bezos built the Cock Rocket.

[MrXxxx]

7 minutes ago, jamtomorrow said:

The 0.001% are way way ahead of us. It's why Bezos built the Cock Rocket.

I think i'm a bit old for a 'Cock Rocket' ....but who know's, once the Covid vaccine has created a world full off eunuchs/Jaffas, as a 'pure breed' I may be in demand! :-)

[JMD]

1 hour ago, Cattle Prod said:

If Whitty was top in is field, he wouldn't be working for the govt. The private sector would have poached him long ago. Without being in a position to judge his expertise or intelligence, I'd bet he's mediocre, like any government scientist in my field I've had to deal with.

Yes agreed Cattle Prod, but i wasn't really commenting on Whitty's field of 'expertise', it was more about @sancho panza's topic he raised about our 'expert community' having little common sense... I mean - for all that's holy(?) - that Whitty coastal-town-deprivation report is pure utopian claptrap! But rather interestingly, I suppose it does illuminate and help explain his approach to Covid. 

Ok, Whitty is a one trick (tick?) pony (phoney?) - that's his designated role and i understand that. But where are the polymaths when you need them, Ben Franklin, GK Chesterton... intelligence with moral character, those are the types of people i think we sorely need for next cycle?!   

 

(...i do get that we are moving through a fourth turning, and that there will be no great subtlety of thought around, instead it is a time of hyperbolic reductionism - fantastically symbolised for me each time i see an ignorant reporter gesticulating wildly, replete with facial tics even... anyway my rant (and thread drift?) is here ended)  

[HousePriceMania]

When you look at this, they are deliberately confusing people.  Why is the question.

1) Is it because they will taper and raise quicker 

2) They will never taper, they are just waiting for an excuse not to.

 

This is with 10% inflation, 20% house price inflation etc etc etc. As I said above, they should be acting responsibly, the fact that they aren't is worrying.

Sven Henrich summed it up nicely yesterday.

 

 

The bankers will never do the right thing. Collapse is nailed on now.  It has been since 2005

Same in the UK as the U.S.  

 

[Hancock]

4 hours ago, jamtomorrow said:

Eerily resonant of Luke Gromen's observation that the Fed is trying to "ride two horses with one ass".

Which is not a criticism @Hancock, anyone wanting to hold onto their hard/easy-earned is being forced to second-guess the Fed and play the same game (me included).

Maybe that's a possible BK mechanism - as soon as markets see the Fed commit to one horse or the other, they'll pile in and try and get on the same horse. And maybe the Fed know this, hence this ridiculous charade around will-they/won't they taper.

They need the market to follow *slowly* when they commit, hence all the mixed messages and smoke signals.

Stability, the hidden variable.

Sooner or later the FED is going to have to show the markets there is only one horse, or the markets will have to tell this to the FED.

There is no long term option of ZIRP and helicopter money.

Whether they do this quickly or slowly still results in interest rates rising, and no more printy printy.

[HousePriceMania]

Given there is no risk of contamination from Everygrande...no one needs to worry about this $305Bn default on monday then ?
 

https://www.theguardian.com/business/2021/oct/21/china-evergrande-shares-fall-sharply-after-26bn-asset-sale-falls-through

 

‘No guarantee’ Chinese property giant can meet its $305bn debts, starting with a deadline on Monday that could trigger default

i've been thinking of selling out again, 20% on oil shares in the last month has been very welcome but there are plenty headwinds to make it worth sitting and waiting again.

26 minutes ago, Hancock said:

Sooner or later the FED is going to have to show the markets there is only one horse, or the markets will have to tell this to the FED.

There is no long term option of ZIRP and helicopter money.

Whether they do this quickly or slowly still results in interest rates rising, and no more printy printy.

I see you have faith in your fellow man and their system.