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

[23rdian]

11 hours ago, sancho panza said:

Well worth 29 minutes of anyone's time.George Gammon goes through why there are supply chain problems and why they're not going to get resolved anytime soon.Goes on the assess the probabailityof an economic crisis(high),lays outs a few templates and then concludes that the lockdown template witll be used for climate change purposes in the future when we'll be stopped from travelling to 'save grandma the planet'

Lot of this stuff is already discussed herein,but this is a really decent synopsis and as ever,Geroge puts a lot of the detail within an easy to grasp structure.

 

Great video. Thanks.

[Harley]

6 hours ago, sancho panza said:

I jsut had to google structural deficit ,The more I sit and watch ,the more totally unsustainable it looks.Not just the welfare and NHS spending but also the govts ability to fund the fiscal deficit with QE.There was a chart posted earlier with a sharp rise in the ten year yield.I'm jsut amazed it's taken so long.

Last tax year Govt borrowed something like £270bn and the BoE printed £250bn of it...................

I've been watching for years.  Take the tax take, deduct just social spending (maybe plus NHS even back then), and you already have a problem.  Things after that like defence are chicken feed, let alone the discretionary stuff.  Grade A structural!  I really think they are now just running down the clock on sterling (and others) until some new monetary order.

[Harley]

Any financial modellers out there to vet my thoughts on DCF?  I also know I've ignored stuff like a loss of capital (say a BK).  It looks a bit like project financial feasibility stuff, only the project here being me!  I reckon a few of you like @planit might know some of this stuff.

[MrXxxx]

8 hours ago, sancho panza said:

I jsut had to google structural deficit

Don't worry, I don't think the government knows what it means either! :-)

[Heart's Ease]

Just thought this was interesting to see. Faang-tastic.

[jamtomorrow]

I recall @JMD asking about left-field ideas for inflation-loving asset classes.

Everyone knows about classic cars (which have arguably been in a bubble for quite a few years now). But I would never have suggested plain old second-hand.

More by accident of circumstance than design, I'm long second-hand vehicles in the 5 to 20 year old range (something like 10% "allocation" if you count it like that), and I never expected them to be anything other than a permanent drag on my finances (although they do get *really* well looked after).

So I saw this article and a mischievous thought crossed my mind ... could my small accidental fleet out-perform the share that shall not be named? Bit early to say TBH, looks like it's mainly newer models for now. But maybe I should start tracking it, for "fun"

https://www.motortradenews.com/news/research-highlights-soaring-second-hand-car-prices/

Research highlights soaring second-hand car prices

SECOND-HAND prices of Britain’s most popular cars have risen by up to 57% in two year^], according to new analysis by AA Cars.

The AA’s used car website reported that demand for some models is so strong that they are even appreciating with age. For example a three year-old Mini Hatch now costs 57% more than a model of the same age cost in 2019. But a five year-old model currently costs 15% more than a three year-old car did in 2019, meaning it has gained in value despite getting two years older.

The analysis, of the 30 most searched for cars on the AA Cars platform, compared prices of three, four and five year-old models in August 2019 and August 2021.

The most popular car of all, the Ford Fiesta, saw the average of three to five year old models jump by nearly a third (31%) to £9,770 between 2019 and 2021.

[DurhamBorn]

11 hours ago, Harley said:

@DurhamBorn a rather stretched question I admit but I'm looking to use my earlier stuff to update my financial plan for the next 20 years:  What inflation rates would you use for planning purposes over the next 20 years (or up to whatever you have)!  I'm wondering if I can get better than assuming one rate for the period and instead use a series of rates, e.g. 8% from 2023 to 2025, 5% from 2026 to 2030, etc.  Appreciate it's a stretch question but the better the assumptions....

My cycle target is 62% in the UK,but when i enter numbers i THINK are coming that might be too high.If the numbers i think are coming do come then 46% to 54% would be my target.I only ever go out what i think will be the cycle,and the end has to be best guess at first that gets less fuzzy.I think 29 is now likely end of this inflation/distribution period.

I usually use liquidity flows and currency,but im now slowly adding in structural deficits,as i see them as driving politics more over the cycle etc.

Its the total that i do,the years can slip back and forth,but its roughly 6.8% now until late spring (first year of cycle) then a fall to 3.7% (small risk of a few months of outright deflation) for several months,then bouncing between 4% and 6% until 29 with top of range for the last couple of years of 9%.After that the numbers needed to function say Fiat collapse,but they will maybe change to something just really terrible,but something we can work with.

[Harley]

7 minutes ago, DurhamBorn said:

My cycle target is 62% in the UK,but when i enter numbers i THINK are coming that might be too high.If the numbers i think are coming do come then 46% to 54% would be my target.I only ever go out what i think will be the cycle,and the end has to be best guess at first that gets less fuzzy.I think 29 is now likely end of this inflation/distribution period.

I usually use liquidity flows and currency,but im now slowly adding in structural deficits,as i see them as driving politics more over the cycle etc.

Its the total that i do,the years can slip back and forth,but its roughly 6.8% now until late spring (first year of cycle) then a fall to 3.7% (small risk of a few months of outright deflation) for several months,then bouncing between 4% and 6% until 29 with top of range for the last couple of years of 9%.After that the numbers needed to function say Fiat collapse,but they will maybe change to something just really terrible,but something we can work with.

Lovely thanks.  I'm going to play with some numbers and post back.

[Bricormortis]

The hospital "covid cases" numbers are massaged significantly upwards.

[MrXxxx]

Why its wise to never tell your loved one everything....or get some gold and bury it elsewhere..

https://www.msn.com/en-gb/money/other/should-i-get-a-share-of-my-husband-s-crypto-assets-in-our-divorce-they-weren-t-included-in-our-prenup-but-have-now-boomed-in-value/ar-AAPP0D3?li=AAwnS0s&ocid=mailsignout

Either way this prenuptual goes, the lawyers will be getting their 'cut'.

 

[M S E Refugee]

58 minutes ago, jamtomorrow said:

I recall @JMD asking about left-field ideas for inflation-loving asset classes.

Everyone knows about classic cars (which have arguably been in a bubble for quite a few years now). But I would never have suggested plain old second-hand.

More by accident of circumstance than design, I'm long second-hand vehicles in the 5 to 20 year old range (something like 10% "allocation" if you count it like that), and I never expected them to be anything other than a permanent drag on my finances (although they do get *really* well looked after).

So I saw this article and a mischievous thought crossed my mind ... could my small accidental fleet out-perform the share that shall not be named? Bit early to say TBH, looks like it's mainly newer models for now. But maybe I should start tracking it, for "fun"

https://www.motortradenews.com/news/research-highlights-soaring-second-hand-car-prices/

Research highlights soaring second-hand car prices

SECOND-HAND prices of Britain’s most popular cars have risen by up to 57% in two year^], according to new analysis by AA Cars.

The AA’s used car website reported that demand for some models is so strong that they are even appreciating with age. For example a three year-old Mini Hatch now costs 57% more than a model of the same age cost in 2019. But a five year-old model currently costs 15% more than a three year-old car did in 2019, meaning it has gained in value despite getting two years older.

The analysis, of the 30 most searched for cars on the AA Cars platform, compared prices of three, four and five year-old models in August 2019 and August 2021.

The most popular car of all, the Ford Fiesta, saw the average of three to five year old models jump by nearly a third (31%) to £9,770 between 2019 and 2021.

I have got a Rolex BLNR which has doubled in value in 3 years, I keep getting tempted to sell it and buy Gold but then I wonder if the Watch will keep going up with inflation.

[jamtomorrow]

17 minutes ago, MrXxxx said:

Why its wise to never tell your loved one everything....or get some gold and bury it elsewhere..

https://www.msn.com/en-gb/money/other/should-i-get-a-share-of-my-husband-s-crypto-assets-in-our-divorce-they-weren-t-included-in-our-prenup-but-have-now-boomed-in-value/ar-AAPP0D3?li=AAwnS0s&ocid=mailsignout

Either way this prenuptual goes, the lawyers will be getting their 'cut'.

 

Unless he's completely clueless, it *should* be hard for them to prove hubby still owns them (especially since it seems he bought in when KYC wasn't really a thing).

"Clueless" here being something like sharing his wallet seed with wifey (the crypto equivalent of telling her where the gold is buried).

Unless he held them on exchange, in which case they should take them off him twice as a lesson in stupidity.

[HousePriceMania]

1 hour ago, Bricormortis said:

The hospital "covid cases" numbers are massaged significantly upwards.

And on house prices and the economy ?

[Barnsey]

1 hour ago, jamtomorrow said:

I recall @JMD asking about left-field ideas for inflation-loving asset classes.

Everyone knows about classic cars (which have arguably been in a bubble for quite a few years now). But I would never have suggested plain old second-hand.

More by accident of circumstance than design, I'm long second-hand vehicles in the 5 to 20 year old range (something like 10% "allocation" if you count it like that), and I never expected them to be anything other than a permanent drag on my finances (although they do get *really* well looked after).

So I saw this article and a mischievous thought crossed my mind ... could my small accidental fleet out-perform the share that shall not be named? Bit early to say TBH, looks like it's mainly newer models for now. But maybe I should start tracking it, for "fun"

https://www.motortradenews.com/news/research-highlights-soaring-second-hand-car-prices/

Research highlights soaring second-hand car prices

SECOND-HAND prices of Britain’s most popular cars have risen by up to 57% in two year^], according to new analysis by AA Cars.

The AA’s used car website reported that demand for some models is so strong that they are even appreciating with age. For example a three year-old Mini Hatch now costs 57% more than a model of the same age cost in 2019. But a five year-old model currently costs 15% more than a three year-old car did in 2019, meaning it has gained in value despite getting two years older.

The analysis, of the 30 most searched for cars on the AA Cars platform, compared prices of three, four and five year-old models in August 2019 and August 2021.

The most popular car of all, the Ford Fiesta, saw the average of three to five year old models jump by nearly a third (31%) to £9,770 between 2019 and 2021.

Also something I'm looking at. Ended up ordering a new Dacia Sandero, 4 month wait, now my part ex value has gone up by 15% so will have to renegotiate or pay by card and sell elsewhere.  Also own a 1990 Volvo 740 (drunk ebay purchase) which I spent the lockdown doing up, and got my eye on a third cheap old car. There's no doubt the pristine classic car market is in a bubble, £25k for a G reg 205 GTI for example, but if you can store something late 90s which is unwanted for 5 to 10 years there's a chance. Target my generation (80s kids) wanting to own their first cars or the first car they always wanted again in future.

 

[Starsend]

11 hours ago, sancho panza said:

Some PM miners are super cheap on a cashflow basis anyway,you're getting the yellow stuff in for free so to speak.We've been long most of these from lower down but even so......some of these could double and still be godvalue on  a relative basis

Last figure on the chart is the p/e ratio.

I'm topping up my holdings while they're good and cheap. Focusing on the quality end and the royalty companies. Newmont, Barrick, Agnico, Wheaton, Royal Gold, Franco-Nevada. Got a fair few of the smaller players already so looking to build my position more while they're all cheap without introducing much risk. Get some dividends as well on many of the bigger players, almost 4% on Newmont which makes it easier to hold and wait.

Tempted with some more Polymetal as well due to the extra juicy 7% divi (minus 15% witholding tax). My holding is already quite large in them but I think they could do very well over the coming decade.

[Majorpain]

2 hours ago, Bricormortis said:

The hospital "covid cases" numbers are massaged significantly upwards.

Telegraph again asking difficult questions!  I chickened out this morning and sold RR at a nice profit, its looking likely restrictions are coming back in this winter and there are less risky and more profitable opportunities out there atm.

Naive QSs storing up trouble in chase for lowest bids | Construction Enquirer News

In other construction news, young QS's who have only ever known good times are going to cause problems for the contractors when their supply chain fails.  I especially like:

Quote

“We are an established firm with a track record of delivery. But recently we are losing out to bids which are just ridiculous.

“These firms low-balling are virtual zombie businesses desperate to get some money in at any cost with no real chance of seeing out the contract.

Not long now, economy is teetering on brink of mass failure, is it going to be Inflation or deflation that does the damage?

[JMD]

2 hours ago, Heart's Ease said:

Just thought this was interesting to see. Faang-tastic.

Plus this is a recurring market-cap thing, whereby the largest market-cap companies at end of one decade, are replaced by new ones during over the next.                                                                                                                  Of course companies can make a come back, as per Microsoft - but this normally only happens when the company changes its business model - i.e. Microsoft is now mostly into games/cloud. Lesson here i think is to maybe look for past 'big player' companies that have substantially changed their operations, earn most income from new areas, making 'disruptions' in new markets?  ...i'm no tech expert, but for example, GE seems to be trying hard to achieve these things? (and it has paid of loads of debt in last 5 years, $200billion+ paid off!!!)

[HousePriceMania]

20 minutes ago, Majorpain said:

Not long now, economy is teetering on brink of mass failure, is it going to be Inflation or THEN deflation that does the damage?

 

[Transistor Man]

3 hours ago, Heart's Ease said:

Just thought this was interesting to see. Faang-tastic.

 

When I look at that list, I see the Fabless semiconductor revolution, and how far reaching it's become. 

Apple, MS, Google, AMZ, FB, TSLA, NVDA, all designing their own chips, to a greater or lesser degree. 

And, TSMC, the first pure-play foundry, the first dedicated manufacturer of the designs of others, only. 

Remarkable. 

 

 

 

 

 

[planit]

10 hours ago, JREWING said:

It's what I love about this thread. Big up and thank you to Born up there in Durham for initiating the thought for forum.

I think. We are all going to get our pants pulled down, ass spanked in some way. If you have something well someone else wants it. Reminds me of being a kid with more marbles than the kid with huge fists. You squeezed his balls but he still took yours.

They're coming. Best thing is we'll all lose something but by discussions and understanding well don't make it right but makes one less bitter.

I'm not one to blame. Cattle prod made a good point in his post. Blame is for me pointless and cowardly. Stand up own your shit. Ask yourself could you survive as Papillion. I could easily, but I'm physically and mentally fit. 

Bricks and Mortar, share certificates. Wealth no. Health is. You're health and your loved one's. Easy really. Just never end up needing one of their electric scooter things. Rant over. Blame no one accept responsibilities and be your own man/woman. Blame is bollocks.

PS. Hope the market crashes for Hancock. Get him a cheap pad and portfolio. 

Sometimes you get a post and you can't choose what credit to give it. 

so I had to reply to say

and Agree.

More responsibility and humour, and less bitterness 

[feed]

https://www.express.co.uk/finance/personalfinance/1509692/martin-lewis-nsi-nsandi-green-savings-bonds-rate

Martin Lewis slams 'pants' Green Savings Bonds 0.65% rate - 'no practical advantage'

MARTIN LEWIS has condemned the Chancellor today as NS&I released details on its Green Savings Bonds. According to the Money Saving Expert, the interest rate on offer is "pants" and savers will be left disappointed.
 

Martin Lewis and the express.  Not off to a good start.  

[HousePriceMania]

3 minutes ago, feed said:

https://www.express.co.uk/finance/personalfinance/1509692/martin-lewis-nsi-nsandi-green-savings-bonds-rate

Martin Lewis slams 'pants' Green Savings Bonds 0.65% rate - 'no practical advantage'

MARTIN LEWIS has condemned the Chancellor today as NS&I released details on its Green Savings Bonds. According to the Money Saving Expert, the interest rate on offer is "pants" and savers will be left disappointed.
 

Martin Lewis and the express.  Not off to a good start.  

You can make 0.65% in a day at the moment picking any old crappy share.

[Sugarlips]

2 hours ago, Barnsey said:

Also something I'm looking at. Ended up ordering a new Dacia Sandero, 4 month wait, now my part ex value has gone up by 15% so will have to renegotiate or pay by card and sell elsewhere.  Also own a 1990 Volvo 740 (drunk ebay purchase) which I spent the lockdown doing up, and got my eye on a third cheap old car. There's no doubt the pristine classic car market is in a bubble, £25k for a G reg 205 GTI for example, but if you can store something late 90s which is unwanted for 5 to 10 years there's a chance. Target my generation (80s kids) wanting to own their first cars or the first car they always wanted again in future.

 

Should we return to the Uk I would fancy a mint older 5 series as a weekender - widely regarded as the last of the decent BMWs before the accountants took over and an awful lot of car for 2 grand. Sure they can be expensive to fix but some proper wafting to be had..

https://www.pistonheads.com/buy/listing/11369264

[Starsend]

22 minutes ago, Sugarlips said:

Should we return to the Uk I would fancy a mint older 5 series as a weekender - widely regarded as the last of the decent BMWs before the accountants took over and an awful lot of car for 2 grand. Sure they can be expensive to fix but some proper wafting to be had..

https://www.pistonheads.com/buy/listing/11369264

The best car I ever owned was a 98 528i. It was fucking superb in every way possible. Everything BMW has made since 2000 hasn't been a patch on it.

[HousePriceMania]

Bluffs being called...

 

https://www.bloomberg.com/news/articles/2021-10-21/u-s-5-year-tops-1-2-as-traders-price-two-fed-hikes-by-end-2022

 

Markets

Inflation Fears Wrack Bonds as Fed Seen Hiking Twice Next Year

By 

Hema Parmar

 and 

Elizabeth Stanton

October 21, 2021, 3:13 PM GMT+1 Updated on October 22, 2021, 2:55 AM GMT+1

•  
  Treasury five-year yields climbed above 1.2% on Thursday
•  
  Inflation expectations rise to highest level in 15 years