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

[Harley]

I'm holding my BTC as it was earmarked as money I could afford to lose.  The real issue for me is not BTC but that I've been saying this too often lately!

[working woman]

@Harley thanks for the chart update - the first red hammer was correct in indicating a possible uptrend, confirmed by the green. Then that unexpected red one. Now we have a break out, from the high on the left. With that kind of momentum, I think another move up. Maybe then a flag with a short pull back.

Glad you liked my post. Sometimes I feel what I post is a bit trivial  but I have worked in retail on and off for the last 40 years, seen it all in the 80's boom, 90's bust, dot com bubble, credit crunch and now covid. When things get bad, people disappear and I chat to customers and they often mention what their friends are saying about the economy. For example, with the credit crunch, lots were saying they were tightening their boots.

Bitcoin - for me a sign of the top was when I saw posters in supermarkets selling portions of Bitcoin, trying to suck more ordinary people in.  All those computers switched on and running to keep it going - what a waste of energy.

Yes, BTL, I live in a flat and on the Management committee. Last night found out who was owning one particular nuisance flat. Was very interesting / suprising. So yes, when the BTL tide goes out, there will be some suprises. 

[DurhamBorn]

26 minutes ago, Democorruptcy said:

Jeffries downgraded them today from buy to hold dropping the price target from 150 to 125

 

I think they make very fair points and VOD wont do a lot unless/until inflation feeds into prices.Not all countries index link their plans.My main concern with them is the debt levels,because they are so high they cant execute share buybacks etc.All telcos are the same,but the likes of TEF have made much better progress on debt.VOD could clear a lot with the tower business,but that would be a longer term hit.Key number in the financials is ROCE.That needs to be starting to increase to show inflation is helping returns more than its increasing debt coupons.Irony is id probably be happy with £1.25 in 8 years if the divi was kept where it is.I suspect mergers are coming in the sector.Their new board member used to be chair of OFCOM etc.

[Noallegiance]

 

9 hours ago, sancho panza said:

The issue is that it's certain demogrpahics that go into things like crypto/tech bubbles.So if you're 50 and mix in middle aged circles,you may not know anyone trading crypto.However,msut say I've had a number of people ask me my views on crypto and assume that I'm trading it because I'm known to like a punt.

I doubt it's much of an exageration tbh.Msot of the people losing moeny now are retail and some will indeed have stuck their life savings in and bought the higher highs.

If you think this bubble pricking is interesting ,jsut wait till we start finding out who's been swimming naked in BTL/resi property on the back of burgeoning national debts/banking leverage/fiscal deficits.

How sweet it would taste for housing to do a Luna. 

[A_P]

8 minutes ago, Boon said:

One thing I think is that a few crypto boys losing billions is not mass pain. Most of the market is BTC and that has lost half its market cap. Has more value been lost in the tech shares? A lot of these are down by much more percentage wise and bigger disasters for investors than bitcoin ever was. 

The real mass pain will go largely unnoticed and unreported by the media, the middle and lower classes that will be squeezed. I can't help thinking that 'cost of living crisis' is being covered now in advance so it is has less impact when the real shit arrives.

It is not about the few holding the billions. It is the many who by comparison get a couple of nuggets, which amounts to their life savings/loans/credit cards. Then for the "safety" TPTB will protect them. Problem, Reaction, Solution.

[Boon]

On a pure fundamental level I do agree that BTL is gonna be fecked - the UK market alone is way bigger than anything else. 

However, does that make it too big to fail? My own gut feeling is that yes, it is and there will be some kind of solution to kick the can down the road again.

At a certain interest rate I think this will be real pain but unlike someone gambling on a crypto the media will have great sympathy for someone who was essentially gambling on interest rates remaining low. 

[Harley]

14 minutes ago, Democorruptcy said:

I think you are being a bit harsh there on young people suggesting they don't want to work (like you now... and I never wanted to ). All the props have meant house prices have run away from them, mortgage terms have extended, it's an expensive very long term commitment before interest rises. BATS wouldn't have made enough progress for them against house prices in the covid bounce, it was £55 not that long ago. I see it more as desperate times must have called for desperate measures and feel sorry for them.

Yes, we're in the tail end of the economic system where "perversions", like Giffen Goods and all the rest, are more likely to happen.  Systems theory 101.

[ThoughtCriminal]

11 minutes ago, Option5 said:

We still use explosive charges to perforate the tubing to access the oil/gas etc. They even call the device used a perforation gun.

But no bazookas and machine guns? You bloody woke SJWs have spoiled everything! 😉

[Harley]

10 minutes ago, working woman said:

@Harley thanks for the chart update - the first red hammer was correct in indicating a possible uptrend, confirmed by the green. Then that unexpected red one. Now we have a break out, from the high on the left. With that kind of momentum, I think another move up. Maybe then a flag with a short pull back.

Glad you liked my post. Sometimes I feel what I post is a bit trivial  but I have worked in retail on and off for the last 40 years, seen it all in the 80's boom, 90's bust, dot com bubble, credit crunch and now covid. When things get bad, people disappear and I chat to customers and they often mention what their friends are saying about the economy. For example, with the credit crunch, lots were saying they were tightening their boots.

Bitcoin - for me a sign of the top was when I saw posters in supermarkets selling portions of Bitcoin, trying to suck more ordinary people in.  All those computers switched on and running to keep it going - what a waste of energy.

Yes, BTL, I live in a flat and on the Management committee. Last night found out who was owning one particular nuisance flat. Was very interesting / suprising. So yes, when the BTL tide goes out, there will be some suprises. 

Maybe, time permitting, I'll annotate a chart with my thoughts.  But most importantly, your posts are not trivial in the slightest.  Absolutely not.  

 

[sleepwello'nights]

13 hours ago, Pip321 said:

 

ps (for Errol) I seem to remember he was the most credible I listened to during my research but I think I forget how low the bar was…apologies.  I recall one guy I was told to listen to and I would be totally convinced about Crypto….but all I got was his favourite rapper, his favourite hat, lots of ‘dudes’ after each sentence and a payment system that solved a problem that didn’t exist. Genuinely that podcast I was steered to in or to understand crypto literally convinced me not to invest.
 

I listened to a few but never understood what the case for crypto was. I put it down to me being stupid to understand. It could be that I'm too smart, or not. 

I didn't invest as I'd already lost out big time when I didn't buy any Bitcoin in 2010 or whenever. My biggest loss to date. 

[Harley]

22 minutes ago, working woman said:

Sometimes I feel what I post is a bit trivial  but I have worked in retail on and off for the last 40 years, seen it all in the 80's boom, 90's bust, dot com bubble, credit crunch and now covid. When things get bad, people disappear and I chat to customers and they often mention what their friends are saying about the economy. For example, with the credit crunch, lots were saying they were tightening their boots.

I'm a long time listener to Jim Puplava who owns a US money management firm (and does a weekly podcast, Financial Sense).  He's always regularly gone to the retail folk on the ground to find out what's going on.  I've always wondered if the folk know who he is or just think he's a nice old duffer!  But your posts add more than just that.

[geordie_lurch]

32 minutes ago, Boon said:

One thing I think is that a few crypto boys losing billions is not mass pain. Most of the market is BTC and that has lost half its market cap. Has more value been lost in the tech shares? A lot of these are down by much more percentage wise and bigger disasters for investors than bitcoin ever was. 

The real mass pain will go largely unnoticed and unreported by the media, the middle and lower classes that will be squeezed. I can't help thinking that 'cost of living crisis' is being covered now in advance so it is has less impact when the real shit arrives.

Yep great points @Boon

The following is an interesting comparison but obviously not entirely fair as physical houses are a lot different to crypto ccoin and today's trillions are not the same as 2007s...

 

[Boon]

Personally I think that's a bit sensationalist.

More money has probably been 'lost' in the gold markets using a similar time-frame, even more money from an indice like the S&P.

Someone has gained and it will be rotated somewhere at some time. Maybe on a pivot, metals, stocks and crypto may get it all back and more. 

[Democorruptcy]

18 minutes ago, DurhamBorn said:

I think they make very fair points and VOD wont do a lot unless/until inflation feeds into prices.Not all countries index link their plans.My main concern with them is the debt levels,because they are so high they cant execute share buybacks etc.All telcos are the same,but the likes of TEF have made much better progress on debt.VOD could clear a lot with the tower business,but that would be a longer term hit.Key number in the financials is ROCE.That needs to be starting to increase to show inflation is helping returns more than its increasing debt coupons.Irony is id probably be happy with £1.25 in 8 years if the divi was kept where it is.I suspect mergers are coming in the sector.Their new board member used to be chair of OFCOM etc.

There's a lot of 'Transaction in Own Shares' recently, 6m yesterday. I looked at Carter's background and with his government connections, wondered if he was brought in to smooth any competition questions from a merger. Maybe this Three rumour.

[Democorruptcy]

Re pensions had a shocker yesterday. A family member sent me a screenshot of his company scheme. His £22k is in 3 Aviva Liontrust Sustainable Future Managed/Global/European Funds. His pot was worth £26k a year ago and his company has paid in £3k during the year. -£7k in a year while the FTSE is slightly up. He's 58.

[DurhamBorn]

15 minutes ago, Democorruptcy said:

There's a lot of 'Transaction in Own Shares' recently, 6m yesterday. I looked at Carter's background and with his government connections, wondered if he was brought in to smooth any competition questions from a merger. Maybe this Three rumour.

Thats my take as well,looks like the 3 merger is likely.The buybacks now are only for convertible debt where they issued debt linked to shares,they are just stopping the dilution,not lowering original share count.

On buybacks it really miffs me sometimes how CEOs dont act at the right time.Take ABRDN.They have £300m for buybacks,yet no mention when they will start,even though they could start now.You would think they would start when things are on the downside.BP were the same paying down debt when they should of been buying back shares.I think share buybacks are a good move for value stocks this cycle instead of investing or blowing capital on mergers.

Noticed BTs pension deficit fell from £5bill to £1bill as well,no mention anywhere.Jab must of killed a lot of their retirees 

[ThoughtCriminal]

5 minutes ago, Democorruptcy said:

Re pensions had a shocker yesterday. A family member sent me a screenshot of his company scheme. His £22k is in 3 Aviva Liontrust Sustainable Future Managed/Global/European Funds. His pot was worth £26k a year ago and his company has paid in £3k during the year. -£7k in a year while the FTSE is slightly up. He's 58.

That's absolutely brutal.

[Democorruptcy]

9 minutes ago, DurhamBorn said:

Thats my take as well,looks like the 3 merger is likely.The buybacks now are only for convertible debt where they issued debt linked to shares,they are just stopping the dilution,not lowering original share count.

On buybacks it really miffs me sometimes how CEOs dont act at the right time.Tale ABRDN.They hae £300 for buybacks,yet no mention when they will start,even though they could start now.You would think they would start when things are on the downside.BP were the same paying down debt when they should of been buying back shares.I think share buybacks are a good move for value stocks this cycle instead of investing or blowing capital on mergers.

Noticed BTs pension deficit fell from £5bill to £1bill as well,no mention anywhere.Jab must of killed a lot of their retirees 

Maybe the delay to ABRDN buying IB has also delayed their buybacks.

[nirvana]

Dave's got the Aliens following him now 

 

[Harley]

1 hour ago, Democorruptcy said:

Maybe the delay to ABRDN buying IB has also delayed their buybacks.

IB?   II? 

[Yellow_Reduced_Sticker]

Good morning boys & girlies!

 

everybody chirpy on this friday 13th morning?!

 

 

 

well ya should be COS...markets ROCKETING!

 

Uncle Dave's prediction materialising ??? ... Watch & learn!

 

14 hours ago, DurhamBorn said:

AT&T are up,im overjoyed about how things are going,massive falls in everything we dont own,small falls in areas im laddering into and little gains in areas im heavy.Id say this slow long self off is very nice.Just need UK to win Eurovision ,well im a contrarian 

 

AGREE, my portofiolo is still UP around 40%,

 

anyways...reading last few pages, seems many on here are getting their knickers in a twist? have they misREAD ya posts and invested in APPLE & AMAZON?!

 

 

[HousePriceMania]

Buy the dip is now sell the bounce 

[sancho panza]

Thar she blows....Greta,where for art thou Greta

Fulla rticle is behind a paywall but you cna read on adroid.Lots to appreciate.Debts to CHina for infrastructure spend,people in the organic businesses that would beneift from the law pushing legislation.

Key thing is that if we change the law(covid/climate change) the net effect could well be the same in the west.Economci destruction on an epic scale.

For skim readers in bold

https://foreignpolicy.com/2022/03/05/sri-lanka-organic-farming-crisis/

Faced with a deepening economic and humanitarian crisis, Sri Lanka called off an ill-conceived national experiment in organic agriculture this winter. Sri Lankan President Gotabaya Rajapaksa promised in his 2019 election campaign to transition the country’s farmers to organic agriculture over a period of 10 years. Last April, Rajapaksa’s government made good on that promise, imposing a nationwide ban on the importation and use of synthetic fertilizers and pesticides and ordering the country’s 2 million farmers to go organic.

The result was brutal and swift. Against claims that organic methods can produce comparable yields to conventional farming, domestic rice production fell 20 percent in just the first six months. Sri Lanka, long self-sufficient in rice production, has been forced to import $450 million worth of rice even as domestic prices for this staple of the national diet surged by around 50 percent. The ban also devastated the nation’s tea crop, its primary export and source of foreign exchange.

 

By November 2021, with tea production falling, the government partially lifted its fertilizer ban on key export crops, including tea, rubber, and coconut. Faced with angry protests, soaring inflation, and the collapse of Sri Lanka’s currency, the government finally suspended the policy for several key crops—including tea, rubber, and coconut—last month, although it continues for some others. The government is also offering $200 million to farmers as direct compensation and an additional $149 million in price subsidies to rice farmers who incurred losses. That hardly made up for the damage and suffering the ban produced. Farmers have widely criticized the payments for being massively insufficient and excluding many farmers, most notably tea producers, who offer one of the main sources of employment in rural Sri Lanka. The drop in tea production alone is estimated to result in economic losses of $425 million.

Human costs have been even greater. Prior to the pandemic’s outbreak, the country had proudly achieved upper-middle-income status. Today, half a million people have sunk back into poverty. Soaring inflation and a rapidly depreciating currency have forced Sri Lankans to cut down on food and fuel purchases as prices surge. The country’s economists have called on the government to default on its debt repayments to buy essential supplies for its people.

The farrago of magical thinking, technocratic hubris, ideological delusion, self-dealing, and sheer shortsightedness that produced the crisis in Sri Lanka implicates both the country’s political leadership and advocates of so-called sustainable agriculture: the former for seizing on the organic agriculture pledge as a shortsighted measure to slash fertilizer subsidies and imports and the latter for suggesting that such a transformation of the nation’s agricultural sector could ever possibly succeed.

 

Sri Lanka’s journey through the organic looking glass and toward calamity began in 2016, with the formation, at Rajapaksa’s behest, of a new civil society movement called Viyathmaga. On its website, Viyathmaga describes its mission as harnessing the “nascent potential of the professionals, academics and entrepreneurs to effectively influence the moral and material development of Sri Lanka.” Viyathmaga allowed Rajapaksa to rise to prominence as an election candidate and facilitated the creation of his election platform. As he prepared his presidential run, the movement produced the “Vistas of Prosperity and Splendour,” a sprawling agenda for the nation that covered everything from national security to anticorruption to education policy, alongside the promise to transition the nation to fully organic agriculture within a decade.

Despite Viyathmaga’s claims to technocratic expertise, most of Sri Lanka’s leading agricultural experts were kept out of crafting the agricultural section of the platform, which included promises to phase out synthetic fertilizer, develop 2 million organic home gardens to help feed the country’s population, and turn the country’s forests and wetlands over to the production of biofertilizer.

 

 

[DoINeedOne]

11 hours ago, sancho panza said:

Think there'll be some disastrous stories in retial/pubs too though.

just heard,local brewery here in Leics called Everards....famous for getting tenants in then upping the costs when they do well.Hence high turnover as the new tenants find out running pubs is 70 hours work for 37.5 hours pay.

ANyway,new LL's at pub in village near Liecester.Two ladies,one of whom was heard to say to punter on her first day,

'don't be to harsh,I haven't pulled a pint before'....I shit you not...

A young fella i know mum and dad run a brewery pub, he does the stupid maths telling people they took over £3000 at the weekend of course he thinks its all profit 

Mum told him they not sure if they will still be there next year as brewery are increasing costs and rent, taxes going up, staff costs, electric and gas etc.. hardly making any profit

 

Also when i lived in Spain i got to know a estate agent guy who focused on bars and cafes

In Spain most places including apartments didn't have reference checks like we do here in the UK

You pay 3x monthly rent 1/3 is the deposit, 1/3 is the first months rent and then 1/3 is the estate agents fee, so you can see why estate agents don't really care about checks as they get their money upfront

Anyway the bar guy said so many brits come over wanting to live the dream thinking owning a bar or cafe is easy within a few months they disappear we take back the property and rent it out to the next idiots 

[DoINeedOne]

4 minutes ago, sancho panza said:

Thar she blows....Greta,where for art thou Greta

 

https://foreignpolicy.com/2022/03/05/sri-lanka-organic-farming-crisis/

Faced with a deepening economic and humanitarian crisis, Sri Lanka called off an ill-conceived national experiment in organic agriculture this winter. Sri Lankan President Gotabaya Rajapaksa promised in his 2019 election campaign to transition the country’s farmers to organic agriculture over a period of 10 years. Last April, Rajapaksa’s government made good on that promise, imposing a nationwide ban on the importation and use of synthetic fertilizers and pesticides and ordering the country’s 2 million farmers to go organic.

The result was brutal and swift. Against claims that organic methods can produce comparable yields to conventional farming, domestic rice production fell 20 percent in just the first six months. Sri Lanka, long self-sufficient in rice production, has been forced to import $450 million worth of rice even as domestic prices for this staple of the national diet surged by around 50 percent. The ban also devastated the nation’s tea crop, its primary export and source of foreign exchange.

 

By November 2021, with tea production falling, the government partially lifted its fertilizer ban on key export crops, including tea, rubber, and coconut. Faced with angry protests, soaring inflation, and the collapse of Sri Lanka’s currency, the government finally suspended the policy for several key crops—including tea, rubber, and coconut—last month, although it continues for some others. The government is also offering $200 million to farmers as direct compensation and an additional $149 million in price subsidies to rice farmers who incurred losses. That hardly made up for the damage and suffering the ban produced. Farmers have widely criticized the payments for being massively insufficient and excluding many farmers, most notably tea producers, who offer one of the main sources of employment in rural Sri Lanka. The drop in tea production alone is estimated to result in economic losses of $425 million.

Human costs have been even greater. Prior to the pandemic’s outbreak, the country had proudly achieved upper-middle-income status. Today, half a million people have sunk back into poverty. Soaring inflation and a rapidly depreciating currency have forced Sri Lankans to cut down on food and fuel purchases as prices surge. The country’s economists have called on the government to default on its debt repayments to buy essential supplies for its people.

The farrago of magical thinking, technocratic hubris, ideological delusion, self-dealing, and sheer shortsightedness that produced the crisis in Sri Lanka implicates both the country’s political leadership and advocates of so-called sustainable agriculture: the former for seizing on the organic agriculture pledge as a shortsighted measure to slash fertilizer subsidies and imports and the latter for suggesting that such a transformation of the nation’s agricultural sector could ever possibly succeed.

 

ri Lanka’s journey through the organic looking glass and toward calamity began in 2016, with the formation, at Rajapaksa’s behest, of a new civil society movement called Viyathmaga. On its website, Viyathmaga describes its mission as harnessing the “nascent potential of the professionals, academics and entrepreneurs to effectively influence the moral and material development of Sri Lanka.” Viyathmaga allowed Rajapaksa to rise to prominence as an election candidate and facilitated the creation of his election platform. As he prepared his presidential run, the movement produced the “Vistas of Prosperity and Splendour,” a sprawling agenda for the nation that covered everything from national security to anticorruption to education policy, alongside the promise to transition the nation to fully organic agriculture within a decade.

Despite Viyathmaga’s claims to technocratic expertise, most of Sri Lanka’s leading agricultural experts were kept out of crafting the agricultural section of the platform, which included promises to phase out synthetic fertilizer, develop 2 million organic home gardens to help feed the country’s population, and turn the country’s forests and wetlands over to the production of biofertilizer.