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

[Harley]

Balance sheets, the Achilles Heel via a number of ways.  If you're not looking at them, and critically, you're not looking to the future.

Spoiler:  Most are FUBAR.

[M S E Refugee]

Russian exports can solve global food crisis – UN https://www.rt.com/business/555729-food-fertilizers-russia-food-crisis/

Reality is starting to sink in, I just hope there are enough Roubles to pay the Russians.

[BadAlchemy]

45 minutes ago, Hardhat said:

What's the story there ? 

I've removed this now. Too much info on a public forum...

[Yellow_Reduced_Sticker]

Good morning boys & girlies!

 

Hope YOU are all enjoying the... MELT-UP!

 

 

Best Regards,

 

SIR David Hunter.

 

 

[Democorruptcy]

8 minutes ago, Yellow_Reduced_Sticker said:

Good morning boys & girlies!

 

Hope YOU are all enjoying the... MELT-UP!

 

 

Best Regards,

 

SIR David Hunter.

 

 

Watch & learn, just means Uncle Dave will be setting his melt-up targets higher.

[sancho panza]

9 hours ago, Cattle Prod said:

So there is a lot of money on the sidelines. I can't see how the market is going to hurt the most people till that money is in. Blood on the streets today, bought a few SPX Dec calls for lottery ticket fun. Cheap as chips, too.

 

That said, in March 2000 there was clearly a lot of money out waiting for the dotcom to bust. The current stupidity hasn't fully capitulated yet.

 

I'm in the same camp ie I don't think we're at capitulation point.

Looks like the Big Tech top is definitely in.Sorry if it sounds like stating the obvious,but it's only viewable in the rear view and with newsflow imho confirming no higher high is on the table.If we are to get a melt up in the S&P a la DH or at the least a lower high (my view and the one that correlates with hsitory most closely),then it will have to run alongside a growth in energy sector as a proportion of teh S&P.

Looks like Dec 21 was the monthly top which I'll be running with for now.Means the clock is ticking.For me,the time to short/move to cash is as we move into lower high on the monthly Heiken Ashi hattip @Harley.If we don't get one then I'll jsut sit in what we've got-oilies,goldies,telecoms,baccy.

Worth noting that previously,in both 08 and 00,the Heiken Ashi showed a lower high before the collapse.I've watched things over the years and there are always some people calling to short every bad week for years.You'd go bankrupt well before your bets land.

I tend to find weeklies are noisy and prefer less bets over longer timeframes.

It's important to remember as well that the Fed sets the  cadence of any marekt rout there may be and the Fed still has some tools at it's disposal to try and fight the rout(and their recent playbook confirms they will at least try,) because quite simply the US stock market has a far greater effect on consumer spending than it's European counterparts.

Decl:All in all, we remain net long by some distance-oilies,goldies,telecoms,baccy in that order.Narrow breadth admittedly,but ones we can sit in if we miss the turn.

[DurhamBorn]

Just bought first ladder back in Royal Mail .First ladder in DS Smith.Hopefully both will go down some more to hit more ladders.Added some more Admiral.

[M S E Refugee]

13 minutes ago, DurhamBorn said:

Just bought first ladder back in Royal Mail .First ladder in DS Smith.Hopefully both will go down some more to hit more ladders.Added some more Admiral.

I think a strike is looking pretty much nailed on.

[Democorruptcy]

10 minutes ago, DurhamBorn said:

Just bought first ladder back in Royal Mail .First ladder in DS Smith.Hopefully both will go down some more to hit more ladders.Added some more Admiral.

I was checking the RMG shorts earlier in the week with it being results today and they made the top 10 most shorted. That drop today must have pleased the shorters.

https://shorttracker.co.uk/companies/?sort=2&d=desc

They had gone even higher when the price shot up during covid, maybe they will cash in again now.

https://shorttracker.co.uk/company/GB00BDVZYZ77/

[harp]

6 minutes ago, M S E Refugee said:

I think a strike is looking pretty much nailed on.

Yep, just spoke to my postie. I’ve re bought. 

[sancho panza]

4 hours ago, MrXxxx said:

Biggest mistake they made by 'choking' for their little bit of power/kudos; the Cons would take the credit if things went well, the Libs would be 'the patsy' if they didn't....if they had held strong they may even have won the next election given how their support base was developing....but as they say 2The rest was history"

The LD's only hope was to force through electoral reform that would curb the Tories power indefinitely ie proportional representation.The Tories didn't want to surrender their safe seats,understandably so,when you see how rich it's made them, and they talked Cleggy into offering the pulbic a version of electoral reform that was almost possibly as pro Tory and anti democracy as the pisspoor system they were trying to replace(transferable vote-so bascially if the troughing snouts from Westminster didn't pick up on the first ballot,they had a second chance).

Even people like my self who desperately wanted electoral reform voted against it.

Having totally failed to create any meaningful change in money flows to Tory pockets,yer man headed off to create real meaningful liberal democracy at Facebook.

Cleggs legacy was Ukip polling 4 million votes in 2015 and getting 1 seat........

Decl:Ukip voter back then.

4 hours ago, Alifelessbinary said:

If you are interested in buying farmland I’d suggest that you have a look at the quarterly reports produced by the big surveying firms. Savills, Knight Frank and Carter Jonas are probably the most active in the area. 

Prices recently hit a four year high and smaller lot sizes (sub 15 acres) have gone bonkers, as everyone decided to grab a little slice of countryside after being locked in their Barratt boxes. I’m struggling to see value in smaller lot sizes as the competition has taken prices far above long term value and you are competing against people who are paying a huge premium for ‘recreational’ purposes.

It’s difficult to find a tenant for smaller lot sizes unless you want to rent the fields for equestrian purposes, which doesn’t pay much rent. Without a tenant farmer management can be a major headache, as fly tipping, squatting and trespass can be costly especially if you don’t live close enough to monitor it regularly. Farming is a specialist area and farmers in general are hardened negotiators. If you do buy a tenanted plot you want a good covenant strength which is hard to assess without specialist knowledge.

The big benefit with farmland is that it CGT free, so a lot of wealthy people use it for tax planning purposes.

There’s savings to be had the bigger the lot size due to quantum. If you are looking to purchase it might be worth making a group purchase to spread some of the risk and reduce the cost.

DYOR is key in this area, as I’ve heard a lot about farmers selling unproductive land to townies for a fortune due to the unprecedented demand.

https://www.carterjonas.co.uk/farm-consultants/rural-farmland-market-update-q4-2021

 

Very much backing up what hive mind farming lead @Joncrete Cungle said a few weeks back that his farm hadn't purchased land since 2000 due to the price not making any investment sense since.

Lot of horsey places come up on the market in Leicestershire.Expensive business buying horses/shoeing /vets fees etc.

Generally wives (sexist I know) that are into horses have other expensive tastes eg cars/private schooling.Avoid.

[DurhamBorn]

10 minutes ago, Democorruptcy said:

I was checking the RMG shorts earlier in the week with it being results today and they made the top 10 most shorted. That drop today must have pleased the shorters.

https://shorttracker.co.uk/companies/?sort=2&d=desc

They had gone even higher when the price shot up during covid, maybe they will cash in again now.

https://shorttracker.co.uk/company/GB00BDVZYZ77/

Its been very very kind to me,time to start to re-enter.I doubt it will fly up,but should be able to do more buybacks to keep earnings stable.

[M S E Refugee]

Just now, DurhamBorn said:

Its been very very kind to me,time to start to re-enter.I doubt it will fly up,but should be able to do more buybacks to keep earnings stable.

I can buy them through Salary Sacrifice at work but I have to wait 5 years from each month I purchase them to sell them Tax free.

I stopped buying them a few months ago as I am 50 soon and I will cash the lot in when I'm 55 and hopefully retired.

[Democorruptcy]

3 minutes ago, DurhamBorn said:

Its been very very kind to me,time to start to re-enter.I doubt it will fly up,but should be able to do more buybacks to keep earnings stable.

I did OK out of it in the covid crash but sold too early and not touched it since.

[sancho panza]

3 hours ago, DurhamBorn said:

This cycle will and is moving wealth from ABC to XYZ

 

In most periods a 60/40 is a good place for most people with an income portfolio of direct holdings as well.However during an inflation it isnt.Not a disaster like some areas,but for those in drawdown i fear they are in for a huge shock.I think it will mean more BTL sales and more Equity Release.

Aiming marker firmly on the backs of the average UK Landlord.Lot of them maybe can't/won't see it-unlike your pal.

Not only is the taxman about to whack them but also costs rising.

Interesting as well that many will start dying around the same time so huge IHT take.Huge structural problem inbound.No wonder the Tories want to corporatize it

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/775002/EPLS_main_report.pdf

Landlords are, on average, older and less ethnically diverse than the general
population10. Most have been landlords for some time.
Over half (59%) of landlords are aged 55 years or older. Not surprisingly, given
the older age profile, a third (33%) of landlords are retired. The majority (89%) of
landlords are White.

While almost half of landlords own just one property, half of private rented
sector tenancies are let by the 17% of landlords with five or more properties.
45% of landlords have just one rental property. This represents 21% of the
private rented sector9. A further 38% own between two and four properties
(representing 31% of the sector). The remaining 17% of landlords own five or
more properties, representing 48% of the private rented sector.

Most landlords operate as private individuals rather than as part of a company
or organisation.
94% of landlords rent property as an individual, 4% as part of a company and 2%
as part of some other organisation

https://propertyindustryeye.com/landlords-claimed-18-5bn-in-tax-relief-in-2021/

Buy-to-let landlords claimed £18.5bn in tax relief in 2021, a sizable amount considering much of the money they can recoup has been taken away by the government.

Before 2017 landlords could deduct their full mortgage interest costs when calculating their tax bill, but now they only receive a tax credit of 20% of the mortgage interest payments.

Ludlowthompson calculated that loan interest made up 37% of tax reliefs claimed by buy-to-let landlords, which is equivalent to £6.9bn.

This was followed by property repairs, maintenance and renewals at 24% of total tax reliefs at around £4.5bn.

[RJT1979]

58 minutes ago, harp said:

Yep, just spoke to my postie. I’ve re bought. 

Time to sell then?

[reformed nice guy]

50 minutes ago, DurhamBorn said:

Its been very very kind to me,time to start to re-enter.I doubt it will fly up,but should be able to do more buybacks to keep earnings stable.

https://otp.tools.investis.com/Utilities/PDFDownload.aspx?Newsid=1585211

The Royal Mail posted their full year results.

Look decent to me. Plenty of free cash flow, lots of leases, reduction of debt, lots of capital + plant fully depreciated etc

[HousePriceMania]

1 hour ago, DurhamBorn said:

Just bought first ladder back in Royal Mail .First ladder in DS Smith.Hopefully both will go down some more to hit more ladders.Added some more Admiral.

Royal Mail PLC

294.20 GBX−48.20 (14.08%)today

I think they could go under 200 again.

[janch]

Apologies if already posted..........I have a few pages to catch up with but this caught my eye.  Apparently the Swiss are thwarting the EU's best laid plans:

https://www.zerohedge.com/commodities/swiss-connection-how-russia-weathering-tough-sanctions

Some snippets:

Deutsche Welle has reported that 80% of Russian raw materials are traded via Switzerland, according to a report by the Swiss embassy in Moscow

 "Unlike the financial market, where there are rules for tackling money laundering and illegal or illegitimate financial flows, and a financial market supervisory authority, there is currently no such thing for commodity trading," financial and legal expert at Public Eye David Mühlemann told the German broadcaster ARD.

But don't expect things to change any time soon.

Calls for a supervisory body for the commodities sector based on the model of the one for the financial market by the likes of Swiss NGO Public Eye and Swiss Green Party proposal have so far failed to bear fruit. Thomas Mattern from the Swiss People's Party (SVP) has spoken out against such a move, insisting that Switzerland should retain its neutrality, "We do not need even more regulation, and not in the commodities sector either."

[Harley]

1 hour ago, sancho panza said:

I tend to find weeklies are noisy and prefer less bets over longer timeframes.

Cheered to see you write that.  I assumed you were deep in the dailies.  As I discussed up post, IMO you get better clarity on the monthlies but at the cost of getting in/out later.  But if it's a big move maybe a price worth paying for longer term more laid back holdings.

I've been trying to use the weeklies to identify buys where the monthlies look like they might run.  That is, front run the monthlies.  But I'm not sure it works so well for me.  Indeed I probably did it because of a lack of churn in the bull market but things may have(!) changed.

I'm likely to go back to basics and just do monthlies, at least for my "annuity" portfolio which is more long term buy and hold.  That'll take less work, not that I would wait to the end of each month as they change during the month.  So more accurately I'll look at the monthlies on a weekly basis!

I need to decide on the trend following portfolio.  

[Harley]

1 hour ago, harp said:

Yep, just spoke to my postie. I’ve re bought. 

Eh? 

[geordie_lurch]

Good summary of where we are at via Zerohedge here with this bit the pick for me...

"The S&P 500 is on track for its longest weekly losing streak since 2001 as traders flee risk assets over fears that the Federal Reserve will push the economy into a recession as it tries to curb inflation. The benchmark is close to falling into a bear market, after dropping 18% from a record high in January.

"The US selloff was rather orderly and the market isn’t oversold, yet. That tells us that we are likely not at the bottom yet,” said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. “Consumer sentiment remains depressed and we are seeing consumers retrenching on some discretionary spending.”

[Harley]

1 hour ago, Democorruptcy said:

I did OK out of it in the covid crash but sold too early and not touched it since.

I timed the whole thing beautifully.  I just say that because....well... I've never said it before and may never again!  

PS:  Apologies, I came over all emotional there! 

[sancho panza]

@Bricormortis made me draw up a lsit ref rpeviosu point

Marks looks in terminal decline and that's before you visit their stores.It's a proper race to zero with left wing lovethang Lewis's

[sancho panza]

7 minutes ago, Harley said:

Cheered to see you write that.  I assumed you were deep in the dailies.  As I discussed up post, IMO you get better clarity on the monthlies but at the cost of getting in/out later.  But if it's a big move maybe a price worth paying for longer term more laid back holdings.

I've been trying to use the weeklies to identify buys where the monthlies look like they might run.  That is, front run the monthlies.  But I'm not sure it works so well for me.  Indeed I probably did it because of a lack of churn in the bull market but things may have(!) changed.

I'm likely to go back to basics and just do monthlies, at least for my "annuity" portfolio which is more long term buy and hold.  That'll take less work, not that I would wait to the end of each month as they change during the month.  So more accurately I'll look at the monthlies on a weekly basis!

I need to decide on the trend following portfolio.  

I might look at the weeklies for timing a move but in all honesty,for our optiosn trades,I jsut size the bet,work out my odds and put it on.We generally run 6 month ++ calls/puts so plenty of time to run.I leave the shroter term stuff to the gamblers.

Bitter experience has taught me that the timeframe for small retial players like my self is min 6 mnth+ bets/portfolio moves.As soon as you mvoe shorter you're competing with some players that are chasing quarterly returns or can move the market -either one of which could lsoe us moeny.For buying stocks we generally buy with a few years in mind for the trade to mature.