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

[HousePriceMania]

 

[Xtal]

16 minutes ago, Lightscribe said:

https://www.telegraph.co.uk/politics/2022/05/24/windfall-tax-within-days-boris-johnson-tries-move-partygate/
 

I read that and think what’s the bloody point in me working full time. I’m certainly not seeing inflation linked pay rises and I’m sure a lot more will be thinking the same.

[afly]

12 minutes ago, AWW said:

Re Windfall Tax, the fact that it's being worked on (and therefore at a stage where the detail could be leaked to the well-connected) but there has been no sell-off, suggests that it's not going to be particularly impactful.

I am considering selling out of Shell and BP temporarily until I know more. Anyone else thinking the same or different?

If it's fairly light touch it may actually give them the political freedom to issue out a bumper div. They've been hamstrung so far due to the optics

[DurhamBorn]

3 minutes ago, HousePriceMania said:

 

Most of those,99.9% talk a load of shite and have zero understanding of markets.Iv seen them every day for 40 years of investing ,investing tourists really.Markets arent linear.

Look at the FTSE leaderboard,Fags,telcos,oilies all doing fantastic.My families investments are at all time highs this morning.Broad sweeping statements are useless.The cycle is going exactly to plan the only diferences are policy response being different to expected,but il just build that in to my roadmap.

[Barnsey]

Snippet from John Authers' latest newsletter:

Meanwhile, the most interesting finding of the Draaisma research is that the other way to prosper under inflation is through trend-following. Equity trend-followers, which might otherwise be called dedicated followers of momentum, do almost as well under inflation (8%) as they do the rest of the time (11%); momentum strategies applied across all asset classes do much better (averaging 25% in inflationary regimes, against 16% the rest of the time). This therefore looks like it should be the time for macro or trend-following hedge funds to start delivering, after the best part of a decade when they’ve failed to do so.

[BWW]

Just now, AWW said:

Re Windfall Tax, the fact that it's being worked on (and therefore at a stage where the detail could be leaked to the well-connected) but there has been no sell-off, suggests that it's not going to be particularly impactful.

I am considering selling out of Shell and BP temporarily until I know more. Anyone else thinking the same or different?

 

If it's fairly light touch it may actually give them the political freedom to issue out a bumper div. They've been hamstrung so far due to the optics

 

I think banks and UK oilies are a buy until Thurs and will take off next week after the tide goes out and Rishis damp squib starts to look like the naked emperor.

[competitition for how many colloquialisms and metaphors can be mixed]

 

[Majorpain]

12 minutes ago, afly said:

If it's fairly light touch it may actually give them the political freedom to issue out a bumper div. They've been hamstrung so far due to the optics

Its going to be fairly light touch since majority of BP/Shell income is abroad, its only the North sea fields that the Govt can meddle with and they have sold out of most of those assets.  The other side of the coin is that this is a supply/demand mismatch and they really need to get more gas out of the North Sea, windfall taxes are not going to help that.

The proposed electricity one is cleverer as most generation is UK based and it hits wind turbines/Nuclear etc. not just fossil fuels, who really will be making massive profits at current prices.

[Yadda yadda yadda]

30 minutes ago, Xtal said:

I read that and think what’s the bloody point in me working full time. I’m certainly not seeing inflation linked pay rises and I’m sure a lot more will be thinking the same.

The more people give up work the more upwards pressure there will be on wages medium term. Downward pressure on benefits from an affordability perspective too.

Wage brackets have been compressing due to a labour shortage at the lower end. The people who earn the least are dropping hours or employment altogether. Employers have to push those wages up. These are now catching the middle. Why work hard when you can drop down to easier graft? At some point wages for the middle will have to start rising or else no-one will do those either. To steal DB's analogy the elastic band of wage growth is being pulled back and at some point it will snap.

Sure it is grim and the continuation of exacerbating policies stems from pathetic, cowardly leadership.

[geordie_lurch]

14 minutes ago, Barnsey said:

Snippet from John Authers' latest newsletter:

Meanwhile, the most interesting finding of the Draaisma research is that the other way to prosper under inflation is through trend-following. Equity trend-followers, which might otherwise be called dedicated followers of momentum, do almost as well under inflation (8%) as they do the rest of the time (11%); momentum strategies applied across all asset classes do much better (averaging 25% in inflationary regimes, against 16% the rest of the time). This therefore looks like it should be the time for macro or trend-following hedge funds to start delivering, after the best part of a decade when they’ve failed to do so.

The trouble with that advice is that sometimes you might actually be chasing the wrong sort of momentum i.e. if we are as I suspect already only have a bear rally to come within a deepening recession

[HousePriceMania]

22 minutes ago, DurhamBorn said:

Most of those,99.9% talk a load of shite and have zero understanding of markets.Iv seen them every day for 40 years of investing ,investing tourists really.Markets arent linear.

Look at the FTSE leaderboard,Fags,telcos,oilies all doing fantastic.My families investments are at all time highs this morning.Broad sweeping statements are useless.The cycle is going exactly to plan the only diferences are policy response being different to expected,but il just build that in to my roadmap.

My SIPP is up 40% in 18 months as of today.  Mostly from REPSOL, BP, SHELL and a couple of miners, dividends have been pouring in too.

I'm happy to hold that now and tinker round the edges.

These gains seem too good to be true though but happy to ride the way.

if the European oillies follow the trent of Exxon, I expect my SIPP to double, it's one hell of a ride.

[HousePriceMania]

19 minutes ago, geordie_lurch said:

The trouble with that advice is that sometimes you might actually be chasing the wrong sort of momentum i.e. if we are as I suspect already only have a bear rally to come within a deepening recession

Simple question...

Historically, if the country went into a large recession...did the stock market fall significantly ?

I did a google on US/UK recessions and I am amazed at how few have happened.

 

The last 2 saw top to bottom falls of nearly 50%

 

 

[Democorruptcy]

52 minutes ago, AWW said:

Re Windfall Tax, the fact that it's being worked on (and therefore at a stage where the detail could be leaked to the well-connected) but there has been no sell-off, suggests that it's not going to be particularly impactful.

I am considering selling out of Shell and BP temporarily until I know more. Anyone else thinking the same or different?

Re BP won't what happens about Rosneft have more impact on their share price than a windfall tax? 

Quote

 

Rosneft accounts for around half of BP's oil and gas reserves and a third of its production and divesting the 19.75% stake will result in charges of up to $25 billion, the British company said, without saying how it plans to extricate itself.

https://www.reuters.com/business/energy/britains-bp-says-exit-stake-russian-oil-giant-rosneft-2022-02-27/

 

 

[sancho panza]

10 hours ago, Cattle Prod said:

The legislation was brought into the EU in 2013, after field trials on Cypriot savers. UK has hopefully avoided thanks to brexit 

iirc there was a clause only haircutting those with over E100k?

I was in Cyprus for a couple of weeks not long after and the place was ticking over fine.The Russians who got haircutted probably saw it as a cost of keeping moeny where they don't aska  lot of questions.

Problem in the wider EU is that they will hit a lot of non Russian super savers hard and possibly make the inflation situation in places like Germany even worse than it is.

1 hour ago, DurhamBorn said:

UK is crying out for a leader who tells the truth.The bloke in the pub knows the truth and what needs to be done.It was similar just before Thatcher came along.Everyone knows mass immigration and bennies are causing most of the problems,it all goes back to those because the state is set up to help those areas by taking from the others.

Thatcher got in and did the job because people knew it needed doing,even if they didnt like the fact it needed doing.

In my town most BTL is owned by public sector workers or ex public sector workers using their pension lump sums to buy houses,but most of those rents are funded by bennies.So private sector low paid worker is paying for the state worker to fleece them twice over,and ensure they cant get a home.

The good news is they cant fight the macro forever,with monetising debt cut off,unless they increase rates to do some small QE,then its only a matter of time before the government implodes.

 

So true.The man/woman/pick your pronoun knows what they're seeing on the shelves and in the streets.I've said before,the immigration problem is at the poiint where whole hotels are being commnadeered by the Home Office to try and hide the problem but the people local to those hotels know exactly what's going on and tell all their contacts.

Our politcal class views the public with utter contempt and assumes we're all thick as mince which is why we're headed for a 'let them eat cake' moment,they can't see the collapse coming because the electoral system hasn't allowed for the ture level of dissent to show.

Ships capsize slowly at first then quickly.

1 hour ago, Lightscribe said:

https://www.telegraph.co.uk/politics/2022/05/24/windfall-tax-within-days-boris-johnson-tries-move-partygate/
 

I can't see how we'll end up without trashed currency and more inflation the wya they're going.

[belfastchild]

1 minute ago, sancho panza said:

iirc there was a clause only haircutting those with over E100k?

Yes, friends got done by it. Sold house and business here to go live in the sun in the house they had already paid the deposit on. Moved out there with the cash then deposited in cyprus bank until house finished.
Got caught out by this, now back here living in rented accommodation as they could no longer afford the place out there and couldnt buy back here with what was left. Developer went bust as a result, no money back, empty shell of a house.
Warning to us all!

[HousePriceMania]

1 minute ago, belfastchild said:

Yes, friends got done by it. Sold house and business here to go live in the sun in the house they had already paid the deposit on. Moved out there with the cash then deposited in cyprus bank until house finished.
Got caught out by this, now back here living in rented accommodation as they could no longer afford the place out there and couldnt buy back here with what was left. Developer went bust as a result, no money back, empty shell of a house.
Warning to us all!

There isn't an emoji available to put to that !!!!

That's shite luck, they couldn't have timed it any worse.  The mail online would be all over a story like that.

Saying that, was there a lot of noise in the media about financial problems in the country before hand ?

IIRC here in the UK money earmarked for a property purchase is protected even if the banks go tits up.

 

[RJT1979]

4 minutes ago, HousePriceMania said:

There isn't an emoji available to put to that !!!!

That's shite luck, they couldn't have timed it any worse.  The mail online would be all over a story like that.

Saying that, was there a lot of noise in the media about financial problems in the country before hand ?

IIRC here in the UK money earmarked for a property purchase is protected even if the banks go tits up.

 

How would you prove it? Isn't it 6 months in current account protected?

[HousePriceMania]

6 minutes ago, RJT1979 said:

How would you prove it? Isn't it 6 months in current account protected?

Not sure.  Maybe if it is with the solicitor, I'd need to go searching.

The British Establishment will do anything to get people buying houses 

[DoINeedOne]

18 minutes ago, belfastchild said:

Yes, friends got done by it. Sold house and business here to go live in the sun in the house they had already paid the deposit on. Moved out there with the cash then deposited in cyprus bank until house finished.
Got caught out by this, now back here living in rented accommodation as they could no longer afford the place out there and couldnt buy back here with what was left. Developer went bust as a result, no money back, empty shell of a house.
Warning to us all!

Ive mentioned in the past an old friend of mine aunt sold her house in Cyprus and the same thing had money in the bank got caught out by this, had to move in with her sister

 

And maybe worth reposting this as a reminder, the guys business account ended up sacking everyone and leaving Cyprus

 

Also from notes i have

 

Digital wealth is easier to seize

 

IRELAND 2009: Took Eur4.4bn National Pension Reserve Fund assets to bail out banks.  The Fund was established in 2001 to ensure the Government could pay pensions in 2025-2050

 

PORTUGAL 2010:  Nationalised pension assets of Portugal Telecom

 

IRELAND 2010: Took remaining Euro 2.5bn National Pension Reserve Fund assets

 

FRANCE 2010: Took Euro33bn from its National Reserve Pension Fund that was intended to fund pensions in 2020-2040 but used the money to fund today’s pensions instead

 

HUNGARY 2010: Nationalised $14bn of individual private pension accounts which had been set up in 1998 to limit state pension liabilities and used the money to reduce state debt

 

PORTUGAL 2011: Confiscated pension assets of its largest banks which comprised around three quarters of private pension assets

 

POLAND 2011:  In 2011, Poland reduced the mandatory contributions into its second pillar privately-managed pension funds from 7% of salary to 2.3%, with the balance being paid into the state pension system

 

UK 2012: Transferred £24bn of Royal Mail pension assets to the Treasury and used the funds to reduce the current budget deficit

 

POLAND 2013: Nationalised half private pension assets by confiscating bond holdings

 

 

[sancho panza]

1 hour ago, AWW said:

Re Windfall Tax, the fact that it's being worked on (and therefore at a stage where the detail could be leaked to the well-connected) but there has been no sell-off, suggests that it's not going to be particularly impactful.

I am considering selling out of Shell and BP temporarily until I know more. Anyone else thinking the same or different?

I think a lot of it is in the share price.Despite Total's recent discovery off Namibia,them and BP/Shell are at the back of the pack running off the Oct 20 lows.

With Shell's recent withdrawal fresh in the minds of Dutch/Western politicians and the fact they need SHell/BP for energy security,I think they'll find an easier target.

[Boglet]

21 minutes ago, HousePriceMania said:

There isn't an emoji available to put to that !!!!

That's shite luck, they couldn't have timed it any worse.  The mail online would be all over a story like that.

Saying that, was there a lot of noise in the media about financial problems in the country before hand ?

IIRC here in the UK money earmarked for a property purchase is protected even if the banks go tits up.

 

What are you talking about? The bogged emoji is absolutely made for that kind of situation.

If ever there was a situation to get a bogged emoji, this it.

[HousePriceMania]

Does anyone think US QT day will have any impact ?

 

QT day: 7 days

[Democorruptcy]

39 minutes ago, HousePriceMania said:

IIRC here in the UK money earmarked for a property purchase is protected even if the banks go tits up.

If the money qualifies as a Temporary High Balance it has 6 months protection. If you had sold one to buy another it qualifies, if you have been saving up to buy one for ages it's £85k only.

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

 

[sancho panza]

hattip Kaplan

Commericals currently at lowest level net short for two years in silver.Historical context below.One chart to watch if the commericals increase that trend

Dyor etc

Decl:long silver miners

 

[SpectrumFX]

2 hours ago, AWW said:

Re Windfall Tax, the fact that it's being worked on (and therefore at a stage where the detail could be leaked to the well-connected) but there has been no sell-off, suggests that it's not going to be particularly impactful.

I am considering selling out of Shell and BP temporarily until I know more. Anyone else thinking the same or different?

I sold out of all my oil and energy shares a few weeks back and put the money into the Guinness Global Energy fund.

It means that I've got to pay the fund fee now, which I wasn't paying holding the shares direct, but I can live with that for the diversification that it's buying me. My thinking was that the diversity of holdings would water down the political risk from things like windfall taxes.

[DurhamBorn]

2 hours ago, HousePriceMania said:

Simple question...

Historically, if the country went into a large recession...did the stock market fall significantly ?

I did a google on US/UK recessions and I am amazed at how few have happened.

 

The last 2 saw top to bottom falls of nearly 50%

 

 

Last two were in a dis-inflation cycle,not this time.I think we will see some huge falls,but also some decent increases.BAT fell 54% from top to bottom,BT fell 80% ,TEF 80% etc tech bubble masked things.