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

[HousePriceMania]

3 minutes ago, kibuc said:

I have a suspicion that all those guys think of any double-digit annual inflation as "hyperinflation" which is laughable. I remember when me any my brother went for ice cream back in the early nineties carrying money in a fucking washtub.

My sister used to refuse to go to the shop for my parents with 10% extra in case prices had gone up.

4 minutes ago, kibuc said:

I have a suspicion that all those guys think of any double-digit annual inflation as "hyperinflation" which is laughable. I remember when me any my brother went for ice cream back in the early nineties carrying money in a fucking washtub.

Hyper inflation,  5% 

[HousePriceMania]

24 minutes ago, HousePriceMania said:

In the great depression it was companies with debt that won out IIRC, because they were in a better position as their debt was wiped out, better infrastructure because of their spending etc.

Hang on, that might have been the 1970s inflation Im thinking of, soz

[HousePriceMania]

Had to laugh at this one...

 

 

[M S E Refugee]

53 minutes ago, PrincessDrac said:

Alasdair Macleod. October 26, 2021: Big Problem For The Comex Shorts. The problem for the Swaps is that demand for physical is cleaning the market out on the dips. China’s deliveries into the public is greater this year than for all last year, and India’s imports have totalled 770 tonnes so far this year, substantially up on last year. Bear in mind that Comex is about one eighth of the total gold derivative market, excluding options. The short positions in London will be far larger. They need to be resolved in the eleven weeks remaining this year, before Basel 3 applies. My guess is that from now on holders of gold deposit accounts must expect letters from their banks closing their accounts. On the inflation side, we see escalating price pressures from higher energy prices still working through into production costs, backwardations in base metals, no end to the logistics disruption, and therefore the prospect of significantly higher consumer prices in the coming months. This is a very difficult situation for the shorts who continue to launch downside attacks in the paper gold market, but the problem is they keep running into aggressive physical buying on these dips.

My Wife and I have got a couple of 0% Credit Cards and I'm very tempted to buy some Sovereigns.

[reformed nice guy]

Another anecdote

Farmer friend went to sell some cows today. Price is down about 10-20%, especially young ones that other farmers would normally buy to fatten up (~2 years). Reason is price of feed is up so the cost of rearing them is seen as too risky. Fertiliser is also up at least 50%

[Loki]

5 minutes ago, reformed nice guy said:

Another anecdote

Farmer friend went to sell some cows today. Price is down about 10-20%, especially young ones that other farmers would normally buy to fatten up (~2 years). Reason is price of feed is up so the cost of rearing them is seen as too risky. Fertiliser is also up at least 50%

Here come the meat shortages after the glut

[MrXxxx]

3 hours ago, Shamone said:

Filth.

I thought they all looked like that, mine does!...does yours not then?!

[MrXxxx]

3 hours ago, sancho panza said:

Enjoying the DM articles.Most widely read news site in the world.

This p[rety much sums up my view of why I need to do less hours.

How the hell can he call himself a conservative and then tax the working instead of restraining spending?The political elite lost me 15+ years ago.He's one of them.

Anecdotally,already hearing that some of my Mum's old pals have been on the phone to her about enrgy price rises.This is going to be a brutal winter.

https://www.dailymail.co.uk/news/article-10139635/Rishi-Sunak-warned-Budget-not-going-feel-great-tax-burden-highest-70-years.html

Rishi squeezes the middle earners: Experts say families earning around £30,000 will bear the brunt of tax rises in Sunak's 'Boris Budget' - as Tories warn about Chancellor 'showing off' and ending up like Gordon Brown

 

They warned millions of people will be left worse off under plans unveiled by the Chancellor yesterday, with no realistic prospect of taxes falling in future, experts warned today.

The Chancellor faced a backlash over his big-spending economic plan as it was revealed all strata of society will end up paying more in the middle of a cost of living crisis.

Experts said the scale of the spending he announced yesterday would see the state expand to its biggest size since the late 1970s, before Margaret Thatcher conducted a decade of reform to bring it under control. 

He also faced criticism from within Tory ranks from MPs who accused him of being too interested in 'Brand Rishi' and warned he could end up like Gordon Brown - a chancellor who took the top job and lost power. 

The Institute for Fiscal Studies said middle-earners would lose an average of £180 per year, while inflation and a freeze in personal tax allowances meant that one in nine workers was now a higher-rate taxpayer. The rate was one in 30 in 1991.

I would have thought it is ideal for anyone that isn't a homeowner and is considering FIRE in the next few years....interest payments will go up, bills [energy, food council tax etc] will go up, and mini BTL landlords will struggle if overstretched = property having to be sold under duress..your FIRE individual will both a) catch themselves a cheaper property, and b) if they have picked the right investments keep up with inflation.

[Harley]

13 hours ago, Festival said:

. I don't know how to model this effect in the calculator given the inflation is still there but annual expenditure is declining at the same time.

That's why I often go into the black arts of DCF to do my own custom modeling.  Some calculators though do support events, but none I've seen support a reducing withdrawal figure. But then I can also imagine you'll spend more on other items Iike healthcare.  Or maybe use the calculator to model alternatives for several variables and take an average?  

PS: I'm trying to do similar with the Harry Browne portfolio, plus using hard assets rather than just gold.

[DurhamBorn]

https://www.telegraph.co.uk/technology/2021/10/28/amazon-engulfed-supply-chain-chaos/

Happening now as we expected.However big makes no difference with cost push inflation.Amazon can cut margins to nothing or lose sales.The 17% they charge merchants isnt sustainable.

Given how much web services makes retail is probably burning cash.

[Harley]

9 minutes ago, DurhamBorn said:

https://www.telegraph.co.uk/technology/2021/10/28/amazon-engulfed-supply-chain-chaos/

Happening now as we expected.However big makes no difference with cost push inflation.Amazon can cut margins to nothing or lose sales.The 17% they charge merchants isnt sustainable.

Given how much web services makes retail is probably burning cash.

I've bought so much stuff.  But haven't finished, even if I've no room left!  I'd buy more stocks too but they're expensive!  

PS: People used to look on the High Street and then buy on Amazon.  Now the smart ones look on Amazon and buy elsewhere!

[Harley]

YouTube tried to take down George Gammon's Rebel Capitalist channel.  Had a load of support from Joe Rogan, etc and got reinstated.

[Barnsey]

It's happening folks!

 

[jamtomorrow]

8 hours ago, DurhamBorn said:

https://www.telegraph.co.uk/technology/2021/10/28/amazon-engulfed-supply-chain-chaos/

Happening now as we expected.However big makes no difference with cost push inflation.Amazon can cut margins to nothing or lose sales.The 17% they charge merchants isnt sustainable.

Given how much web services makes retail is probably burning cash.

ZH posted this last night, trend looks stunningly bad. They made the point that if AWS wobbles (and it could, if competitors finally get their act together and make their offerings properly AWS-fungible), the whole thing will sink like a rock.

 

[MrXxxx]

6 hours ago, Harley said:

YouTube tried to take down George Gammon's Rebel Capitalist channel.  Had a load of support from Joe Rogan, etc and got reinstated.

Why did they try to take it down, do `they` not want people to become financially literate then?

[Festival]

8 hours ago, Harley said:

That's why I often go into the black arts of DCF to do my own custom modeling.  Some calculators though do support events, but none I've seen support a reducing withdrawal figure. But then I can also imagine you'll spend more on other items Iike healthcare.  Or maybe use the calculator to model alternatives for several variables and take an average?  

PS: I'm trying to do similar with the Harry Browne portfolio, plus using hard assets rather than just gold.

Thanks - probably take an average having modelled a few alternatives seems the best approach.

I have a few hard assets alongside gold (eg silver and some whisky!). Never sure how to treat real estate is it best to treat like a proxy for bonds or as a hard asset. At least there is country specific data on property returns going back a long time.

[MrXxxx]

1 hour ago, Barnsey said:

It's happening folks!

 

In a similar vein I posted a video about two months ago on JCBs development of hydrogen JCBs. I think in the future we will have hydrogen haulage/transportation and electric (or dual fuel electroc hydrogen) personal vehicles...once of course when we have the infrastructure built, so I won't be selling my oil producers quite yet!

[Harley]

8 minutes ago, MrXxxx said:

Why did they try to take it down, do `they` not want people to become financially literate then?

They never said.  Just that it did not comply.  No warnings, nothing.  Just took it down.  I'm sure it'll still be down if he did not have the support. 

PS:  I've watched George for a while now.  He really has grown into quite a talent from a zero start.  One of life's doers.  Shows what can be done with some application.

[HousePriceMania]

10 out of 10 to whomever said the Scottish share was too good to miss at 40p a share

 

[Harley]

23 minutes ago, Festival said:

Thanks - probably take an average having modelled a few alternatives seems the best approach.

I have a few hard assets alongside gold (eg silver and some whisky!). Never sure how to treat real estate is it best to treat like a proxy for bonds or as a hard asset. At least there is country specific data on property returns going back a long time.

Yep  I wonder about property too, although I have not rebought as overpriced atm.  I agree about considering bond proxies rather than just bonds.  Have to get back to the fundamentals of the approach to work that out.  After much dilly dallying I'm putting my indexed linked NS&I in there.  I appreciate the loss of normal bonds but that's partly portfolio insurance for me, although I'll hold less than 25% total.  The portfolio is after all about long term preservation first and foremost.

Hard assets is a key area for me and like all the four asset classes, I'm sub-dividing it into areas beyond the suggested make up.  So more than gold in PMs - crypto, other PMs, commodities, etc.

They way I approach all this stuff (Browne portfolio, DCF, etc) is to use it all as a sound starting point and then cautiously move where I think I need to.  At least I better know where I'm starting.  The biggest moment in my investing life was getting grounded - having a playbook from which to play rather than being blown around by single events, media, emotion, available time, commentators, etc.  

[CVG]

2 minutes ago, Harley said:

They way I approach all this stuff (Browne portfolio, DCF, etc) is to use it all as a sound starting point and then cautiously move where I think I need to.  At least I better know where I'm starting.  The biggest moment in my investing life was getting grounded - having a playbook from which to play rather than being blown around by single events, media, emotion, available time, commentators, etc.  

Me too. I have about 2% in bonds - really just to keep track of where they are at the moment. I see big buying opportunities as yield rise more in line with inflation in a few years, so that I can lock in perpetual high returns (here's hoping).

MY home? I don't include that at all. It's my home - not an investment.

I treat my PB's as cash - so currently 1% on those.

Hard assets. Any split on varied precious metals based on relative value to each other, e.g. GSR. I include physical at home, physical in vault, miners and metal ETF's in this class.

[DurhamBorn]

1 hour ago, Barnsey said:

It's happening folks!

 

I worked for Cummins,they build the best engines in the world.We were doing lots of work with Hyundai on hydrogen.100% they will have it sorted,they already have really.

[DurhamBorn]

1 hour ago, jamtomorrow said:

ZH posted this last night, trend looks stunningly bad. They made the point that if AWS wobbles (and it could, if competitors finally get their act together and make their offerings properly AWS-fungible), the whole thing will sink like a rock.

 

I think to be fair they are adding huge capacity everywhere funded from cashflow so likely they will increase free cash in the medium term.However they have a massive cost base,and every part of it facing headlong into inflation.

 

[Harley]

11 minutes ago, CVG said:

Me too. I have about 2% in bonds - really just to keep track of where they are at the moment. I see big buying opportunities as yield rise more in line with inflation in a few years, so that I can lock in perpetual high returns (here's hoping).

MY home? I don't include that at all. It's my home - not an investment.

I treat my PB's as cash - so currently 1% on those.

Hard assets. Any split on varied precious metals based on relative value to each other, e.g. GSR. I include physical at home, physical in vault, miners and metal ETF's in this class.

Sounds good, although I put my growing PM miner holding in equity.  Most of my equity is 3%+ yielders with decent fundamentals bought when technically cheap.  I also sliced a bit off the equity bucket for trading (equities and options) but am too busy to dabble atm.  Defo agree about the home (a chattle, not an investment) but put PBs in bonds to fake the overall bond % (a very little)!  I'm currently about 30% equity, 20% hard, 20% bonds, 30% cash.  Hard will go up when commodities pull back.  Bonds will move to property, etc when they are a better buy, some cash is in st bonds but needs to be worked harder.  Maybe at least other currencies.  

[Harley]

7 minutes ago, DurhamBorn said:

I think to be fair they are adding huge capacity everywhere funded from cashflow so likely they will increase free cash in the medium term.However they have a massive cost base,and every part of it facing headlong into inflation.

 

Is AWS essentially a data centre?  I have a watchlist of data centre stocks, but not them.  Quite hard to invest there atm as several are private, small, not just data centres, or get taken over.

On the subject of watchlists, thanks to @sancho panza for posting his now and then.  They offer a good headstart and/or cross check of my own.