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

[Funn3r]

On 06/06/2022 at 09:37, Loki said:

U.K. 15 Year Gilt 2.475%

U.K. 30 Year Gilt 2.457%

U.K. 50 Year Gilt 2.266%

 

That's not right surely?

That's amazing. The shorter the term the more you get. Do they do a U.K. 24 Hour Gilt?

[Funn3r]

On 06/06/2022 at 10:42, Mapper said:

Tis true.

Maybe, it was 10s of thousands of years.

Yes and that one place you said would still show human traces is only "allegedly" anyway.

[Spiney Norman]

2 hours ago, DurhamBorn said:

The economy is saying people who consume but dont produce need to consume much less until they do produce.Government is saying,no those who produce must consume less,and pay more for those who dont produce so they can consume even more.Its nuthouse stuff yet its the basis of government policy.

Thats very well put DB.

You should say that on TV, if people understood what is happening and is about to get worse there maybe change.

You would be seen as the next "Tommy Robinson" an economic "Tommy Robinson" by the 1%.

[geordie_lurch]

Not going to lie, it's hard watching XOM hitting $102.8 after I took profits at $80 and needed the cash

[DurhamBorn]

1 hour ago, Option5 said:

Trading as a ltd company.

FAMILIARS CAT CAFÉ LTD

Up to their eyeballs in debt 

 

Dont like to focus on people,but its fascinating to see how that works out because its top of cycle stuff.

 

[HousePriceMania]

2 hours ago, DurhamBorn said:

Dont like to focus on people,but its fascinating to see how that works out because its top of cycle stuff.

 

It's interesting to see stuff like this, serves as a warning to people not to get into bed with people who will take everything from you.

2 hours ago, geordie_lurch said:

Not going to lie, it's hard watching XOM hitting $102.8 after I took profits at $80 and needed the cash

Me too.

[mh9000]

I know it's bordering on specific advice but there must be a few in this scenario here, so please forgive me for asking...

Seen a few here are minimizing tax by adding to SIPPs or ISA monthly, are you still buying the typical stuff mentioned in here ? 
I've got a bit of the ISA allowance left to use up (10k) and cash that I'd saved for a house sat there that's no longer for that.

A very good problem to have but the few things I've bought this tax year have gone up so didn't manage to hit ladders in in time. Do you still just add to what you've got? Seems a better option than guaranteed loss of 9% on cash? Assuming all other "offline"/non-share purchases are covered (pizza oven, 2 years of 00 grade flour etc ).

Sorry for the dumb question, I hope a few others might also get something out of it.

For this my risk tolerance is fairly high and a long 5+yr time frame. Considering Silver miners but it's 10K were talking about, not to be sniffed at but also so not sure that would spread wide enough?

I know there isn't really one size fits all answer so reluctant to ask but looking for some ideas. Cheers! 

I can offer you some tips on pizza, I discovered "poolish" a few months back, you basically subtract a bit of the mix, do a pre-ferment of the yeast and flour night before then add to the rest of the flour and water when you go to do the main dough. Minimal extra hassle but it's ended up being the best dough I tried so far. : https://electricbluefood.com/wprm_print/13716

[invalid]

5 minutes ago, mh9000 said:

 

For this my risk tolerance is fairly high and a long 5+yr time frame. Considering Silver miners but it's 10K were talking about, not to be sniffed at but also so not sure that would spread wide enough?

 

 

You could look at some ETFs if spread is a concern. Not giving advice or recommending, but purely as an example there is the Wisdom Tree Silver ETF for exposure to physical silver market.

[spygirl]

11 hours ago, DurhamBorn said:

Bennies again as well.Every cafe etc over there on the coast has job adverts in the windows and all the shops.However they simply cant compete with the bennies.Cafes cant pay £500 a week for staff.The polos think high bennies keeps demand up,and to be fair they are right,but we are well past the point where they become very destructive.Who is going to buy all the probates in Scabby? .Wonder if that bonkers Cat Cafe is still going.

Yes.

https://www.tripadvisor.co.uk/Restaurant_Review-g190744-d17636100-Reviews-Steampuss_Cat_Lounge-Scarborough_Scarborough_District_North_Yorkshire_England.html

Seems like weve a large pool of doley cat lovers looking to fill in their days.

Wont make money.

[Democorruptcy]

8 hours ago, DoINeedOne said:

 

seems same lady was in the Telegraph too

Last orders for Britain's pubs as energy crisis strikes

Miranda Richardson, landlady of the Live and Let Live, has been told the £1,400 she pays each month for gas and electricity will rise by 50pc thanks to the escalating energy crisis.

 

“Just to open the doors each week it costs £2,700 and that doesn’t include food and drink,” she said. “That’s just the lease, staff wages and energy bills, which are huge outgoings.

 

“I can’t make cutbacks like I can at home. You can’t tell customers to put on an extra jumper or turn lights off. The cellar equipment needs to be powered 24/7 to keep the beer cool and stock frozen, they can’t just be turned off.”

https://archive.ph/TR808

I said a few weeks back about someone i know who runs a pub told there son they don't know if they will still be in the pub next year

 

So more pubs and restaurants will go under less nice places to go

 

Was chatting with my partner about the younger ones in our family and how they don't even go out drinking when i was there age i was out Thursday, Friday, Saturday and Sunday if i could handle it but there was so many pubs to go too, but now...

Where I am, in winter a lot of pubs already only open at the weekend, that might be coming to England. This winter could be an energy lockdown instead of a covid.

[geordie_lurch]

The USA data isn't getting any better - do we have similar details for UK consumer credit card use? Full article here

"Here are the shocking numbers: in April one month after the jarring March print again came in more than double the $25 billion expected to $52.435 billion, in April consumer credit again exploded to a ridiculous $38.1 billion, again blowing away expectations of a $35 billion increase (and not much lower than last month's downward revised $47.3 billion).

And while non-revolving credit (student and car loans) rose by a relatively pedestrian 21.1 billion (which was still the 6th highest on record)...

... the stunner for the third month in a row was revolving, or credit card debt, which remained shockingly high, rising by the second highest on record at $17.8 billion, and down from only the highest print on record, March's downward revised $25.6 billion (from $31.4 billion)...

... and sending total revolving consumer credit back to new all time highs at just over $1.1 trillion, erasing all the post-covid credit card deleveraging just in time for those credit card APRs to start moving much higher, first slowly and then very fast."

 

[Noallegiance]

Brent and WTI now both back over $120.

This being only a taster of what's to come really does put things into perspective. 

Our economies are going to look vastly different in 8-10 years.

[Noallegiance]

17 minutes ago, Cattle Prod said:

Oops

You should been reading DOSBODS, Barkindo. Then you mightn't look like such a tit.

As discussed here, those two members with spare are UAE and Iran, which is sanctioned (for now). He's effectively admitting that Saudi is maxed out, otherwise he'd say "3-4"

Or maybe he's just a tit.

 

So I assume the capacity is full because demand isn't there to empty it?

What happens when demand (say, China?) returns? Prices find a new lower level after a lag? Or they stay high and go higher due to input costs of production?

Pretty clear Russia isn't coming back to mass pumping to the West any time soon.

[sancho panza]

9 hours ago, DurhamBorn said:

Il be selling the rest of mine very soon.Been a fantastic call,hit the bottom on them and had a very big holding,but i want those profits in divis not windmills etc and its time to move on from them.Shares are still cheap in the context of the cycle,but it looks like the gains are on capital more than divis.I can understand their logic though,but im off with my loot.

Must say it's interesting you saying that.I've been looking after the kids all day but had a quick look and saw the repsol price and thought they might be for the chop.

Previously we've sold XOM/OXY/EQNR and bought the laggards in the race at teh time of sale.Currently you can sell 1.73% yielding Repsol and buy Total with yield 4.76%.Having said that even the laggards are running well from the Oct 20 bottom..oh the heady days of $35 XOM

 

9 hours ago, DoINeedOne said:

 

seems same lady was in the Telegraph too

Last orders for Britain's pubs as energy crisis strikes

Miranda Richardson, landlady of the Live and Let Live, has been told the £1,400 she pays each month for gas and electricity will rise by 50pc thanks to the escalating energy crisis.

 

“Just to open the doors each week it costs £2,700 and that doesn’t include food and drink,” she said. “That’s just the lease, staff wages and energy bills, which are huge outgoings.

 

“I can’t make cutbacks like I can at home. You can’t tell customers to put on an extra jumper or turn lights off. The cellar equipment needs to be powered 24/7 to keep the beer cool and stock frozen, they can’t just be turned off.”

https://archive.ph/TR808

I said a few weeks back about someone i know who runs a pub told there son they don't know if they will still be in the pub next year

 

So more pubs and restaurants will go under less nice places to go

 

Was chatting with my partner about the younger ones in our family and how they don't even go out drinking when i was there age i was out Thursday, Friday, Saturday and Sunday if i could handle it but there was so many pubs to go too, but now...

She's lucky she can jsut give the keys back.I feel sorry for the people that can't

Lot of pub/cafe/nail shop owners been lulled into a false sense of security by 40 year disinlfation .....lot of people don't realsie how quickly a buisness can go cashflow negative when it's the receipeint of discretiaonry spend.

Pubs have been shutting for a long time in Birmingham/Cov/Leicester( the Midlands cities I know),but they were all the old liquid boozers that didn't have a lot of food being sold.Now even the foody ones are going.

As per @DurhamBorn, the owners are looking at the risks of running negative cashflow for 6 months to see if it bottoms and then looking at the bennies and thinking why not?

Lot of marginal businesses going to go to the wall and that includes the amrginal businesses that don't yet know they're marginal businesses

[sancho panza]

1 hour ago, geordie_lurch said:

The USA data isn't getting any better - do we have similar details for UK consumer credit card use? Full article here

"Here are the shocking numbers: in April one month after the jarring March print again came in more than double the $25 billion expected to $52.435 billion, in April consumer credit again exploded to a ridiculous $38.1 billion, again blowing away expectations of a $35 billion increase (and not much lower than last month's downward revised $47.3 billion).

And while non-revolving credit (student and car loans) rose by a relatively pedestrian 21.1 billion (which was still the 6th highest on record)...

... the stunner for the third month in a row was revolving, or credit card debt, which remained shockingly high, rising by the second highest on record at $17.8 billion, and down from only the highest print on record, March's downward revised $25.6 billion (from $31.4 billion)...

... and sending total revolving consumer credit back to new all time highs at just over $1.1 trillion, erasing all the post-covid credit card deleveraging just in time for those credit card APRs to start moving much higher, first slowly and then very fast."

 

The issue with revolving credit is why it's high.Reasons can vary from people bowing cash because they're remoing to blowing cash to buy food.

I suspect at the minute it's people buying the  staples of life

53 minutes ago, Cattle Prod said:

He means production capacity, not tank. Demand is high, higher than pre Covid and production is dropping. 

They're trying to trigger a recession to kill demand and knock oil back to below 50 to cure inflation, but much to their consternation it's staying high, even though they are dumping strategic reserves at a historic rate. So it's a race now to see if they blow up the economy before breaking oil, and so far oil us winning. They may choose to break the economy, but after the first hint of it (next couple of months) I think they will pause rates. Inflation will probably go down because of leads and lags, but gold will again lead the next inflation spike in 18mths or so.

That's an interesting thesis right there.

Must say I agree gold is looking the bargain right here .This really isn't your traditional run in to a BK  but tehn this isn't going ot be your average BK either.Biggest since 29......

 

[Don Coglione]

3 minutes ago, sancho panza said:

That's na interesting thesis right there.

But if my thesis is correct, that they know fossil fuels are running out and that they must therefore limit demand under the guise of climate change, it makes perfect sense.

[The Grey Man]

http://thesaker.is/is-us-nato-with-wef-help-pushing-for-a-global-south-famine/

Interesting read. 

Fuel for the fire really. The take that the inflation push, the Russian sanctions impacting on food and fuel costs world wide, are a one way drive by the US to force a "with us or against us" view.

A formal decoupling of the world economy.

 

[wherebee]

7 hours ago, HousePriceMania said:

BP and Shell shot up at 2.30 ( US opening time ).  Anyone know why ?

it's become hard now to keep with my plan of just staying in the oilies for 10 years and enjoying the dividends, when I am up 75% or more.  However - I think I'll wait until the end of the Australian tax year; next years earnings will be less as the recession bites, so rather push gains into that year.

[GoneDark]

1 hour ago, Noallegiance said:

Brent and WTI now both back over $120.

This being only a taster of what's to come really does put things into perspective. 

Our economies are going to look vastly different in 8-10 years.

I think they're going to look horribly different in 4 to 5 months.

Maybe i need to lay off the Doomaid.

[JMD]

3 hours ago, sancho panza said:

Must say it's interesting you saying that.I've been looking after the kids all day but had a quick look and saw the repsol price and thought they might be for the chop.

Previously we've sold XOM/OXY/EQNR and bought the laggards in the race at teh time of sale.Currently you can sell 1.73% yielding Repsol and buy Total with yield 4.76%.Having said that even the laggards are running well from the Oct 20 bottom..oh the heady days of $35 XOM

 

She's lucky she can jsut give the keys back.I feel sorry for the people that can't

Lot of pub/cafe/nail shop owners been lulled into a false sense of security by 40 year disinlfation .....lot of people don't realsie how quickly a buisness can go cashflow negative when it's the receipeint of discretiaonry spend.

Pubs have been shutting for a long time in Birmingham/Cov/Leicester( the Midlands cities I know),but they were all the old liquid boozers that didn't have a lot of food being sold.Now even the foody ones are going.

As per @DurhamBorn, the owners are looking at the risks of running negative cashflow for 6 months to see if it bottoms and then looking at the bennies and thinking why not?

Lot of marginal businesses going to go to the wall and that includes the amrginal businesses that don't yet know they're marginal businesses

Yes I've been looking to buy more divi-paying Total. SP, have you any views on why Occidental (7x) and Conoco (4x) have done so well since the Oct 2020 lows? Not asking in terms of trading advice, but to learn from my mistake (of not buying more of them!). Both share prices had been falling quiet steeply and for some time prior to the 2020 lows so perhaps they are now just rebounding back to 'true value'? Or perhaps their large shale oil drilling is flattering their production figures? Tbh i don't know their production details, but it was the relatively large exposure to shale that stopped me buying more as I deemed it a risk.                                                                                                                                                                        SP, I know you spray and pray but if you or @Cattle Prodcan add anything to my above rambling question I'd be grateful. Again I'm not asking for trading advise - The real kicker for me is that those two oilies are my smallest holdings, but are my best performers!! Anyway in the short term I think I'll sell whilst at their highs and put all proceeds into Total, but if we do get a BK I might be tempted to buy back in (after all I note that Buffet is still buying Occidental, owns 15%). 

[Castlevania]

4 hours ago, JMD said:

Yes I've been looking to buy more divi-paying Total. SP, have you any views on why Occidental (7x) and Conoco (4x) have done so well since the Oct 2020 lows? Not asking in terms of trading advice, but to learn from my mistake (of not buying more of them!). Both share prices had been falling quiet steeply and for some time prior to the 2020 lows so perhaps they are now just rebounding back to 'true value'? Or perhaps their large shale oil drilling is flattering their production figures? Tbh i don't know their production details, but it was the relatively large exposure to shale that stopped me buying more as I deemed it a risk.                                                                                                                                                                        SP, I know you spray and pray but if you or @Cattle Prodcan add anything to my above rambling question I'd be grateful. Again I'm not asking for trading advise - The real kicker for me is that those two oilies are my smallest holdings, but are my best performers!! Anyway in the short term I think I'll sell whilst at their highs and put all proceeds into Total, but if we do get a BK I might be tempted to buy back in (after all I note that Buffet is still buying Occidental, owns 15%). 

Occidental bought Andarko in 2019 for way too much and when oil prices crashed in 2020 were weighed down by the debt they’d issued to complete that deal.

[BurntBread]

34 minutes ago, Castlevania said:

Occidental bought Andarko in 2019 for way too much and when oil prices crashed in 2020 were weighed down by the debt they’d issued to complete that deal.

I didn't know that: thanks for the info! It was clear that Occidental wasn't making much money through 2020 and (more worryingly) much of 2021, and weren't paying anything in the way of a dividend. That made them quite an outlier, but they are huge (I don't know why they don't count as a "supermajor" - maybe because they have less international reach?). Anyway, I bought some, because I thought they would leverage the oil price well, but not a huge amount, as I regarded their lack of profitability as a risk: it wasn't clear to me why they were doing so badly, financially, and I thought there was a possibility that even such a large company might go under if the oil price took another dive in a BK.

[wherebee]

16 hours ago, RickyBacker said:

Quite possibly one of the best videos I've seen about the current state of the world with a focus on global energy and supply chains. It's a monster presentation... I'm 1h 40 mins in and it is truly captivating. 
Grab a beer and enjoy / worry about the state of the world based on data and facts.

 

really good video, worth a watch.

However, he clearly has swallowed the official line on i) ukraine and ii) covid/vaccines.  So... what else is he wrong about?

That said, one really interesting thing I am seeing which is linked into his energy resource maps is that Australia has a lot of untapped oil and gas, as well as massive potential for solar (centre) and wind (south and east).  The new labor gvt here, which campaigned for ten years on green energy, has in it's first week backed coal, said that coal will be around until 2050, and that renewables have to be carefully introduced.  It's shocked a lot of the wokies hah fucking hah.  

Maybe the coldest winter in 30 years here in Victoria, plus the gas grid almost falling over, plus energy bills shooting up whilst megatons of coal, oil, and gas sit under our feet (development moratorium in Victoria, despite huge reserves) has resulted in some new ministers going 'oh shit'.

My woodside shares have rocketed through the roof today.  The market knows something...

[Barnsey]

Tenants face 'worrying picture' of further rent hikes, as number of rental homes has almost HALVED since 2019 amid landlord sell-off

https://www.thisismoney.co.uk/money/buytolet/article-10889583/Number-rental-homes-HALVED-2019.html

Agents reported that buy-to-let investors were increasingly abandoning London, with more than half estate agents saying they had seen a decrease in landlords in the capital.

Propertymark has previously said that small-time landlords are increasingly giving way to portfolio investors and large corporate landlords. 

Rents in London have hit a new record of £2,193 per month, rising by 14.3 per cent in the last year from £1,919 - the largest annual jump of any region, according to recent research by Rightmove.

Average asking rents outside of London have risen by 10.8 per cent or £106, to £1,088 per month, in what is being described as the most competitive market ever recorded.

Propertymark’s chief executive, Nathan Emerson, said this was a worrying picture for private renters.

'A lack of property is the root cause for rent increases and rising figures on social housing lists', he said.

'We know from our qualitative research that the most common reasons for landlords to choose to sell their properties and no longer provide homes are around risk, finances and viability.

'Landlords and letting agents have been the subject of extreme legislation changes as the UK Government tries to improve the sector. 

'However, without a middle ground, these changes are actually proving detrimental to those they are supposed to protect.

'Sadly we do not see this improving as the sector braces itself for more changes within the anticipated Renters' Reform Bill and upcoming energy efficiency targets.'

[feed]

1 hour ago, wherebee said:

However, he clearly has swallowed the official line on i) ukraine and ii) covid/vaccines.  So... what else is he wrong about?

Agree

I got as far as him talking about the 40 mile convey and the (wrong) lessons learned from it.  That convoy didn’t exist and was identified as a media fabrication almost as soon as it was published, 3 months ago.  If he can’t validate something as basic as that, and opens with it, he doesn’t have much credibility.