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

[dnb24]

Shamelessly stolen from Twitter-

Fed: Hikes 75bps

SNB: Hikes 50bps

BoE: Hikes 25bps

ECB: A plan to make a plan

BoJ: Operation ostrich

[ThoughtCriminal]

UK Reddit investor board post. 

 

"Negative equity? Awesome! So how much do you owe me?"

 

😂😂😂

[JoeDavola]

31 minutes ago, ThoughtCriminal said:

It'll be from the last few days, all of their stuff is always current.

 

2008 but with huge inflation, more debt and structural problems everywhere.

 

We just never learn.

Agree it seems the overall economic outlook for house prices is worse than 2008 because of the inflation. 

However here in NI ever since the pandemic started there has been very few houses coming on the market especially desirable houses in decent nick. And things have stayed quiet since the pandemic ‘ended’.

Add to this the fact that there’s virtually no house building happening. And the population of NI rising.

The situation seems to be that most people that bought a few years back can’t afford to ever move up the ladder now and in many situations couldn’t afford thhe house they’re in at todays prices; so there’s no housing ‘ladder’ any more.

So we have such a severe lack of supply both in sales and rentals that people can ask whatever price they want and someone will at least be trying to pay it if they can get the credit. A lot of cash buyers out there too.

I guess what I’m saying is instead of a reduction in house prices we could have a continual reduction in volume of sales as fewer folk than ever can afford to buy or afford to move.

[geordie_lurch]

I think this clip sums up the ridiculousness of the world's Governments trying to pretend they are not intentionally trying to crash their economies

 

[wherebee]

1 hour ago, ThoughtCriminal said:

Watch that video and then tell me there isn't a housing bubble.

 

At first I thought it was a parody of The Big Short. Then it struck me: this is real.

those sort of numbers, if you are running as a full time business with staff, accountants, etc, then that's great!

But... I suspect these fuckwits are one or two man bands and once the non payment of rent starts climbing, and the input costs start rocketing.... they are fucked.

[Jesus Wept]

I was doing some research into where we were in the 1970s.

Obviously most are aware of the similarities but when you read this the parallels are startling.

Virtually 50years to the day.

Are we in the equivalent of June 1972?  
 

Will history repeat?

 

 

[marceau]

10 minutes ago, JoeDavola said:

Agree it seems the overall economic outlook for house prices is worse than 2008 because of the inflation. 

However here in NI ever since the pandemic started there has been very few houses coming on the market especially desirable houses in decent nick. And things have stayed quiet since the pandemic ‘ended’.

Add to this the fact that there’s virtually no house building happening. And the population of NI rising.

The situation seems to be that most people that bought a few years back can’t afford to ever move up the ladder now and in many situations couldn’t afford thhe house they’re in at todays prices; so there’s no housing ‘ladder’ any more.

So we have such a severe lack of supply both in sales and rentals that people can ask whatever price they want and someone will at least be trying to pay it if they can get the credit. A lot of cash buyers out there too.

I guess what I’m saying is instead of a reduction in house prices we could have a continual reduction in volume of sales as fewer folk than ever can afford to buy or afford to move.

Possibly. But this sort of reasoning won't work against a long term trend change. 

Credit market makes it look like people have infinite cash, but they really don't. 

[Lightscribe]

I know many on here don’t believe in any elitist plans or anything like that and all this instead is just down the ineptitude of current global leadership.

There have been people willing to openly call it out in the past of course. Does what Larry McDonald has to say here sound familiar now?

 

Or skip to 17:00 here when George Hunt talks about Maurice Strong (former Klaus Schwab) words at the earth summit (former WEF Davos), and the reference to the worlds population as cannon fodder.

Maybe just maybe there might be some connection 

 

[JoeDavola]

Just now, marceau said:

Possibly. But this sort of reasoning won't work against a long term trend change. 

Credit market makes it look like people have infinite cash, but they really don't. 

There were many repos in 08-12 crash but I can’t see the gov of today letting that happen.

However anecdotally I am seeing sales fall through here and hearing stories of quite extreme borrowing to get on the ladder eg a 45 year old trying to get a 30 year mortgage.

[HousePriceMania]

41 minutes ago, Jesus Wept said:

https://www.bbc.co.uk/news/business-61835796
 

 

this could be just the start. There must be loads of companies who are teetering on the edge and struggling with high supply chain costs, Labour prices and now add lack of demand. 
 

The whole thing could collapse. 
 

Big Kahuna here we come…… ? 

Avon cosmetics is based in Northampton, somone who worked there in accounts told me a few years ago that they always do well in a recession. 

Lets see this time 

[geordie_lurch]

The last of my shell shares I was holding just auto sold on a stop loss I set a while ago to keep some of the profits. Looks like another rough day to come

[marceau]

17 minutes ago, JoeDavola said:

There were many repos in 08-12 crash but I can’t see the gov of today letting that happen.

However anecdotally I am seeing sales fall through here and hearing stories of quite extreme borrowing to get on the ladder eg a 45 year old trying to get a 30 year mortgage.

This is not 2008. Liquidity is not the issue, supply is the issue. Govts can't juice credit markets without destroying their purchasing power - a situation that is likely to persist for many years, maybe even decades. BOMAD, cash buyers etc may have already blown their load, even if they haven't they are absolutely dwarfed by global credit markets.

Direct govt lending could be big enough and durable enough to prop the market but their priorities are going to be elsewhere, many of them are going to have trouble staying solvent. In all honestly NI is a giant welfare case and it's likely to go the same way as all other aspects of welfare - relentless, sustained pressure on spending in real terms.

[DurhamBorn]

54 minutes ago, Jesus Wept said:

https://www.bbc.co.uk/news/business-61835796
 

 

this could be just the start. There must be loads of companies who are teetering on the edge and struggling with high supply chain costs, Labour prices and now add lack of demand. 
 

The whole thing could collapse. 
 

Big Kahuna here we come…… ? 

Notice how they mention 60 different items needed for lipstick and running out.Thats the key.If they made most of them themselves they would be fine.40 years of outsourcing all the bits to cheap countries and just putting them together is hammering them.We were right on here to try to mostly stick to de-complex,or at least consider it in every buy.

These companies are all bringing production back but half their populations wont work,better off on bennies.

[MrXxxx]

43 minutes ago, ThoughtCriminal said:

UK Reddit investor board post. 

 

"Negative equity? Awesome! So how much do you owe me?"

 

😂😂😂

People like this shouldn't be let out on their own, let alone buying a house!

[DurhamBorn]

44 minutes ago, ThoughtCriminal said:

UK Reddit investor board post. 

 

"Negative equity? Awesome! So how much do you owe me?"

 

😂😂😂

Her addy is hotbitch ,so point her to seeking.com and tell her to search in the Durham area and things will be fine 

[Barnsey]

38 minutes ago, HousePriceMania said:

Avon cosmetics is based in Northampton, somone who worked there in accounts told me a few years ago that they always do well in a recession. 

Lets see this time 

Based on how many catalogues were left outside doors on our street, not well it would seem.

[HousePriceMania]

44 minutes ago, JoeDavola said:

There were many repos in 08-12 crash but I can’t see the gov of today letting that happen.

However anecdotally I am seeing sales fall through here and hearing stories of quite extreme borrowing to get on the ladder eg a 45 year old trying to get a 30 year mortgage.

Can we stop calling it a ladder ?

If it's a ladder it's a ladder to try and crawl up a pyramid (scam)

If the MSM called it a pyramid and pointed out a 45 year old with a 30 year mortgage was at the bottom of it propping up the wealth of the Queen, do you think they'd buy ?

[BWW]

4 hours ago, HousePriceMania said:

Can we stop calling it a ladder ?

If it's a ladder it's a ladder to try and crawl up a pyramid (scam)

If the MSM called it a pyramid and pointed out a 45 year old with a 30 year mortgage was at the bottom of it propping up the wealth of the Queen, do you think they'd buy ?

snake ?

[Jesus Wept]

29 minutes ago, DurhamBorn said:

Notice how they mention 60 different items needed for lipstick and running out.Thats the key.If they made most of them themselves they would be fine.40 years of outsourcing all the bits to cheap countries and just putting them together is hammering them.We were right on here to try to mostly stick to de-complex,or at least consider it in every buy.

These companies are all bringing production back but half their populations wont work,better off on bennies.

@DurhamBorn

I noticed you talked about taking some profits in baccy the other day. 

How do your think the supposedly defensive stocks (PHARMA, TELECOMS, BACCY, UTILITIES), will play out over next 1-2 years.

In particular: 

GSK, BATs, IMB, TEF, ORA, VOD, VZ, T, NG.

I also am holding HEFL and MNG which have given nice dividends (for now),  insulating / cancelling out the approx. -10% losses on share price so far 

I am considering selling all the above and taking the 10-30% profits made so far and just moving to 80% cash and 20% Gold and Silver in BullionVault. 

Since liquidating all oil related stocks a few weeks ago (and a few others),  I am already about 60% cash sitting across 4 x S&S ISAs. 

Interestingly In the 1970s SM dropped 75% over 2 years but then returned back to same level rising 150% in 3 months from the bottom. 

I am so tempted to go virtually all in cash and wait for a new opportunity like the 1970s gave us and the pandemic gave us….

 

[HousePriceMania]

5 minutes ago, BWW said:

snake ?

Give it a month 

[DurhamBorn]

25 minutes ago, Jesus Wept said:

@DurhamBorn

I noticed you talked about taking some profits in baccy the other day. 

How do your think the supposedly defensive stocks (PHARMA, TELECOMS, BACCY, UTILITIES), will play out over next 1-2 years.

In particular: 

GSK, BATs, IMB, TEF, ORA, VOD, VZ, T, NG.

I also am holding HEFL and MNG which have given nice dividends (for now),  insulating / cancelling out the approx. -10% losses on share price so far 

I am considering selling all the above and taking the 10-30% profits made so far and just moving to 80% cash and 20% Gold and Silver in BullionVault. 

Since liquidating all oil related stocks a few weeks ago (and a few others),  I am already about 60% cash sitting across 4 x S&S ISAs. 

Interestingly In the 1970s SM dropped 75% over 2 years but then returned back to same level rising 150% in 3 months from the bottom. 

I am so tempted to go virtually all in cash and wait for a new opportunity like the 1970s gave us and the pandemic gave us….

 

Im not selling any of my telcos apart from US ones,i took small profits on them but bought more Turkcell,and only took 10% off my BAT holding because it got too big.I bought a huge holding at average £25.Im more concerned about inflation than share losses.Drawdowns dont concern me really.

Divis matter like you say,even if the stocks stay down a bit.Most bubble areas including bonds dont have that luxury.

[Jesus Wept]

35 minutes ago, DurhamBorn said:

Im not selling any of my telcos apart from US ones,i took small profits on them but bought more Turkcell,and only took 10% off my BAT holding because it got too big.I bought a huge holding at average £25.Im more concerned about inflation than share losses.Drawdowns dont concern me really.

Divis matter like you say,even if the stocks stay down a bit.Most bubble areas including bonds dont have that luxury.

That’s a very interesting take on it. 

Like you I have a fairly substantial holding in BAT and bought around 2550p a few times a across the various ISAs  - so up about 31% as of this morning. 

My T and VZ are showing a slight loss (5%).

Whats your thinking about selling these US telcos. Just plain overvalued? Still ? They’ve dropped massively over the last few years. Dividends have been fairly good. 5-6% 

The European telcos are all up 10-15%. 

Why the differentiation between the US and European telcos ?

I was going to take profits in Europe and ladder down on AT&T and Verizon ….if they experience further big falls in the general sell off. The opposite thinking to you. 
 

Interesting looking back…

 

 

Edited to add: Just put Turkcell on my watch list after having a look at it. 
Fallen 80% from an $11 high 5 years ago. How did you hear about this one? 

[THEFREEMAN]

So the thread identified oil as good holds and then the gubbermint decided to tax all the profits? So now they are trash holds?

Whats the point of investing

[HousePriceMania]

5 minutes ago, THEFREEMAN said:

So the thread identified oil as good holds and then the gubbermint decided to tax all the profits? So now they are trash holds?

Whats the point of investing

Whats the point of existence ?

 

Same Same.

[Jesus Wept]

Time to go long on Turnips. They’ve dropped 50% ! (36p to 18p on a yellow reduced sticker !). 
 

https://www.bbc.co.uk/news/business-61813857

Consumer crash and big deflation demand crunch coming?