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

[ThoughtCriminal]

2 hours ago, sancho panza said:

Intersting that they forsee 30% hydrogen output by 2027....

Couple of key points right there CP.Big issue is keeping BRICS(particualrly) but also others using USD to borrow/buy commodities,they let it run up too much and the sytem blows up and I suspect ther'yre well aware(as we discussed on here a few years back) that this will be the dollar's last crisis as the world's reserve currency.

Those countries will weigh the benefits of dollar pricing but fundamentally,the Fed needs to keep it within a range,not too low-as that will hammer dollar savers,not too high-as that will hammer dollar borrowers.

I'm with you & Luke groemn here that Fed will have to let DXY drop for myriad reasons.

I've also said for some time that once a weak dollar pahse is in play then some sort of big kahuna credit event won't be far away and things will get very interesting.

DXY short then? 😉

[ThoughtCriminal]

1 hour ago, JMD said:

Interesting. Would that sell for maybe only £2k? Plus say £2k to repair?          ...Or am I being a bit humorless and not getting your (nearside) front wheel drive joke?!

If I could get that back on the road for 4k all in I'd have a field full of them! 

 

That'll be more like 11-13k back on the road. So 7k saving

[ThoughtCriminal]

1 hour ago, Cosmic said:

No its going to go for 12k+ I recon. There is a reserve set too, normally (or at least back when I did Copart stuff) insurers don't do this which means its coming from another source... could be purchased previously, damage was found to be worse than they thought then gets doctored and thrown back...

I bought a Focus ~5y ago looked like less damage than that, but similar, that had a reserve etc. The offside chassis leg was bent and touched the suspension, along with ripples back in to the body. Ended up parting.

My Cat N Ibiza bought at 3yr old from Copart has been an absolute gem though, airbags were not deployed on that one. New front end from another car I bought and parted out at the same time and we're ~£2.5k OTR for a car that's done 3.5years trouble free service for me and still worth that or more.

I'd stay away unless you can get them under the sum of their parts and are prepared to break the ones that are going to be more trouble than they are worth...

Insurers are placing reserves and minimum bids now, guess times are hard.

 

But you're right, you have to keep an eye out as plenty of dodgy bastards out there trying to sell problem cars on.

 

I always check when the write-off date was. If there's a big gap between that and when it's been listed then I don't touch it.

[ThoughtCriminal]

If we don't end up with a major war soon it'll be a fucking miracle.

 

Is there a war proof investment? Gold/silver maybe?

[Axeman123]

1 minute ago, ThoughtCriminal said:

If we don't end up with a major war soon it'll be a fucking miracle.

I will say, Turkey has spent centuries playing rival suitors off against each other to stay independant. They were originally sanctioned for buying Russian air defence systems, then they were selling drones to Ukraine for them to fight the Russians, next they were Russia's pal for blocking those countries entering NATO, and finally:

The NATO proxy war on Turkey (using Kurds) has largely been run and financed from Sweden etc.

Hats off to Erdogan, he has seen off NATO regime change without becoming Putin's bitch.

[Noallegiance]

In case anyone wants to smash up their phone or telly, these mother fuckers are together and having a jolly old time discussing how shit everything is for everyone but them:

 

[Transistor Man]

49 minutes ago, JMD said:

That point about diesel oil shortages made me think about the government pivot (political panic on particulates?!) on car diesel use a few years back, after having  encouraged its use for many years. I mean it's been mentioned before that the whole 'CO2 climate crises' may just be cover for our politicians to begin their control/rationing of the ever dwindling supplies of global fossil fuels... So did government need to quickly cut diesel use and found a convenient health related reason to achieve this?                                                                                                                                      

The particulate health issue with diesel engines was well known before the big push on mass-use was made. 

It was just a stupid decision, in my view. 

I believe Sasol make all diesel for domestic use in South Africa via a Gas-to-Liquids process. Something they mastered during the apartheid era. 

I think they can also do coal to Synthetic diesel economically -- but with significant emissions.

Sasol are starting to partner with European petrochemical companies to apply these synthetic technologies to aviation fuel starting from green hydrogen. 

 

[Onsamui]

Defaults & Stupidity | Armstrong Economics

 As I have said before, we will see that start in the emerging markets which have already begun. It will then spread to Europe and eventually end up with the United States coming in last.

[Talking Monkey]

2 hours ago, sancho panza said:

Someone mentioned this a while back but Barclays are shwoing awful timing as ever.This is what ahppens when you bail out failed finacial instituions so that they fail to learn the lessons they need to in temrs of leverage

Remember barclays Dowd Buckner leverage ratio circa 50/1

https://www.moneyexpert.com/news/barclays-to-buy-specialist-lender-kensington-mortgages/

Barclays to Buy Specialist Lender Kensington Mortgages

Barclays has snapped specialist lender Kensington Mortgages for £2.3 billion, part of a scramble for mortgage books as interest rates rise, despite the threat of recession.

Kensington offers loans to customers often declined by traditional high-street lenders, including the self-employed and others with multiple or variable incomes. The Maidenhead-based business also lends to first-time buyers and borrowers over 55. Its 600 employees service an estimated £8.7 billion of third-party mortgages in addition to the firm’s own £1.2 billion mortgage book.

70% of that mortgage book is made up of loans to owner-occupiers, while 30% is buy-to-let.

Barclays has forecast the value of that mortgage book will hit £2 billion when the deal completes in December and says that value will determine the final sale price.

Kensington’s mortgage book will make a rather small addition to Barclays' existing £156 billion of mortgages but will position the bank to serve neglected kinds of borrowers.

However, non-traditional borrowers are also riskier and will be more vulnerable to the ongoing cost of living crisis, potentially pushing up defaults. Additionally, the housing market, superheated since reopening following the first lockdown two years ago, is also showing signs of slowing down and some analysts are warning of an impending crash.

“We wonder about the logic of expanding into a riskier part of the mortgage spectrum at this point in the cycle,” Citigroup analyst Andrew Coombs told the Financial Times.

But Russ Mould, the investment director at AJ Bell, said the acquisition makes sense in the long run. “The timing might seem a bit odd given cracks appearing in the property market. However, Barclays is clearly taking a long-term view and its purchase of Kensington Mortgages together with a book of UK home loans is a logical strategic move,” he said.

That looks like awful timing, reckless even, considering their leverage ratios. 

[Kudukid]

7 hours ago, Errol said:

Putin doesn't bluff. 

Why should Russia supply unfriendly nations with anything? 

Let's hope that the West can survive without any of Russias natural resources ...

The plan isn't for us to survive.

 

They are going to holodomor us all.

 

They have previous in this.

 

Buckle up.

[JMD]

2 hours ago, Starsend said:

It's hard to overstate how bad our leaders are, they're absolute cretins. When you have the prime minister of the UK coming out with shit like this "toxic masculinity". What hope is there to fix the problems this country faces!

The problem is, you get rid of Boris and the rest are all as retarded. If they weren't he would never have got to be the leader in the first place. I am convinced that we face an epic collapse at some point, there is no way to avoid it with people like this at the helm.

Ukraine war: Johnson says if Putin were a woman he would not have invaded - BBC News

 

I agree with what you say, it's pure travesty isn't it? But I do think this is all end-of-cycle degenerate type behaviour, institutional collapse, etc and commentators liken it to the social nadir points as happened with the Fall of Rome or Berlin in the 1920s (are there any other historical examples?).                                                                                                 ...However, if were looking for any positives in this dire political situation, the only saving grace for me would be that I believe no secret evil cabal would be appointing these buffoon politicians to represent them, instead I think such idiot individuals occupy their positions because large swathes of decent folk have decided the current muddled moral maze is not for them, and also crucially our modern economic times give talented people choice to persue bigger opportunities in the private sector. Ultimately this means there just aren't the necessary strata of 'loyal lieutenants', that a decent and strong leader (general) can emerge from. For example, compare perhaps the type of lightweight people frittering around Boris, to the heavyweights who surrounded Thatcher? 

[Loki]

4 minutes ago, JMD said:

I agree with what you say, it's pure travesty isn't it? But I do think this is all end-of-cycle degenerate type behaviour, institutional collapse, etc and commentators liken it to the social nadir points as happened with the Fall of Rome or Berlin in the 1920s (are there any other historical examples?).                                                                                                 ...However, if were looking for any positives in this dire political situation, the only saving grace for me would be that I believe no secret evil cabal would be appointing these buffoon politicians to represent them, instead I think such idiot individuals occupy their positions because large swathes of decent folk have decided the current muddled moral maze is not for them, and also crucially our modern economic times give talented people choice to persue bigger opportunities in the private sector. Ultimately this means there just aren't the necessary strata of 'loyal lieutenants', that a decent and strong leader (general) can emerge from. For example, compare perhaps the type of lightweight people frittering around Boris, to the heavyweights who surrounded Thatcher? 

We're gonna need a bigger boat B Ark

[Loki]

lmfao

 

[JMD]

19 minutes ago, Loki said:

We're gonna need a bigger boat B Ark

Is that Cathie's ARK?!? ...I presume not!

[Loki]

Just now, JMD said:

Is that Cathie's ARK?!? ...I presume not!

https://hitchhikers.fandom.com/wiki/Golgafrinchan_Ark_Fleet_Ship_B

[Axeman123]

9 minutes ago, Loki said:

lmfao

We have now reached the Donald Rumsfeld "known unknowns" stage...

[Barnsey]

Just been spending a bit of time today digging into the U.S. Real Estate market and mortgage market, and it's fooking terrifying to be honest compared to whats going on here.

Florida real estate for example up 34% in the LAST YEAR ALONE (over last 3 years in central Florida, appreciation of 50-60% quite normal despite the lockdowns etc).

Most of the largest mortgage originators (providers) by $ amount are non-bank lenders, the largest of which by far (Rocket Mortgage) has seen its share price fall 70% since month of initial listing last year. Current 15 year fix 5.125%, 30 year 5.75%.

https://www.rocketmortgage.com/

Major alarm bells ringing. If you're going to focus on a BK trigger, non-bank mortgage lenders in the U.S. and new build construction not a bad place to start.

[janch]

Some people in the energy business answering questions about LNG etc:

More at the link:

http://www.cityunslicker.co.uk/

Won’t the lack of LNG landing terminals in Europe mean that the UK will be alright? If the gas can’t be physically landed in mainland Europe and the UK - Europe link only has so much capacity then won’t that mean lower gas prices through winter in the UK?  (Al)

 

Basically, yes, that's correct, although with absolute prices being sky-high whatever the physical sufficiency and price relativities, the definition of "will be alright" could be queried.  UK (also Spain) is well served with LNG regas capacity and both countries are enjoying lower wholesale gas prices than the continentals, exactly as market logic would predict.  Correspondingly & likewise, the UK is exporting as much gas as the pipelines to the continent can manage, based on that clear price differential.  There's every reason to assume this will continue through winter; including the exports unless things get so bad that HMG introduces rationing &/or export restrictions. 

This sufficiency of LNG capacity is a great free-market success story that we've written about before, contrasting with the dismal failure of central planners, particularly in Germany and, to some extent in France.  Italy ought to be better off, too, but local planning laws there are skewed 99% towards NIMBY considerations and generally fatal for building regas.......

 

 

[JMD]

3 hours ago, ONC said:

Ok, off work with Covid (bored) and just browsing for share ideas. I have ZERO experience of stock picking, so really DYOR,

First, started looking for the worlds most indebted companies (as debt will be inflated away with inflation)

https://en.wikipedia.org/wiki/List_of_most_indebted_companies

1 Volkswagen on top of list, they will probably overtake Tesla in EV. But still an expensive product that people can avoid by running old cars longer. So no good

2. AT&T, Verizon   Already tipped here.

3 Looking down the list I saw  AB InBev, the brewer.  This may have a few good points 

a)  Very global (See below), lots of emerging markets

b) cheap product, always in demand, can pass on inflation?

c) huge fixed debts at very long maturity ( average maturity 16years), (nice to be inflated away)

d) people may stop drinking at restaurants/pub but could instead still drink at home.

E) traded on NYSE:  BUD   So can added to SIPP and no withholding tax?
 

F)  current dividend is low, but has been higher

https://www.tipranks.com/stocks/bud/dividends

 

Does anybody have an opinion on AB InBev ??

 

I like InBev and it was already on my BK watchlist along with Ambev(Brazil), Coors, and Diageo, as I like divis! I think 'big drink' will do well.                                                                                                                                                                       As you say, with a inflation cycle, it is the debt cost/debt maturity that is more important than the total amount of debt. How did you find the InBev debt profile? Did you use their website or do you have a 'quick access' source for these type of statistics?

[janch]

https://www.zerohedge.com/geopolitical/how-representative-g7-world-its-trying-lead

The G7 countries currently represent 43 percent of the world economy, down from nearly 70 percent three decades ago.

[belfastchild]

8 minutes ago, janch said:

There's every reason to assume this will continue through winter; including the exports unless things get so bad that HMG introduces rationing &/or export restrictions. 

I like their faith in HMG to stop exporting and making money if there is a deficit at home with people paying less.

[ONC]

10 minutes ago, JMD said:

I like InBev and it was already on my BK watchlist along with Ambev(Brazil), Coors, and Diageo, as I like divis! I think 'big drink' will do well.                                                                                                                                                                       As you say, with a inflation cycle, it is the debt cost/debt maturity that is more important than the total amount of debt. How did you find the InBev debt profile? Did you use their website or do you have a 'quick access' source for these type of statistics?

Hi JMD,  nothing special, I just found the debt profile plot in their annual report. Did not see anything about debt cost though.

Correction on one point, AB Imbev  is Belgium company, with 30% Dividend withholding tax. Does not matter that it is on NYSE as BUD, still would pay withholding tax. However, it seems unclear if tax is paid if held within SIPP.

 

 

 

[JMD]

2 hours ago, GTM said:

Just need Fred Goodwin to come along and get into an auction for them, ABN Amro style, and we are back in 2007.

Yes, game on... But why not pair Fred Goodwin with Pierre Gerbeau (he of Millenium Dome) and the City will get their epic 'back to the future' dream team!!

[JMD]

1 hour ago, Loki said:

https://hitchhikers.fandom.com/wiki/Golgafrinchan_Ark_Fleet_Ship_B

Oh i see, telephone hygienists, etc.                                                                                                                                      Douglas Adams died too young, I'd love to have had his take on current events... I really should re-read his books, perhaps he predicted all this crap and left some useful info. in his writings?

[JMD]

1 hour ago, janch said:

Some people in the energy business answering questions about LNG etc:

More at the link:

http://www.cityunslicker.co.uk/

Won’t the lack of LNG landing terminals in Europe mean that the UK will be alright? If the gas can’t be physically landed in mainland Europe and the UK - Europe link only has so much capacity then won’t that mean lower gas prices through winter in the UK?  (Al)

 

Basically, yes, that's correct, although with absolute prices being sky-high whatever the physical sufficiency and price relativities, the definition of "will be alright" could be queried.  UK (also Spain) is well served with LNG regas capacity and both countries are enjoying lower wholesale gas prices than the continentals, exactly as market logic would predict.  Correspondingly & likewise, the UK is exporting as much gas as the pipelines to the continent can manage, based on that clear price differential.  There's every reason to assume this will continue through winter; including the exports unless things get so bad that HMG introduces rationing &/or export restrictions. 

This sufficiency of LNG capacity is a great free-market success story that we've written about before, contrasting with the dismal failure of central planners, particularly in Germany and, to some extent in France.  Italy ought to be better off, too, but local planning laws there are skewed 99% towards NIMBY considerations and generally fatal for building regas.......

 

 

That is a good example I think (hope!), of why commentators like David Murrin, say the UK can chart a course through this economic cycle (esp now left the EU) - mainly by going for growth and productivity. Murrin says low taxes and dropping regs would attract global inward investment to the city, but also including export manufacturing companies from even the US which he thinks will suffer from future weak dollar... However, the evidence so far of this happening is weak, plus part of Murrin's thesis is we should become more like Switzerland and be neutral arbitor and use our soft power - ie not go poking the Russia bear!!